Pre-construction nightmare- Issue with Centex townhomes in Ashburn (Fairfax: sales, real estate market)

[libgyrrl]

We purchased a townhome from Centex homes- The Glen at Goose Creek- about 2 months ago at a great "pre construction" price. The builder assured us that we were getting the best deal and the price would only go up from that point on. We expect the home to be ready next Spring.

This is our first home and we arranged with the builder to pay the honest money deposit in three installments of 5K each. We've paid the first two deposits and the third is set to be paid on October 1. and We found out today that they have dropped the price on our model and all of the other models by 15K!!!!!
Are we stuck? We've read over the contract and I think we would definitely loose the 10K, but its not clear if we would also have to shell out the last 5K.
Also, at the end of the day, if we are loosing a total of 10 or 15K, is it really worth it? I think we should cut our losses and get out now before they take the price down even more and we're stuck with an overpriced home.

My husband thinks we should go forward and not risk loosing our deposit with the hope that the market will bounce back. Please advise!!!

[DavidS827]

There is no doubt you will lose the 10k. I doubt they would come after for the additional 5k, but it is a possibility. What I suggest is that you take a hard look at the numbers. If they dropped the price of the home that doesn't directly correlate to the amount that you may have lost in home value. The reason being that you don't know what options other people have or will put into their homes. So you may not be down anything. I would also take a look at how long it would take you to recoup that money (10k) if you went out and bought the same house for 10k less. If your mortgage payment was $80 less per month (using a factor of $8 in payment for every $1000 you finance) it would take you over 10 years to get that money back in mortgage payment savings.

[libgyrrl]

thanks. We confirmed today that we would definitely loose our 10K, but they won't come after us for the remaining 5K. The sales agent admitted that they took the price down to drum up more business and that people who buy at the reduced price won't get the 15K in options that we have. We definitely have a lot to think about....

[Tish Thompson]

Lib, If I were in your situation, I'd proceed with the purchase. The prices have gone down a little but when you look at the numbers, a 15K decrease in the sales price makes very little difference in your monthly payments. Also, the market decrease is temporary. Buy the house, stay in it for 3 or 4 years and then sell it.

[memiller]

You were comfortable with the house at the price you contracted for. Don't worry about what other homes sell for. If you plan to live in yoru home for years to come then it will all even out in the end.

Chances are you aren't spending more then those buying today. When builders drop their prices, they usually make up for it by taking away included features. It's possible at the price you paid, you got a free sunroom or extra hardwood. At the new price, those things were probably taken away. If you decide to back out, all hope is not lost. You may still get to use your deposit with another Centex purchase. The realtor you used to help purchase from Centex should be able to advise you on what your options are.

[mosley06]

I think you can recoup the $10,000 in the resale market, plus get a home that already has the upgrades that you are looking for at a cheaper price. So don't be afraid to back out of the contract, if you can find a better deal.

[Nancy in Nokomis]

I have been reading a bunch of articles and they all say the market in this area is gowing to drop even more - so if you stay at least 6 years you shoulde be O.K.
The home I just bought has already gone down 50k

[libgyrrl]

Thanks for all of the advice. Keep it coming!

Fairfax Mom: Did you buy it new? Are you going to stay put?

I found out that although they lowered the price by 15K, they are not offering 15K in options (that's what I got) to the folks who would be buying after me. So at this point, it evens out. Hopefully it won't go down anymore.

[Margery]

If your home price includes options that the purchasers of the lower priced homes do not have, you are not losing as much as you think. Those options will make your home more attractive in the event you want to sell. You might also consider the tax savings: you will be able to deduct the interest paid on your loan (and, believe me, most of your payments in the first years will be interest) and you will also be able to deduct the real estate taxes paid. There is more to look at when purchasing a home than just the initial cost. Real estate markets go in cycles and this area's real estate always comes back.

[jennirowe]

I know some of buyers who did that. Builder's salesmen are the toughest one. Last thing builder wants to hear is canceling your contract! Toll Brother's contract default rate was 34% last report. A lot of my customers got what they want since 2006. It is your money. Before closing, check everything on your option lists on contract. Almost all builders will change something to cheaper options as far as I know. Because house price is dropping, but builder's cost is up. What do you expect quality?

Good luck,