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Author: WotPeed Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 126969  
Subject: Financing contingency on new construction Date: 12/17/2013 4:10 PM
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My wife and I are thinking of putting a deposit down on a new home (new as in "currently just a concrete slab"). We were planning on putting our current house up for sale in February and then renting for 6 months or so while we looked for a new place, but we saw this development and decided we'd like to take the plunge.

My concern is regarding a financing contingency that appears in the purchase contract. I haven't seen the contract yet but our RE agent has talked to the developer and says that we'll have 60 days from signing the contract to have our financing for the new home in place. We're scheduled to sign the contract this weekend.

Considering we haven't even listed our current home yet and that we'll need the proceeds from that sale for the down payment on the new mortgage it seems clear that there's no way we'll have the new loan in place in 60 days. Our agent says that the builder assures us that "they'll work with us" if the sale of our house hasn't been finalized when the 60 days are up.

To me it seems foolish to count on the developer to do something that's not in the contract. It seems like an easy way for them to say "sorry, time's up, we're keeping your deposit". Our agent and I are going to talk to the developer to see if we can get them to change the contingency period to 90 days but something tells me that's not going to happen. New construction around here (San Diego) seems to be in high demand so I doubt they'll bend over backwards for us.

The deposit isn't huge ($5k) but obviously I don't want to throw it away. Any advice? Do builders really "work with you" if you can't get financing in place by the deadline specified in the contract? The builder is KB Home if that helps any.


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