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When you sign a contract, you might as well
consider that pen in your hand to be a stick of dynamite. Over the
next several months, you will have to live by what is and- equally
important- what is not in the contract.
If you ever talk to a home buyer
who’s been ripped off by a builder (that is, had a “negative home
buying experience”), you’ll notice one common thread: a bad
contract. After you strip away all the incompetent
subcontractors, the builder-grade materials, and the outright
deception by the builder or salespeople, you’ll usually discover
that it all starts with a lousy contract that didn’t protect the
consumer.
How
do bad contracts ZAP good home buyers?
1) Generic real estate forms. Suprisingly, many new
homes are bought with just the generic real estate “Contract to Buy
and Sell”. While this may be fine for existing homes, new home
construction is another ball game. Although this generic contract does
not identify the buyer and seller and the amount to be paid, no
mention is made of exactly what you’re buying or when it will be
completed. Some builders get around this problem with a “new
construction addendum,’ which is nice but it runs into the next
problem.
2) Omission of details. Even the contracts written
for new construction are devoid of critical details. For example,
it’s rare to find a completion date and any penalty clause. No specs
or materials are promised-just a vague wording that says the home will
be built in accordance with the “drawings and design plans.’ If
the builder drew those plans, the plans may still omit many details.
For example, a door opening is drawn on the plans but no mention is
made whether it’s an expensive, six panel, solid oak door or a
cheap, pine hollow-core door. And it’s like that all down the line:
heating/cooling systems, windows, faucets-the plans give you no clue
as to whether you’re getting quality or trash.
3) Verbal Promises. The final straw of these bad
contracts is verbal agreements. The builder may promise a brick
fireplace at the beginning, but having no written agreement makes it
easier for the builder to say later he never promised you that. If you
order a change but fail to put it in writing, the builder may fail to
make the change. Or the change will be made and you’ll be charged
twice the “verbal” price. Near closing, you may be shocked by huge
bills for items you thought were more affordable in earlier
conversions.
This Homebuyers Tip was excerpted from:
Your New House,by Alan & Denise Fields,Windsor Press, 1996
ISBN# 0962655686
We use
the California Association of Realtors forms because:
They protect both the
seller and the buyer.
They are backed by the
California Association of Realtors in case of a suit where the legal
issues in the forms are questioned.
They are accepted by
all Real Estate Offices in Southern California.
Presenting any other
contract will cause delays with negotiations or acceptance of offers
with other agents while their attorneys review the contract, which
could be detrimental to the buyer's chances of getting the home.
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