About to close on a home that has already lost $$ (sales, houses)

[djb2002]

Should I walk? I just noticed on the builders website that the same home in my subdivision that I will be buying for x amount is now being sold for about 12% less. At that rate, I may never gain equity with the current market. I only have 3K invested as earnest so I'm thinking if I cannot get the builder to drop the price for me, I am walking. I think I may have some leverage because of the small investment I made and the fact that they would have to sell my home as spec home for the new price. I know the media is doom and gloom, but I wouldn't want to take that kind of hit in a healthy market let alone one that may be dropping further. Any advice would be appreciated.

[Master Shake]

I think you summed up your options pretty well. Unless your contract has other specific penalities listed, your choices are to work out a better deal with the builder, or walk away from your $3K deposit money. There are tons and tons of other houses available right now, and your builder knows this!

Of course, a third option would be to continue with the purchase as it is, but probably only if you REALLY, REALLY like the house and area, and plan on staying for more than 5 years or so.

[Bummer]

Originally Posted by djb2002

Should I walk? I just noticed on the builders website that the same home in my subdivision that I will be buying for x amount is now being sold for about 12% less. At that rate, I may never gain equity with the current market. I only have 3K invested as earnest so I'm thinking if I cannot get the builder to drop the price for me, I am walking. I think I may have some leverage because of the small investment I made and the fact that they would have to sell my home as spec home for the new price. I know the media is doom and gloom, but I wouldn't want to take that kind of hit in a healthy market let alone one that may be dropping further. Any advice would be appreciated.

Obviously, djb, you have the "upper hand" in this case.

Unless there are other, more severe, penalties in your contract, the builder would be downright crazy NOT to renegotiate in order to Save The Sale!

From the facts posted, continuing with the sale would not be in your best interest.

Good Luck!

[MotleyCrew]

I have heard of some cases in our development where the builder did in fact renegotiate the price on homes in the same situation. Can't hurt to ask.

[Monster Daddy]

$3K isn't much to walk away from. I would definitely renegotiate. Or you could simply reshop homes or look to buy one of the quick builds at great savings. Agritopia was offering $100K off a quick build.

But remember, the most desperate builders are also the ones most likely to go bankrupt and then you might wind up losing your earnest money anyway or have a completed home but with unfinished issues.

If you find a builder on shaky finances I think the only thing I would buy from them is a nearly completed quick build. But even then I would firmly resist closing unless every issue was resolved prior.

[sheena]

Originally Posted by djb2002

Should I walk? I just noticed on the builders website that the same home in my subdivision that I will be buying for x amount is now being sold for about 12% less. At that rate, I may never gain equity with the current market. I only have 3K invested as earnest so I'm thinking if I cannot get the builder to drop the price for me, I am walking. I think I may have some leverage because of the small investment I made and the fact that they would have to sell my home as spec home for the new price. I know the media is doom and gloom, but I wouldn't want to take that kind of hit in a healthy market let alone one that may be dropping further. Any advice would be appreciated.

Get them to drop the price, they might. I walked away from a deal losing 4x what you have invested. It was either that or finance something 50,000+ in a hole. I cut my losses and walked away. Thank goodness I did, it ended up being worse than I expected.

[ArizonaBear]

As what everybody else suggested------better a $3-5K loss vs. a $50K one-------all other factors being equal.

[Gretchen B]

I would definitely try to renegotiate the price. However, if they won't come down on the price, make sure you read your contract thoroughly. I'm sure there's probably a "specific performance" clause in there where they could sue you to close the deal. Not that the builder would choose to do that, but you need to know what the worst case scenario would be if you walk away from this deal. I wouldn't necessarily assume that you'd only risk losing your $3,000.

[Ponderosa]

You could walk away on the 3K, then go right back into the sales office and buy another and still be way ahead. Just watch that you are comparing apples to apples. I have noticed that the price cuts at some of the builders are accompanied by feature cuts too. Things like making rounded corners optional, eliminating patios, and jacking up prices on options. I also second the post above to watch who you buy from these days. Many, if not most of the builders who were household words around here went under during the last housing crunch in the late 80s/early 90s.

[jco]

This happened to several friends of mine, and they marched right back into the sales office and received a much lower price on the house. They would rather keep you as a buyer than see you walk and go somewhere else. If, for some reason, they don't, I'd wave goodbye to the $3k and find another house.