New Homebuyers Beware of Escalation Clauses

A lot of people are buying new homes these days. Whether it’s being driven by the new normal of working from home, or climbing property values, the market is red hot and shows no signs of slowing down any time soon.

But the pandemic, coupled with record-setting consumer demand and limited supply, has changed how you buy a home today. Whether it’s a socially distanced model home tour while wearing masks or dealing with unpredictable construction delays due to material and labor shortages, it’s certain your parents did not purchase homes this way.

Beware of escalation clauses that can significantly increase your home’s price

One of the more important changes in homebuying today is that some homebuilders are using an “escalation clause.” Cost increases for lumber, concrete and other materials are leading some homebuilders to add escalation clauses to their contracts, which means the contract price of your new home can change, or escalate, based on the builder’s cost increases for materials.

A bit part of this issue is the cost of lumber, which has gone up by almost 200% since the pandemic began – an all-time high. For instance, lumber prices over the past year added more than $18,600 to the average price of a new single-family home, reports the National Association of Home Builders.

An escalation clause allows the builder to pass along such cost increases to you. And in addition to lumber, there are many other materials that are increasing in cost, all of which could be added to your new home’s contract price if an escalation clause is in place.

Homebuyers who agree to an escalation clause are sometimes finding that when their closing occurs, the price of their home has increased by as much as tens of thousands of dollars. Half of the nation’s homebuilders are adding price escalation clauses to cope with rising costs, according to the National Association of Home Builders, so it’s important to know about these clauses and what the impact on your home’s price might be.

William Ryan Homes Tampa guarantees contract prices

Homebuilder William Ryan Homes has chosen a different path, sticking to the contract price, regardless of the continued increases in materials. Once homebuyers sign the contract, the price is set and guaranteed – there are no escalation clauses. This is one of many ways William Ryan Homes Tampa is different from many other homebuilders in the region.

William Ryan Homes Tampa has a homebuilding formula that works

William Ryan Homes Tampa has a three-part formula for homebuilding – quality homes at the right price in a good location. The formula works for buyers who want a big bang for their buck in a community that is convenient to everything the Tampa Bay area has to offer.

Additionally, the homes are green-certified, designed and built with energy efficiency and sustainability top of mind, which means lower utility bills and cleaner living. In fact, William Ryan Homes is one of the top homebuilders of National Green Building Standard (NGBS) green-certified homes in the Tampa Bay area, having completed nearly 500 green homes since 2016.

About William Ryan Homes Tampa

William Ryan Homes Tampa Division has been building homes for more than 15 years in five area counties: Hillsborough, Pasco, Polk, Manatee and Hernando.  The company, which has built more than 1,700 homes in Tampa Bay, currently has seven new home neighborhoods. Home prices range from $330,000 to over $600,000, with the exception of the custom collection in south Tampa, which ranges from $600,000 to $1.5 million.

To schedule an appointment to tour model homes, contact Maxine at 813-696-6986 or send her an email mstull@wmryan.com. She can quickly schedule your visit and answer other questions you may have about William Ryan Homes.