We’ve been hearing about soaring home prices for months now. So some home buyers are thinking of having a home built instead.
But it turns out that may not be a more affordable option.
Frustrated with fighting for an existing home, Clayton Mardis decided to hire a builder. “Yeah, we thought we would build. Give it a year, we will take our time,” Mardis said.
It’s working for him, but not for Jason Reeves, stuck with a lot of dirt and weeds. “There was going to be a walkout on the left side here,” Reeves said. That was supposed to become his family’s dream home in Liberty Township.
“The final contract was finalized on March 25,” Reeves said. But just as the bulldozer arrived to start work, his builder has some bad news. “They asked us for $75,000 more to build our house,” Reeves said.
Another 75 grand in his neighborhood of $600,000 homes. Why? Soaring lumber prices, that have nearly doubled this year. But Jason says his bank won’t extend his loan that much. “Can you get a mortgage for that? No. Well, we can start this all over again,” Reeves said.
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This is happening to more and more families this year who are having a home built. You agree upon a price, sign a contract, the builder says everything is great, but then he says we are going to need a lot more money.
Jason and his wife are now backing out of the deal. But the builder, Frazier Homes, wants to keep $17,000 of their deposit. An attorney for the builder said, “$12,000 is for architectural plans, which Reeves gets to keep, and $5,000 is for administrative costs outlined in the contract.”
Jason hired a lawyer of his own to plan his next steps. But this is a caution to anyone building a home right now: be prepared for price increases, possibly major price increases. “My wife is heartbroken. I am taking it a little better than she is, for her, it is just a nightmare,” Reeves said.
If you’re signing a contract with a builder, make sure you know if it is a locked-in price, or if it can escalate with the price of materials. That way you don’t waste your money.