When you decide to have a new home built, you’ll need to find a builder and sign a contract with them. Since home construction is a complex process, it’s important to make sure you understand your home building contract before signing it. What should you expect to see on one of these contracts? You should make sure your contract includes the following information. If not, you should have the builder revise the contract to include this information before you sign it.
Estimated Timeframe
Your contract should include information on the estimated timeframe for your home building project. It should show when construction is scheduled to start and when it is scheduled to end. You should also see details on when different phases of the project are scheduled to take place. Keep in mind that delays can happen for several reasons, such as adverse weather, labor shortages, material shortages or inspection delays. However, if these conditions do not occur, your builder should make every effort to complete your project within the scheduled timeframe.
Scope of the Project
Your home building contract should provide you with detailed information on the services that are included. This goes beyond the actual building process. Your builder should also state that they are performing any other tasks that are needed for your project, such as obtaining permits and providing materials, equipment and labor. Your contract should also show that the builder agrees to follow the house plans and specifications and will not make any changes or modifications to these without consulting you. This helps ensure that you’ll get the exact house you’re expecting.
Payment Details
Your contract should include details on payment, including when each payment is due, how much is due and how payments should be made, such as by check. You should also make sure your contract from the builder includes detailed information on all the fees and costs for your project. This helps you understand what you’re paying for, so you can ask questions or point out errors if needed. Your final payment might be due when your project is considered substantially completed. Since this interpretation can differ, your contract should provide a clear definition of substantial completion.
Project Scope Changes
If you change your mind about certain features or other components of your new home, such as wanting to adjust a room’s layout, add a window or have a custom feature installed, the contract should address this. Your contract should provide information on how these changes will be handled. For example, your contract might state that you will need to provide written documentation with approval from both you and your builder to change facets of your project. Keep in mind that your builder might want to make changes during the project. Having this section in your contract stops your builder from doing these without your approval.
Inspections
You should be able to check on the progress of your home construction project. Your contract should state that you may do this, as long as you plan to stop by at reasonable times, depending on the specific work that is going on. These inspections give you a chance to make sure your project is going as planned and bring up any issues you might have with the builder.
About the Author
Kyung Kim
Hi, I'm Kyung Kim. I immigrated from South Korea to the United States in 1968 when I was 7 years old. I have seen my mom struggle with the English language and work hard to raise her four kids by herself. Still to this day, I don't know how she pulled it off, but she bought her first home in 1979 for $70,000 and because of that decision, she was able to live without worrying about her financial future. I want that for everyone, to feel the pride of home ownership and to build their financial wealth using real estate as part of their financial portfolio. I feel so blessed to play a small role in helping others reach this goal.
I live in Beaverton with my husband, Richard. My mom, who lived with us for several years, passed away in our home in February 2022. Her first home purchase in 1979 made it possible for her to live to the very end, without worrying about her finances. As of August 2022 with a little downpayment assistance, our four children own their own homes. Being in real estate, I quickly realized that if they didn't buy now, they may be priced out of the market in the future. Whether that would have been the case, we will never know, but what we do know is that they are all realizing some good, healthy appreciation in their home values.
As passionate as I am about people owning their homes, I'm also passionate about giving back to our community. I support Compassion First, a non-profit organization that provides aftercare for sex trafficked girls in Indonesia. My husband and I also feel called to financially support social injustice organizations.
I'd love to assist you. Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having a real estate professional by your side. I'd be honored to put my real estate experience to work for you.
