How a Reservation & Payment Schedule Works in Gulf Coast New Construction
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I’m Meredith, your Gulf Coast real estate advisor. Below is a clear example of how a reservation and payment schedule can work for a new construction development on the coast. Every developer has their own process and documents, so consider this a helpful guide, not a substitute for your specific contract. This walk-through also assumes a cash buyer. If you’re using financing, the flow usually tracks the same milestones through a construction-to-permanent (C2P) loan with lender-funded draws.
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If you’d like to compare active opportunities, start here:
Orange Beach — https://www.searchthegulf.com/orange-beach/
Gulf Shores — https://www.searchthegulf.com/gulf-shores/
Ono Island New Construction — https://www.searchthegulf.com/onoconstruction/
The Purchasing Process (Hypothetical Example)
1) Reservation
Place a $10,000 refundable reservation to hold your selected homesite or plan while final pricing, specs, and contract documents are prepared.
2) Conversion to Contract
After the 20th reservation, the developer opens a 15-day window for you to convert your reservation into a binding Purchase Agreement.
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At signing, you deposit 20% of the purchase price into escrow.
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Those funds are released to the developer when infrastructure is sufficiently complete and building permits are issued.
Construction Draws (Cash Buyer Example)
After your 20% contract deposit, the remaining 80% is paid in draws tied to construction milestones:
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Foundation completion — 10% Draw
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Dry-in complete (exterior walls, doors, windows, roof membrane) — 20% Draw
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Sheetrock finished — 25% Draw
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Substantial completion — 20% Draw
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Final closeout — 5% Draw
These requests are supported by builder documentation and typically verified by the title company or your third-party inspector.
If You’re Financing Instead of Paying Cash
Most buyers who finance use a construction-to-permanent (C2P) loan. The lender follows similar draw milestones, but funds each draw directly after inspection and approval. During construction, you generally make interest-only payments on funds disbursed; the loan converts to a permanent mortgage at completion/CO and closing. We’ll align your rate-lock strategy, inspection cadence, and title disbursement language with the builder’s schedule.
Simple Numbers Example
On a $1,000,000 purchase price:
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Reservation: $10,000 refundable.
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Contract Deposit (20%): $200,000 into escrow at binding.
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Remaining 80% paid by draws: $800,000 total, released as:
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Foundation 10% = $100,000
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Dry-in 20% = $200,000
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Sheetrock 25% = $250,000
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Substantial complete 20% = $200,000
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Final closeout 5% = $50,000
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What I Manage For You
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Escrow mechanics and who authorizes releases.
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Permit and infrastructure triggers tied to any deposit releases.
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Selections, allowances, and change-order deadlines to protect schedule and cost.
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Insurance, fortification, and coastal resilience considerations that influence long-term ownership costs.
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Punch-list and warranty deadlines to ensure a smooth handoff.
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Resale positioning for Orange Beach, Ono Island, and Gulf Shores so today’s choices support tomorrow’s value.
When you’re ready, I’ll tailor this framework to the specific community you’re considering and coordinate with your builder, lender, title company, and inspector so every milestone is documented and predictable. For current releases and market insights across the coast, visit https://www.searchthegulf.com — the Gulf Coast’s premier website for searching all real estate listings on the Gulf Coast.
Meredith Amon is a Gulf Coast Expert Real Estate Advisor, licensed in Alabama and Florida. She specializes in helping buyers and sellers navigate the buying and selling of homes along the Gulf Coast.
#searchthegulf #meredithfolger #becausewelivehere
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