Pre-construction nightmare- Issue with Centex townhomes in Ashburn (how much, townhouse)

[Fairfax Mom]

My home was built in 1972 and has re-done bathrooms and kitchen so it is nice but small.
Since the value went down I am stuck here

[LLD]

One of the reasons that existing houses are going down is because builder's are dropping prices and offering all kinds of incentives and upgrades too. This is a national phenomenon right now. Existing homes where I live are just sitting big time because builders are offering up to $35K in upgrades and have reduced prices etc.

That won't happen quite as much in NOVA because there is not tons of space for new home building unless you go out a ways but it will happen in those few areas where new construction is going on. I bet it is happening in several of the far out commuting areas like Gainesville area too.

[libgyrrl]

To the person who told us to go back to talk to Centex-

That's our game plan. We have tried to let them know that we aren't happy, we even wrote a letter, but they pretty much told us that there's nothing they can do. We're in the process of shopping around for a real estate agent who can give us a rebate. That way we won't feel the burn of the 10K as much. Once we decide on a house, we'll go to cancel our we have options.

[Yankeesfan]

Libgryll, do you currently own a home, or is this your first home purchase? I ask because if you buy a different house, the price may drop proportionately after you move in, whether it's new or resale. So you'd still be losing out in the short-term. But if you currently own a house that you would stay in, it might be worth staying and waiting out the slump. One key factor is how long you plan to stay in the area, so that there is not a risk of having to sell in a few years for less than you paid, whether it's this Centex house or a different house that you buy instead.

[memiller]

You're trying to find a realtor that will give you $10,000 back if you buy a home? Why do you think that's a good plan? If you purchase a $500,000 home (similar in price to your Centex home) that offers 3% to a realtor, that's a $15,000 commission for the brokerage. The realtor gets a percentage of that $15,000. At 80% that's $12,000 for the realtor. You want the realtor to give you $10,000 of the $12,000 to cover your lost deposit? The realtor who does that will still have to pay taxes on the $12,000. If the realtor pays a low 25% tax rate, that's $3000. So, you're looking for a realtor who will pay $1000 out of his/her own pocket so you can buy a home? Good Luck.

[Margery]

Although I do give rebates to buyers who find the home themselves, I doubt if the builder will pay commission to an agent if you have already registered with them. You usually need to have an agent registered with the builder before you sign a contract. Check with Centex to see if that is their policy. The rebate will have to be approved by your lender, and I require that it be shown on the settlement sheet.

[HEATHER72]

I don't see what the problem is. Say you paid $500k for a house and $15k of options were included. Someone comes in now and the house is $485k, but don't get the $15k worth of options. Where is your loss?

[jenluvshomes]

Originally Posted by 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!!!

I would suggest that you ask the builder for the price diffrence. I don't know if anyone has already said this but that would be my first step. If your home hasn't even started they should give you the 15k diffrence and let you keep your options. They are playing it on an angle that they are not giving that 15k in options anymore. They probably are, have a friend secret shop them to find out what they are really offering. I would definantly take it to the top to get the $15k shaved off your contract, they don't just want your contract they need it.

[idburns]

We are currently building a stacked townhouse in Gainesville with Centex. Within a month of us signing our contract the price of our model went down about $10k. One thing in our favor is that anyone who bought after us aren't receiving the $1200 for washer/dryer or the $13k downpayment assistance that we are receiving, they are only receiving $7500 or so. Also, only one more building is being constructed after ours so they are really trying to just finish the development.

EDIT: Centex is also giving my buying agent 3% outside of the money they are offering me.

[handy man88]

Originally Posted by 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.

Sounds to me like you're breaking even, but I would look for the prices to continue to drop as the market slows even further as we near the cold months. Anytime after August, the real estate market slows to a standstill until February depending on how soon it starts to warm up.

I predict that your builder will continue to put up homes even though there are no contracts for them, and once they are built, your builder will put them up for sale at an even lower price.

Your location in Ashburn is so far from DC. The greater the distance from the DC beltway, the greater the drop and the longer time required for recovery.

If you're not planning on selling anytime soon, then the reduction in property values will result also in lower property taxes.