Real Estate Contract Advice (sale, real estate market, mortgage)

[mavprah]

We signed a contract to purchase a custom home last August. Subsquently the real estate market and the value of the custom home has fallen at least 50K. But the cost of the custom home keeps going up at each stage.

What are our options in terms of possible renegociating the final selling price. Or Walking out of the contract and possible lossing our earnest money of 100K

Please advice.

[eikalilos]

Doesn't seem that responsible to back out of a $50k loss only to lose $100k earnest money. But there may be things that we don't know (ie how much longer it will take to get the house, etc.)

This recent thread might provide some information for you to read while you're waiting for other replies here.

Good luck with whatever you decide to do.

[5stones]

in hte past people have worked with the builder in such a situation and gotten more "upgrades" etc... put in. Talk with hte builder and expalin what you are concerned about. Believe me in this market they don't want to be stuck with the house!
You will probably NOT getting any money back off money off the price you signed the contract for. After all it's not the builders fault the market tanked. But they may be willing to do some nice upgrades and better landscaping etc...gfor you.

[Hokieed]

I advise living in the house for 10 + years. Heck, just stay till the end of your mortgage and the home is paid off. The value has got to be back up by then.

Is it a good neighborhood?

[Fairfax Mom]

Looks like you are out of luck unless there is some kind of loophole in your contract

The value will probably go down much more before you close -

[ACWhite]

ask a good real estate lawyer to review your contract - there is a lot of money involved.

[Mr. Mark]

The real question is - can you afford the house and payment at the contracted price? House sale prices will always change with supply and demand. Just because prices have dropped doesn't mean that it still isn't a good buy for the long term. If you didn't plan on staying in the house for at least 3-5 years you shouldn't have bought it in the first place.

Location, condition, and price are the three main ingredients to any house sale. If the house is in a good location with attractive ammenities, and you take good care and continue maintenance of the house, when the time comes to sell in 3+ years you should be in good shape.

If you can't afford the estimated payment for the next three years contact a real estate attorney NOW. Every builder will scratch and claw to hold onto as much of your earnest money deposit as possible but they don't want to go public by taking you to court. No builder wants to be known as "The Builder who Sues Buyers".

Good Luck!

[Espressoo]

Tough situation that I'm going through right now. Come next month, our contact will have been 1 year and the home is still not completed. We complained at each price drop and changes to the new community and only managed to get a few options thrown in after threatening to walk several times. The builder really doesn't want to lose an existing qualified customer so they might be willing to work with you but will not be likely to drop or adjust the price. Of course, it wouldn't hurt to try asking.

What I'd do is state your concerns about the market and note any delays in construction. If you know they dropped the base price, firmly address that and ask for a detailed comparison sheet and possible adjustment. If they are unwilling to do so, which is most likely the case, ask for added options at no cost after viewing the comparison. For example, if they're now offering a free rec room as a current incentive and you do not have that as an option, ask for it. Given the time and effort they put in with you as a client, the least I would predict is they give you those options at 1/2 price which still covers their cost. It's going to be a tough battle but all you can do is ask and provide a convincing argument to walk.