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Soaring Prices: What to look out for when signing a home-building contract

Posted at 7:18 AM, Jul 13, 2021
and last updated 2021-07-13 07:18:40-04

We've been telling you about soaring home prices for months. Some home buyers may be opting to build their own home to get out of the bidding war cycle, but it may not be a more affordable option.

Jason Reeves is stuck with a lot of dirt and weeds

"There was going to be a walkout on the lefthand side right here," Reeves said.

That was supposed to be his family's dream home. The contract was finalized on March 25, but just as the bulldozer arrived to start work, his builder had some bad news.

"They asked us for $75,000 more to build our house," Reeves said.

Why? Soaring lumber prices have nearly doubled this year, but Reeves said his bank won't extend his loan that much.

It's happening to more and more families this year who are having a home built. You agree upon a price, sign a contract, the builder says everything is great, and then says they're going to need more money.

Reeves and his wife are now backing out of the deal, but the builder wants to keep $17,000 of their deposit.

An attorney for the builder said $12,000 is for the architectural plans, which the Reeves get to keep, and $5,000 for administrative costs outlined in the contract.

Reeves has hired his own lawyer to plan his next steps.

If you're signing a contract with a builder, make sure you know if it is a locked-in price, or if it can escalate with the price of materials.