Advice needed on getting out of builder's contract with some $$ back (feedback, square foot)
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Found a great Santa Fe style model in southern AZ. Price was great for the quality and the floorplan was better than I'd seen in the 3 years I spent searching on every trip I took to Arizona.
March - put down $2500 - and prequalified. Signed contract and put down additional $12,750.
Went back in early May to pick upgrades. Noticed a house at the bottom of our street was 2 stories when the company had promised us that strip would only be one story homes. This was important to us because of the view of the Mountain.
We had intended to bump out the house by 4 feet which they knew. The sales person took me to a cul de sac lot with amazing views that was $17,000 more than the lot premium we were paying and said that if we were committed to bumping out the house and since we were looking like we would be spending 20,000 or so on upgrades - they would give us this lot instead for the price of the less expensive lot.
She did a transfer and put the price of the bump out on the contract instead of putting it in as an upgrade.
Worked long distance with design center on upgrades. They are very slow and months go by. All of a sudden it is discovered that when they put the extended house on that lot - the driveway is such that getting two cars in the garage at an angle is not going to work. House can't be straight because it would overlap the setback. They try to get a variance two time and it is rejected. Now we can't have a 4 foot extension on the house. So - we decide to accept this and bump out just the porch and add a few upgrades.
They did a new addendum taking off the 4 foot extension.
The base price is $304,990. We were getting to about $325,000 - $330,000 with upgrades. All of a sudden I get a heads up that one of the homes did not appraise for the sale price. Granted it was a home with a huge amount of upgrades but we got nervous. Checked with the county - discovered much to my surprise the homes are selling for $10,000 to $30,000 less. One house was advertised as being $30,000 below the cost of the current model.
We didn't see this coming. Back in March the sales office was busy with people buying homes and the price was so much lower than the Southern AZ market in general and with that view and lot - we were not worried. And, it was our first experience buying a new construction there was a lot we didn't know.
We've saved enough for the down payment but not enough to have to pay an additional $20,000 to cover the difference between the appraisal and the sale price.
Most recent glitch was the special parapet roof I wanted and had a price on for the front and back - is no longer an option because the builder had one leak recently. I also had to strip our options down to bare bones to try and get the price down to what it "may" appraise for. But - even the base price is higher per square foot than what homes are selling for in that subdivision.
There is no protection for us in the contract in the event the house appraises for lower than the sales price. The language is something I'm not clear on so I am trying to find a lawyer.
1) We have not signed for the upgrades yet. The final list will be in my hands today or early next week.
2) We have not signed the final plot plan yet. We got that the end of last week.
3) No foundation or building has occurred as yet.
I have not heard back from the three lawyers I contacted yet and am anxious for some feedback. Anyone hear have any insight? Is it possible to get earnest money back - or at least part of it? I'd be ok with letting them keep $2500. What are my chances? In addition to the low appraisals - this is just not the house I envisioned or wanted any more.
Two builders that I have worked for in the past would probably refund your earnest deposit minus any "design work" that has been done or an administrative fee for the salesperson's/design center worker's time, plus any permits they may have acquired so far on your behalf. The fact that the house hasn't been started yet is a big benefit in your favor.
It sounds like the salesperson was not up to speed on what was allowed and not allowed on particular lots in regard to setbacks. And the fact that you thought you could get two major upgrades (the bumpout and the added roof details), and then couldn't, would be a major deal breaker for me personally.
Before going to an attorney, I'd just go straight to the sales manager and ask to be let out of the contract and get your earnest deposit back because of the issues. You may not even need an attorney. Be sure to detail each and every occurrence of dissatisfaction, with dates, names, details, etc. Were you working with a buyer's agent?
As a sales manager, the last thing I would want is a very unhappy homeowner moving into one of my developments right from the get-go. An extremely unhappy customer can kill a project (or at least greatly hurt sales in an already down market).
My agent is also a friend. I had advice (after the fact) that an agent should always make sure there is an out in the contract and when I told her - she had no idea you could negotiate with a builder on their contract or draw up a new one. In fact, she bought a house with the same contract as well.
I do have lots of detail because I do everything in emails and save them all in my Arizona file. I've spoken with the top broker/sales person for the company already but not in as much detail as I have here. We talked about the low appraisals and she claimed we'd be "ok" at $165 per square foot. When I asked for sales info - she was not forthcoming so I investigated it myself. Sure enough the facts did not back up her claims.
I wanted to contact a lawyer - not to sue them but perhaps we are overlooking something in our contract and I wanted to run it by a Lawyer who knows Arizona Real Estate law. But - I do see your point and I agree - they don't want me (or anyone - but especially me) as an unhappy client. ;-) I'm just one of those people that don't take no for an answer. Can't help it - I'm a New York City type person (lived there for 16 years).
Glad you agree about the glitches they made.... I do think it is a strong point.
I can just hear them though - saying they will give me another lot so I can do the bump out. There is a lot next to it that is larger but it is next to a huge two story that I don't like. However, it is a combination of things not just the 2 things they suddenly found out they couldn't do after agreeing to do them.
Thanks for your feedback - I really appreciate it!!
My agent is also a friend. I had advice (after the fact) that an agent should always make sure there is an out in the contract and when I told her - she had no idea you could negotiate with a builder on their contract or draw up a new one. In fact, she bought a house with the same contract as well.
I do have lots of detail because I do everything in emails and save them all in my Arizona file. I've spoken with the top broker/sales person for the company already but not in as much detail as I have here. We talked about the low appraisals and she claimed we'd be "ok" at $165 per square foot. When I asked for sales info - she was not forthcoming so I investigated it myself. Sure enough the facts did not back up her claims.
I wanted to contact a lawyer - not to sue them but perhaps we are overlooking something in our contract and I wanted to run it by a Lawyer who knows Arizona Real Estate law. But - I do see your point and I agree - they don't want me (or anyone - but especially me) as an unhappy client. ;-) I'm just one of those people that don't take no for an answer. Can't help it - I'm a New York City type person (lived there for 16 years).
Glad you agree about the glitches they made.... I do think it is a strong point.
I can just hear them though - saying they will give me another lot so I can do the bump out. There is a lot next to it that is larger but it is next to a huge two story that I don't like. However, it is a combination of things not just the 2 things they suddenly found out they couldn't do after agreeing to do them.
Thanks for your feedback - I really appreciate it!!
You're welcome. You're right in that they will probably first try to get you to switch lots. They may even throw some money your way to offset the "misunderstandings" about the roof detail, bumpout problems and the other poor customer service experiences. You have to make a decision as to whether you would accept those before you even meet with the sales manager/broker. They may give you another lot and not charge the site premium, or give you other upgrades for free. But as a good friend and builder used to tell me "You can't buy customer satisfaction, you have to make the problem right some way or another". If you get customers to accept the deficiency and throw money at them, they will always and forever tell friends and family about the "4' bumpout they never got" or the "parapet roof that was supposed to go there". It's a no win situation, but not all builders are as customer conscious as others.
If appraisals are coming in lower than construction costs, that's a scary situation to get into. The builder cannot control the market forces at work in that area though and there might not be any recourse on that portion. But obviously the builder is "over-building" for that area IMO. But yes, the combination of all those things would cause me to rethink the whole thing. Personally, I'd go in with the intent of getting my entire deposit back, and then let them negotiate any "fees" that they think are fair from there.
I entered into a builder's contract with a general contractor to build a modular home in NY. We agreed on a price. A year later, after we finally got the permit from the town, my builder tells me it costs 20% more to prepare the land for the foundation. This is way exorbitant and I can no longer afford it. Our original contract was so weak, I don't have any provisions for things like this. Can I get out of the contract? thanks.
That is one of the stupidest things I did. Did not consult a lawyer before signing contract. Contract is straightforward. If I refuse to pay him, I lose the 10% down payment I made. I am prepared to lose it, because it's my fault for not getting a lawyer. What I want to know is how I could avoid a Mechanics lien or a lawsuit from him. There is no foundation, no work done yet, other than the permit that he worked on. THanks.
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