Some surprises are nice. Spur of the moment flowers. A beautiful sunset. A new puppy. Others not so much. New home builders are using a new tactic in their fight against rising costs that are catching buyers by surprise.I have clients who contracted with a builder back in February for a new home to be delivered in late July. It is about at drywall stage now. Yesterday we got a call from the agent saying they were going to make a change. They were going to raise the agreed to price from $485,000 to $527,900. A $42,000 increase! Surprise!
Is this legal? Yes it is. In the contract it clearly states this can be done by the builder. Does not even require proof of rising costs. My clients had signed this contract before I was brought into the picture. Not sure I could have gotten that changed because almost all local builders are putting this in their agreements.
As if this were not enough, they added a 10% escalation clause allowing the builder to increase the price again up to 10% more, at their discretion.If you are looking to buy a new home this year, make sure you get a real estate agent to look over the contract and explain to you what is in it. Or, if you like surprises, carry on!