Aug 30, 2010

Buyers of Newly Constructed Homes, Beware the Resale Commission Clause!

If you're buying a new condo, townhouse, or other home in a new development, you'll have plenty of paperwork to read over before you sign on the dotted line. Of course, it's always a good idea to read it all carefully, but who doesn't start yawning after a while?

There's a new clause being snuck into these contracts, however, that should make you wake up and reach for your red pen. It provides that you'll have to pay the builder a 1% transfer fee when next you sell the property, and so will anyone else who sells the place, for the next 99 years! (Can you picture the builder's grandchildren rubbing their hands?) For more details, see this article provided by the National Association of Realtors.

The number "one" as a percentage sounds small and insignificant, but I wouldn't want to shell out $2,500 to the builder if I were to sell my house for $250,000, $5,000 if it goes for $500,000, and so forth. I'll bet you don't either. So look for that clause, and demand that it be stricken from the builder's contract. Every contract can be amended, and while the market's slow, you've got the upper hand in deciding what you'll accept in there.