Builder Contract Per Diem Question

S

Sakred

New member
Hey guys. I wanted to understand how Builders Per Diem amounts work. I am currently in escrow with Richmond American, and as part of their sales contract they have a Per Diem amount of $480 per day payable by the buyer if escrow is delayed. Unfortunately for me my escrow was scheduled to close on 6/30/2016, and I still have not received a Clear to Close from my lender.

I am hopeful that everything gets resolved today and we get the Closing docs, but I want to see if anyone has had a similar experience in the past. Are these Per Diem amounts enforced, and if so, is there anyway to have them waived. Thanks in advance for the help.
 
My mortgage got delayed about 6 days.  I had to pay $1,900 for that delay.  And then I yelled at my mortgage relative, and she refunded me $900+ dollars.
 
zubs said:
My mortgage got delayed about 6 days.  I had to pay $1,900 for that delay.  And then I yelled at my mortgage relative, and she refunded me $900+ dollars.
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this. talk to your lender about it and let them know their delay is costing you money. some may work it out with you. some may not.
 
The part I don't get about this per diem is that if the builder is delayed, you don't get anything and have to make arrangements to move later. If you delay, you pay a hefty penalty.
 
yoyo2012 said:
The part I don't get about this per diem is that if the builder is delayed, you don't get anything and have to make arrangements to move later. If you delay, you pay a hefty penalty.
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It's very one sided. I asked that same question before signing the contract and they just shrugged and said "that's just how it is".
 
Is the lender that you're going with the one that is preferred by Richmond American? If so, there may be a possibility that you can get the per diem waived, since it's Richmond American's preferred lender.

When I bought my home, I went with the builder's preferred lender, because I was told by the sales rep that the per diem wouldn't be enforced if it was the lender's fault.
 
It's negotiable to a point. If you can prove the circumstances are beyond your control, the sales office will waive the per diem penalty.
 
Before considering an outside lender, ask these questions:

1) Have you closed a new construction home in the last 6 months? If so, what tract? After you get the answer, you check with the tract and ask how the deal went.

2) If the lender causes the delay, what's your written policy on payment of per-diem charges?  Nothing in writing = avoid

When it's the builder, or the builders lender, per diems are waived. If you're the cause it depends what the reason is. Example, your wire is misrouted, or there's been a serious medical issue with immediate family (documentable), these kinds of delays are waived on a case by case basis.

My Bank will sometimes cover per-diems, again on a case by case basis. I offer my own payment of per-diem expenses, up to 5 business days, on any builder deal, paid out of my own pocket - not the Bank's. Thankfully, I've not had a situation requiring the payment, but let's be honest... things happen no matter who the service provider is. The key is having some sort of written guarantee on what happens if you can't finish your financing with the lender you're working with.

My .02c

Soylent Green Is People
 
$480 seems awfully high, but I guess it depends on the price of your home. I'm thinking more like $150/day is the standard.

Regarding sellers delay of closing, it's the same in re-sale; no loss to seller. I was in escrow once and the seller just changed their mind about selling. Nothing I could do since no inspections or appraisals were performed and I didn't 'lose' any money.

 
*Update*

I was not charged the Per Diem amount by Richmond American. I just signed closing documents yesterday. Escrow was never notified to add any amounts other than what was agreed to earlier on in the buying process. The delay was primarily due to my lender who gave a weak excuse, about an influx of refinance customers due to the low interest rates. Anyhow, I just processed the final wire transfer and will hopefully be moving in this weekend.

Thanks for all the feedback. I was stressing about this for a while. 
 
Patty O Furniture said:
$480 seems awfully high, but I guess it depends on the price of your home. I'm thinking more like $150/day is the standard.

Regarding sellers delay of closing, it's the same in re-sale; no loss to seller. I was in escrow once and the seller just changed their mind about selling. Nothing I could do since no inspections or appraisals were performed and I didn't 'lose' any money.
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It's a Richmond American home, so it's probably under $1MM and thus, not on the high end.  I believe the other builders were around $450/day as well.
 
paydawg said:
Patty O Furniture said:
$480 seems awfully high, but I guess it depends on the price of your home. I'm thinking more like $150/day is the standard.

Regarding sellers delay of closing, it's the same in re-sale; no loss to seller. I was in escrow once and the seller just changed their mind about selling. Nothing I could do since no inspections or appraisals were performed and I didn't 'lose' any money.
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It's a Richmond American home, so it's probably under $1MM and thus, not on the high end.  I believe the other builders were around $450/day as well.
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The New Home Company charges $500/day!  :eek:
 
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