I am not in the construction industry, but have subscribed in Fine Homebuilding for several years. I am in the process of beginning construction of new home and GC’s contract calls for a 1% cash deposit at the time of signing the contract. Total contract price is $300,000+. Is this an industry standard? If not, what is? GC is prominent builder in our area and I have bank construction loan in place with draw schedule.
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Replies
1% is low. I usually require 10% on a new home.
WAHD
Read this discussion...
http://forums.taunton.com/n/mb/message.asp?webtag=tp-breaktime&msg=30375.1
Try to look at the project from the builders perspective. And welcome to the forum.
Do it right, or do it twice.
Edited 5/4/2003 11:43:51 AM ET by ELCID72
It varies with me but I'd want more like ten percent before I showed up. I suspect that the 1% is just to put you on the scedule and that another draw is due as soon as he opens ground. Hard to answer your Q without seeing entire contract and payment scedule but basically, yes, a deposit is normal and his sounds low.
Excellence is its own reward!
On a new home construction contract my company takes 10% upon siging the contract and it stipulates that the full deposit is held until your final bill. At that point, we settle the account and hand over the keys.
In California the law is 10% or $1000 which ever is less. urg
Peace,
MartinHeads I win, tails you lose.
10% here where I work, possibly a little more depending on job.
Never be afraid to try something new. Remember, amateurs built the ark, Professional build the Titanic.
Around here, it's about 2.5%. Under 200k or so, contractor does the construction financing, nothing is your's til closing.
That new construction or remodel for the 2.5% , guess I should have put that in my post, it's all remodel that we do, Makes a huge difference.Never be afraid to try something new. Remember, amateurs built the ark, Professional build the Titanic.
new const on the 2.5. Orig ques was about new const (1%)....whad and fez said 10% on new const.
On remodel, I vary depending on the job, material-to-labor-to-subcontract ratios, and how well I know the people.... usually runs about 10pct, sometimes more
Big projects over 1500-2k in material, with someone I know, I have them open an account at local builder supply, small town everybody knows everybody anyway, I get contr. pricing, but charge materials to their account. I turn charge copies over to client asap after obtain materials. Keeps from tying up much of my capital in materials on jobs, and they don't get markup. Builder supply is good, and I get enough kickbacks....i.e. the other day he threw in a right angle Milwaukee drill I'd been looking at.....owner followed me out to the truck and put it in back while I loaded about $1000 of materials.