Due diligence period for spec home?

Question

Looking for some advice on how spec home offers are typically structured.  I'm in North Carolina and looking to buy a spec home that should be ready in about 4 months.   I have a few questions and hoping that some of the more experienced folks here on BP can offer some advice:

1) On a typical purchase, i'd normally have a 15 day due diligence period and then the Earnest Money Deposit becomes non-refundable.   But if the home isn't ready for a few months, how can I do an inspection and release all contingencies?  Does the DD period normally get extended?

2) Also, how do I make sure that the builder doesn't skimp out of quality and finishings once he gets an offer locked up?  I assume I can have him commit to some stuff (fixtures, appliances, etc), but there's no way I can identify everything (nor would I want to be spending time on checking every single thing).  Is this just a question of good faith and trust?

3) Any other lessons learned or suggestions?

Thanks in advance!

Kirk Hanson · Answer

Hire a good, licensed real estate broker to represent your best interest.  If you are buying from a reputable builder, the builder will pay the broker and you get legal, sound advice from a local professional. It's a win-win for all involved!

Troy Sheets · Answer

If the house passes home inspection, appraises, and you get financing, you've checked off all your usual contingencies and the EMD goes non-refundable, at least in my experience. You can specify anything you want in your AOS though and have it written up however you want. You want 15 days after all those contingencies are met to back out, write it up that way. It's all negotiable.

As far as skimping, do they have a model or example home you can look at? We usually show a recently completed home and provide a spec sheet of exactly what we're using from floors to appliances. Buyers get allowances with the spec sheet and can change anything they want as long as it's not more money to purchase or install. If it's more, we negotiate an upcharge.

See #2, definitely have a spec sheet signed off on as addendum to AOS so you're not surprised by an 80% efficient heater or formica countertops.

Matthew Paul · Answer

You are buying a new home , you can spec all the finishes you want .  BUT the builder will charge you for each and every upgrade

Jason T. · Answer

Hi Kyle.  II have I have not yet made an offer. But I was curious how to structure the offer with regards to earnest money and due diligence periods.