Construction contract, without land/financing

Hello,
since the free real estate market in our region looks very poor, we wanted to continue the search through a developer.

The sales representative from the construction company X on site wants a signed construction contract from us first before becoming active. This contract should already include the amount X for a quickly calculated house type, as well as the confirmation of the construction service description. Only then should an external financer go through the financing with us, and if the okay is given, we could then expect property suggestions.

Is this approach legitimate? So far, we have only heard good things about the construction company X.

Thank you for helpful advice.

Hello,
we had a detailed appointment with the construction company, during which the house type suitable for us was adapted to the (reserved but not yet purchased) plot with the major extras like the basement and attic conversion, so that we had an idea of the price. We received this offer with floor plans free of charge. All questions were answered, and we could also ask further questions by phone and in writing. With the documents, we were then able to get advice on financing.
A few weeks later, we signed the contract for work with the construction company, but with the clause that if the financing does not come through, we can withdraw FREE OF CHARGE. This clause was time limited. That gave us enough time to coordinate the bank, the plot, and the construction company.
So: without clear figures regarding the house price with extras, I would not sign anything. But if your construction company is to look for a plot for you, they put in additional work. This should also be paid for, but are there clauses with you if they do not find a suitable plot for you within period X? And is the decision about what is suitable for you solely yours?
Best regards, Malli

Hello Malli,
in the contract, the amount X, which was roughly and very roughly calculated, should be fixed and reserved for one year. Furthermore, the typical withdrawal clauses in case of missing financing or non-existent property are included.

What makes us suspicious is that we are not allowed to take this contract unsigned. We also do not receive any floor plans. It is repeatedly said that we could still decide on a different house type afterwards. This procedure is only for security reasons, due to the preceding property search.

I would not sign anything without further examination, especially not with these amounts!

Hello,

the approach of the developer seems a bit dubious to me...

The way you describe the procedure here reminds me of the "tactic" of some kitchen salespeople...

Sorry, if I am not allowed to have the contract checked in advance and don't even get floor plans, I would be very cautious about signing anything.

Regards,

Dirk

Good day,

The sales representative from construction company X on site wants a signed construction contract from us first before he becomes active.

I am not asking myself for the first time how there can be people who even think of entering into such a contract structure in times of the WWW?

The contract is supposed to record the amount X, which was roughly and very roughly calculated, and reserve it for one year. Furthermore, the typical withdrawal clauses in case of missing financing or no available land are included.

But this certainly does not serve your security, but rather the order books of the provider and thus logically their balance sheet. It’s somewhat like "invoicing wine to hobos" at the end of the year because the book value of the wine merchant should look better due to upcoming financing discussions/IPO with the house bank.

What makes us suspicious is that we are not allowed to take this contract away unsigned. Also, we do not get any floor plans handed over.

Contract comes from "vertragen" (to endure)! This means every contract (previously checked) is also to be found as a confirmed copy in my filing system! Anything else is not serious; certainly not recommended!

What if you sign and—as chance often brings—another offer "around the corner" comes which you would like to accept? Then you—anything else would surprise me—only get out of the contract by paying a compensation sum.

The land situation on the market is almost similarly good or bad in all regions; it always depends on the viewpoint of the observer. Nevertheless, I would never—at least not consciously—maneuver myself into a situation where I run the risk at the end of the day of having been taken in by Jokey Smurf

Rhineland regards