I may have messed up home purchase! (Dallas, Paris: sales, real estate)

[ParisBurns]

OK, here goes:

We made an offer on a builder spec home that is set to close in a few weeks. It was kind of spontaneous; even though we had been talking about buying a new house for some time, we never hired an agent (mistake #1) and would just occasionally look at houses that we thought looked appealing (usually at open houses).

Well, we went out one Saturday a few weeks ago and looked at a spec home that was already completed by a local builder in a new subidvision being built. We liked the property and ended up making an offer (mistake #2, I think) about 3% off the asking price (which was already discounted 7% because of a promotion they are running). They accepted the offer.

OK, I already know we made a mistake by not hiring an agent, so I deserve any harsh words for that mistake. It was kind of a spontaneous move and it didn't really cross our minds since it was a new house (though we had previously worked with an agent on an offer for an existing home we made a few years ago). In researching things after the fact I realized that an agent would have been very helpful even on new home because I am no real estate expert.

I am now very concerned about a few things:

1. That we overpaid for a property they had been trying to move for a few months, and at one point as recently as December had even listed for not much more than what we paid (so it seems like they inflated the price back to its original level so they could tack on their 7% promotion and still be higher).

2. That apparently the builder is running into some problems moving houses in the subdivision, because they are trying to sell some of their remaining lots to another builder.

3. The subdivision is really new and there are only a few houses that have been completed with families living in them.

If we back out of the contract, we will lose our earnest money, but I am OK with that if it prevents us from making a bigger mistake in closing on a house that turns into a financial nightmare. The thing is that right now, I don't know exactly who I can get good feedback from. I guess it's too late for me to hire an agent since the contract is signed.

I am just looking for the best way to have someone review this but can't really afford to pay 3% out of my pocket since it is too late to get the builder to pay the commission. Any ideas?

(I want to feel good about this purchase but instead have been stressing over this ordeal for a couple of weeks now. I wish I had discovered this forum a few months ago.)

[austin_or_sd]

you shuold be able to get your money back. I bought a spec home and asked question specifically on my earnest money, I was told that I can get back at any time. Besides, you can list a ton of reasons that let you back off the deal.

[austin-steve]

You're experiencing buyer's remorse, which may or may not be justified.

Originally Posted by austin_or_sd

you shuold be able to get your money back. I bought a spec home and asked question specifically on my earnest money, I was told that I can get back at any time. Besides, you can list a ton of reasons that let you back off the deal.

You'll need to read the contract you signed. That will determine what you can or can't do with regard to canceling the purchase.

Without know all the details (neighborhood, sqft size, finishouts, price point compared to surrounding homes, position/location of the home in the development, estimated build-out of the neighborhood, utility info, property tax rate, HOA info, etc., I don't think anyone on a forum like this can know whether you made a smart buy or not.

Read your contract. It should have a clause for delivery of HOA documents. In the standard resale contracts, a buyer can terminate the contract after receiving the docs. Your builder probably has his own contract, so it's hard to know what it might say. Either way, you need to read and understand the rules and regs.

Good luck,
Steve

[austifornian]

Originally Posted by ParisBurns

I am just looking for the best way to have someone review this but can't really afford to pay 3% out of my pocket since it is too late to get the builder to pay the commission. Any ideas?

You'll have to do your own market research to ascertain value but you can hire a real estate attorney to go over your contract with you to help you understand all of your options. This will cost you anywhere from $100-$300/hr and you can get a lot of information and a good overview of your options in one hour.

[Trainwreck20]

I would have to agree with Steve....right after I purchased my first house, I about freaked out thinking I had really screwed up. Truth be told, yes, I probably could have gotten a better deal, but I ended up loving the house and it wasn't like I paid double the price or anything...I just probably could have gotten it for 2% (or maybe even 3%) less. Regardless, I lived there for 6 years and sold it for quite a bit more than I paid for it.

Research your neighborhood, possibly with the help of a friend with access to the MLS data. If you price does not seem over the top, I would not worry about it. If it appears that you are paying considerably more than comps in the area, look at how to back out or renegotiate. I suspect that you may have to contact a realtor for the best way to do that, but if he/she can get you out of a bad deal, then I am sure you would employ them in your next deal .

[NS_Highlander]

Another thing you can do is get it inspected and back out if you find any major code issues. A favorite of mine is to check and see if the windows have been flashed before installation. This code in most places and is what the manufacturer recommends. A lot of builders manage to get away with not doing it somehow. Take a look at how they are building the houses right now (if they are) and see if this could be an issue.
The way I see it, go with your gut. You only signed a contract, you didn't close. Buying a house is like getting married. You only proposed but haven't met the builder at the "altar".

[llkltk]

Believe me, we all feel screwed once the contract is signed. We are building a home, got great incentives and a discount and still feel like we got ripped off. We even used a realtor. I think it's normal to feel this way. If you like the house, buy it, if not, ask for your money back.

[austin-steve]

Originally Posted by llkltk

Believe me, we all feel screwed once the contract is signed. We are building a home, got great incentives and a discount and still feel like we got ripped off. We even used a realtor. I think it's normal to feel this way. If you like the house, buy it, if not, ask for your money back.

There is an explanation for this feeling. It's a result of having too many choices nowadays. No matter what you pick, you didn't get something you could have had in one of the other homes you saw, and you'll always wonder if you would have liked it better.

Check out this video on the Paradox of Choice
The Paradox of Choice - Why More Is Less

[debskipper]

Don't worry. I have been a loan officer for 15 years in the Dallas area. Your emotions are natural but the system is designed to protect you. Unfortunately, I don't think having a realtor would have prevented this situation so don't beat yourself up about that. Market value is a very difficult thing to determine in today's market. And yes, builders are in a very bad situation trying to get inventory homes off of their books without loosing too much money. It is not uncommon to see 30 - 50K discounts in our area. They are trying every tactic they can think of to encourage business. Lowering the sales price, raising the sales price with big incentives, free pools, just to name a few. The appraisal that is done in conjunction with your mortgage is designed to protect you from paying too much. If the appraiser works regularly with the builder, he or she may give the builder any benefit the market has - in other words, she may be tilted towards the builder. If she came back with a low appraisal on a builder she had a relationship with, it would be BAD business. You can always request another appraisal from someone that you choose or from someone that doesn't work regularly with the builder. I hope this helps.

[ParisBurns]

Thanks everybody for the input. I really appreciate it.

Yes, I have considered that I might be having buyer's remorse, there may be something to that. :-)

I guess the worst feeling is that I overpaid by $15000 or more...there have been just a few other spec homes in the neighborhood that have sold, is there a way to find out sales numbers on those? Do they get posted in the MLS? (I think the homes were listed there.) Do any realtors offer advice/research on a fee basis (per hour or something)? I called a couple on Friday and neither were interested but did want to list my current house. :-) (We are not selling at this time.)

We are using the builder's lender and they are taking care of the appraisal for the loan, plus we are putting 20% down, so I have no doubt it will appraise where the builder wants it to. It seems like it would be hard to appraise anyway since there have only been a handful of sales in the subdivision.

The contract does clearly state that if the sale does not go through I will lose the earnest money. I can accept that loss if it saved $15000 though!

Ugh, I thought buying a car was stressful...maybe this is normal, we have only bought one house before and we knew we did well with that purchase, so I never had this feeling.