BUILDING NEW HOUSE + deposit (Meadow: hardwood floor, mortgage, credit) - Houston - Texas (TX) - City-Data Forum

7MEADOW · 09-25-2008, 10:34 PM

We are currently having a house built. We were given a good faith approval by their mortgage company for the initial cost of the house. After visting the design center the price increased by 30k. I contacted the morgage company and 2 weeks and haven't responded to the increase in price. The builders require 22k additional deposit for the design center upgrades. My fear is that with the current financial crisis we might not be able to get a mortgage and the builders will keep the 20,000 plus 5,000 earnest money given to them. We signed a contract about 2 months ago and recently they sent us an adendum that states that if for any reason we don't purchase the house, they keep all of our deposits. Is it legal to add this adendum to a signed contract?? Can they keep the deposits in case we are not able to fund the purchase?

Regards

chris_ut · 09-26-2008, 07:48 AM

If you can not purchase due to inability to finance then they can not keep your deposits. That only applies if you walk away of your own choice. Also you can negotiate that deposit. We had 30k in builder upgrades but we only put down like 6k of that for a deposit on our house.

Houston456 · 09-26-2008, 08:08 AM

Design center is known as 'Profit center' in the internal circles of any builder. This is the place to negotiate.

Quote:

Originally Posted by 7MEADOW

We are currently having a house built. We were given a good faith approval by their mortgage company for the initial cost of the house. After visting the design center the price increased by 30k. I contacted the morgage company and 2 weeks and haven't responded to the increase in price. The builders require 22k additional deposit for the design center upgrades. My fear is that with the current financial crisis we might not be able to get a mortgage and the builders will keep the 20,000 plus 5,000 earnest money given to them. We signed a contract about 2 months ago and recently they sent us an adendum that states that if for any reason we don't purchase the house, they keep all of our deposits. Is it legal to add this adendum to a signed contract?? Can they keep the deposits in case we are not able to fund the purchase?

Regards

surfs1st · 09-26-2008, 08:43 AM

Quote:

Originally Posted by chris_ut

If you can not purchase due to inability to finance then they can not keep your deposits. That only applies if you walk away of your own choice. Also you can negotiate that deposit. We had 30k in builder upgrades but we only put down like 6k of that for a deposit on our house.

Ditto. They can not keep your deposit if you can not get funding. It should say as much in your contract, if it doesn't, make them add it.

The design center is a joke, they offer the house at a ridiculusly low level and then tack on 30- 40 in "upgrades." Of course these upgrades could be done by an indpenedent contractor for half the cost. It's straight profit for the builder and where they make up on their loss on selling the house so cheaply.

My wife and I wanted hardwood floors throughout the first floor of the house we are building, they added nealry 15g to the price of the house. These were also low quality hardwoods, so we opted to have them install carpet and got a quote for putting in a higher quality hardwood. The quote came in at half of what the builder was charging.

desertsun41 · 09-26-2008, 09:57 AM

Quote:

Originally Posted by surfs1st

Ditto. T

The design center is a joke, they offer the house at a ridiculusly low level and then tack on 30- 40 in "upgrades." Of course these upgrades could be done by an indpenedent contractor for half the cost. It's straight profit for the builder and where they make up on their loss on selling the house so cheaply.

My wife and I wanted hardwood floors throughout the first floor of the house we are building, they added nealry 15g to the price of the house. These were also low quality hardwoods, so we opted to have them install carpet and got a quote for putting in a higher quality hardwood. The quote came in at half of what the builder was charging.

This is all exactly true. You can indeed get the extras done for half with your own contractors but you would have to pay it out of your own pocket rather then getting it financed.

You would be paying the builder to do what you should be doing. You want hardwood floors, the builder hires a hardwood floor company who charges the builder $5000, the builder charges you $10,000. The builder made all that money for coordinating the contractor. Isnt that something you should instead do?

But again, when the builder does it you can put the cost into the mortgage and not have any out of pocket expense.

chris_ut · 09-26-2008, 11:28 AM

Quote:

Originally Posted by desertsun41

But again, when the builder does it you can put the cost into the mortgage and not have any out of pocket expense.

Good point, why pay 5k for hardwood floors when you can pay 10k to the builder plus another 10k in interest to finance it for 30 years

LostInHouston · 09-26-2008, 01:33 PM

Quote:

Originally Posted by chris_ut

Good point, why pay 5k for hardwood floors when you can pay 10k to the builder plus another 10k in interest to finance it for 30 years

Or just wait until the end of the year and file for your $7500 1st time home buyers (no interest loan) tax credit. Use that money for upgrades.