New Homes Guy "The Contract is Everything" - New Homes Tulsa

The Contract is actually everything!  Before you even decide on a builder, ask for a copy of their sales contract.  As soon as you think they may be one you would consider, request the copy.  The reason for this is clear;  If you start with the contract and making sure it's very clear and concise, the process can go well.  If you end with the contract and have to fight to make sure everything is in writing and clearly spelled out, prices will quite often change, and the relationship will quickly fall apart.  That means that you have to start all over again with another builder.

I can't count the number of buyers I've spoken with that say everything changed after they signed the contract.  What they were told was included wasn't in the finished product.  Details changed.  It's the "unexpected" that can morph the new home experience from Dream Home to a nightmare.  When I say "
unexpected" I don't mean minor changes, I mean serious misrepresentation.  Some items that often occur are:

• Full brick on entire exterior (watch out for siding used in entry ways and covered patios)
• Tyvek house wrap.  Moisture is a house killer.  It it's not Tyvek, I recommend you begin shopping again.
• Is there re-bar in the concrete driveway, patio, and front porch?
• If the home is on a foundation, is the foundation post-tension?
• Exactly what insulation is included, at what R-level, in each area of the home?
• What brand HVAC system is used?  This is a hot one (pardon the pun).  If it's not Carrier or Trane, move on.
• On two story homes, is the second story flooring "Silent flooring"?
• What is the home warranty?  When I was with Shaw Homes, their builder warranty doubled the area builders and came with 2 years of coverage, as well as a 10 year structural warranty!  Find out what they are offering, and get it in writing!

A buyer sat with me and aked if our contract is a "closed ended" contract.  A closed ended contract is one that has a Final Price that can only be changed with the buyers and builders joint permission in writing.  Such changes are things like upgrades after the contract is signed (i.e. change master shower from ceramic tile to cultured marble, change interior paint color, add a light switch prior to electrical, etc...). 

In the conversation, the buyer told me that the last home they had built included unfinished square footage on the second level that he had added to the plan for future completion.  He wanted this unfinished space because he didn't have the money to have it finished now, but planned on doing it himself later to gain some sweat equity, and to keep it out of his mortgage.

One day during construction he shows up to the site to find the second level has been completely drywalled.  Several days later the builder calls him to have a discussion.  The discussion turned out to be a "you owe me an additional $5,000 for the drywall" type of discussion.  Needless to say, the buyer refused to pay because it was made clear up-front that he didn't have the money, and that was why he had it specified as unfinished space to begin with.

At a later date the buyer shows up to the site to find that the entire second level was gutted, and the chunks of drywall were laying in piles.  The builder not only wasted the money on the drywall materials and labor, but out of spite he added additional labor cost to have the demolition work done.

This type of an experience goes way beyond just contract clarity and enters into why using a large reputable builder has advantages most don't ever consider.  In this case, a large builder would have eaten the cost and moved on, knowing that they have a client for life.  When I sold homes for Shaw Homes, the largest custom home builder in Tulsa, the exact same thing occurred with one of my clients.  When I called the buyers to let them know what happened, my exact words to them were "Merry Christmas and Happy Birthday".

Back to contracts.  It's a huge misconception that a long contract is worse than a short one.  Buyers feel like a longer contract is too "complicated" and all about protecting the builder.  Not true.  A longer contract is about the buyer and builder and what both parties expect through the process.  Builders can either have their own contract created, or they can use a generally accepted contract created by a third party, such as the local Home Builders Association.

In my sales days, Shaw Homes used the Tulsa Home Builders Association contract, which is 9 pages long.  In it, the contract clearly spells out the price, as well as what should occur if a building delay comes into the picture due to an act of nature or supply issue.  A supply issue occurred in the past in many US cities when Hurricane Katrina caused a massive supply demand for building materials, as well as skilled labor.  This size of contract even clearly lists the building materials and specifications, any upgrades requested by the buyers at time of contract, contingency purchase options such as "contract contingent upon sale of buyers current home", and much more.

Real estate law is very clear on this topic.  "If not in writing, it doesn't exist" is what Realtors say.  Quite simply, just because the salesperson told you granite counters in the Kitchen and ceramic tile in the Utility Room were included, if it isn't in the contract, the builder doesn't have to put them in.  Of all the complaints I've ever heard, well over half are in this category.  My advice is to demand that the builder give you in writing all that is included, and make sure that it is signed by the builder, not the salesperson or anyone else.

To summarize, the longer the contract the better.  If you are represented by a Realtor, have them look it over prior to signing it.  If you are on your own, read it over yourself to be comfortable.  These types of contracts rarely use the heavy duty legal jargon, and spell the issues out fairly clearly.  Remember that the builder needs to protect themselves as well as you.  This means that some paragraphs are going to clearly protect them, some you, and some both parties.  The most important part is that it all be in writing!  If in doubt, consult a real estate attorney. 

Good luck.  The new home construction process can be an incredibly rewarding one when handled correctly.  My goal is to help you make it what you dreamed it could be.