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Old 04-16-2008, 01:42 AM
 
Location: Apex, NC
78 posts, read 199,308 times
Reputation: 54
Default What should I look out for when breaking contract with builder?

I have signed a contract for a new build townhome in January, with a completion date promised from the builder of April-May. Now after a couple of months of delay, they have now said that the home will not be completed until July-August.

Added onto that frustration, house prices in the community are dropping and the builder are offering more money in incentives. We have 7000 in incentives, and now the incentive amount is 17000.

I have toyed with the idea of breaking contract with the builder as there are a growing number of other deals that I have found in other communities. However, I really like the house and community that I am buying into. What pitfalls should I look out for when breaking a contract with a builder? I have done some research on line and have seen some cases where other home buyers have gotten price breaks from their builder even after the buyer has signed a contract. Has anyone heard of this before, and in what types of situations has this type of price reduction occured?

Thanks for any feedback.
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Old 04-16-2008, 07:16 AM
 
15,385 posts, read 19,878,432 times
Reputation: 6435
Yes I heard of a friend who went to the builder and told them he would walk away and leave the deposit if the builder wouldn't give more incentives since the builder had promissed prices would stay the same, which was actually true, but they just gave more incentives which makes the prices lower in a way. They got $ 10 K from the builder, so they closed and are very happy.
It all depends on your contract and how much deposit you have put down. If the money you lose is less than what you can gain without having getting legal issues, I would first talk with the builder and explain what your thoughts are and decide later if it is smart to walk away. It is your money you can only spent it once and you should try to get the best deal. Are you working with a realtor? If so the realtor should talk with the builder and in that case I would be present during that conversation and have it in person in the sales office, not over the phone.
We had it once our self and to be honest, we didn't have a realtor and didn't do it in person but prefered email and we got after 2 x trying, also a cheaper amount.
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Old 04-16-2008, 11:54 AM
 
Location: Johns Creek, GA
6,582 posts, read 20,192,424 times
Reputation: 5072
My first question would be why?
Why hasn't construction started? Is the builder in financial trouble? Or did you have a contengency? This list could go on for a while-
As it is right now- you can ask/demand just about anything. Doesn't mean you're going to get it. Then again, they may bite and do whatever to keep the contract.
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Old 04-19-2008, 04:06 AM
 
Location: Apex, NC
78 posts, read 199,308 times
Reputation: 54
Quote:
Originally Posted by K'ledgeBldr View Post
My first question would be why?
Why hasn't construction started? Is the builder in financial trouble? Or did you have a contengency? This list could go on for a while-
As it is right now- you can ask/demand just about anything. Doesn't mean you're going to get it. Then again, they may bite and do whatever to keep the contract.
We are buying into a townhome community and the other townhouses in our unit where all under contract. When they where ready to start the building process, one of the contacts in our unit fell through. They never told us this. The sales agent just kept saying, "we are going to start next week". We did not find out that the actual reason until that other home was under contract. I figure they did not want me to also leave my contract.

I do plan on doing what you suggest and pursue getting an increased incentive. I think they would rather keep me under contract than have an open home again waiting for a buyer.
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Old 04-19-2008, 06:36 AM
 
15,385 posts, read 19,878,432 times
Reputation: 6435
Quote:
Originally Posted by greekboy799 View Post
We are buying into a townhome community and the other townhouses in our unit where all under contract. When they where ready to start the building process, one of the contacts in our unit fell through. They never told us this. The sales agent just kept saying, "we are going to start next week". We did not find out that the actual reason until that other home was under contract. I figure they did not want me to also leave my contract.

I do plan on doing what you suggest and pursue getting an increased incentive. I think they would rather keep me under contract than have an open home again waiting for a buyer.

Good idea. How much did you pay as a deposit? In todays market if you don't have high amount you better walk away if the other homes difference is higher than your deposit.
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Old 04-19-2008, 08:31 AM
 
Location: Great State of Texas
73,364 posts, read 33,588,577 times
Reputation: 17428
Not even started yet ? That should raise a red flag. Find out why ?
Losing your deposit by walking away could turn out to be the best thing you do.
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Old 04-19-2008, 01:16 PM
 
Location: Charlotte, NC
422 posts, read 831,466 times
Reputation: 221
Read your contract carefully... most builder contracts have a clause that state that the builder has a certain amount of time to build your home before they can deem the contract void.

My company is 9 months and my last company they had up to 2 years to build the home.
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