New home developer contract per diem clause okay?

Home Forums Purchase Program New home developer contract per diem clause okay?

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  • #64397
    JR0312
    Member

    Basically it says that if escrow goes over the agreed closing timeframe (45 days), a fee of x dollars will be charged to the naca purchaser per day. Will this fly with naca?

    #64398
    Nelsont
    Member

    I don’t think naca has the right to deny it however I have read on here how they strongly discourage it especially since 45 days is usually the absolute minimum and 60 days is not always enough. If the new home is not completed yet I would be even more cautious since a lot of the things the bank does up front normally they wait until completion to do.

    #64402
    JR0312
    Member

    Thank you Nelson. The home is completed. Hopefully it works then since the builder was nice enough to hold the home until Monday for us!

    #64406

    This was covered in the Purchase Workshop I went to last night. You can agree to a Per Diem, but NACA does not pay it or do anything to help you accommodate for it.

    #64409
    TTrumble
    Member

    Hello all,

    Closing time frames are always negotiable. A per diem should be discouraged whenever possible since any delays on your end will be at the bank, not something you created. And there should ALWAYS be a clause stating that if the loan fails to close for any reason (including the seller walking away) you get your earnest money and any per diem funds back without exception.

    These are things your real estate agent should be negotiating for you up front. It is a part of their job responsibilities. Don’t be afraid to make your agent earn his or her commission!

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

    • This reply was modified 8 months, 2 weeks ago by TTrumble.
    #64471
    JR0312
    Member

    Thank you, Tim.

    My agent has been amazing so far and was able to have the builder agree to extend escrow to 45 days as opposed to 30 days. This particular home that they are holding for us has had it’s priced reduced, so I am thankful they are holding it. I’m hoping that 45 days is enough given that it is still winter and inventory is pretty low. I know NACA advertises 28 days, is that a common occurrence?

    #64472
    Nelsont
    Member

    It used to work. And the advertisement is that you can close in 28 days not that you will. Our workshops they say up front realistically 60 days.

    Naca does their end to hold to the 28 day agreement bank of America does not. I believe bank of America has an internal timeline of 18 days once they receive the bank app but since this fall it’s been more like 4 to 6 weeks. And then you add the 2 to 3 weeks on top of that for naca to get through credit access before bank of America even sees the application.

    #70363
    MDPeach22
    Participant

    @Nelstont, I just signed a contract for a new build to be delivered next April/May and the builder is charging $250/day per diem delayed closing. The builder is not budging on this and my agent isn’t able to get them to remove the clause. I have a 3 day rescission period that ends Wednesday but I don’t want to let go of the house nor do I want to be liable for this per diem. Any ideas?

    #70367
    Nelsont
    Member

    The fee might be waived if the certificate of completion is provided within 10 days of a loan approval. I’m probably butchering the timeline but the per diem is generally applied to buyers having difficulty securing financing. Especially with a not yet built house if there’s a delay it’s almost always due to things outside of your control.

    I know it’s easier said than done and I would probably do whatever is necessary to get that house myself but I wonder what would happen if instead of signing you declined and walked away. Would they sweeten the deal? Not suggesting you do that. Just curious.

    #70381
    MDPeach22
    Participant

    @Nelsont are you referring to a certificate of occupancy? I think you might be correct that it’s for buyers having trouble with financing but based on some of the posts in this forum and what I’ve heard anecdotally, it seems like many NACA buyers were subject to the per diem fees even though the delays with BoA was through no fault of their own. there has to be recourse for this? I’m seriously trying to avoid it before my contract becomes BINDING.

    That’s not a bad idea (even though I know you’re not suggesting doing it) but the issue is it’s a sellers market and people are lining up to buy with the builders financing so they have no issue with me losing the house. They also aren’t throwing in any builders assistance or incentives….

    #70383
    Nelsont
    Member

    Yes! Yes I am!

    The per diem fee as far as I know was created for one thing but, applied to all circumstances. They use it as a default. If they can get money any way they can they will. I would if I were them.

    #70389
    MDPeach22
    Participant

    @Nelsont, unfortunately, that seems to be the case. I would too. Challenge is I already know there are going to be delays just because NACA has it’s own process so I’m basically signing on to pay money that I’m trying to save using the NACA program

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