Buyer's remorse - Backing out after signing contract - New build (mortgage, mortgage)
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Virtually never true in a Builder contract. They are very well written legal documents that screw the buyer.
Been forever thus.
That won't work in states with HOA disclosure laws. Virginia law mandates the buyer has 10 days upon receipt of documents for a get out of jail, free of charge. No contract can supersede consumer rights. I am pretty certain Washington and Oregon are heavily consumer biased.
OP, I have a state by state list of HOA regs, I will see if I can find anything to help (over the weekend, I'm under water right now)......but DO contact your Realtor sooner, than later.
how do you sign a purchase agreement without having the loan/mortgage in process?
I would think that if you didn't get a mortgage loan, that would be an easy out.
Not in my new construction contract it wasn't. I had to go through a preapproval with the buyer's preferred lender prior to going under contract - I wasn't required to use them but I had to get the preapproval to show I was a qualified buyer. But that was months before the house was scheduled to close, before they had even broken ground. There were subsequent benchmark dates for when I had to have my financing, but it wasn't that early, and nothing could have been approved at that point because who knew where interest rates were going to be 4, 6, 8 months down the road.
As it was, my builder ended up having to pay for a rate lock extension because they missed the closing date, which had already been pushed out a few times from the original estimate.
We built with Toll in 2012-13. The contract was an inch thick (at least). Our realtor advised us to read it and accept that any good faith deposit would be gone if we cancelled (unless we couldn't get financing which would never be the case). The builder sales agent made it crystal clear that no changes to the contract would be alliwed.
Of course, that non refundable clause bothered me, so our agent suggested that I have an attorney look it over. I immediately called my lawyer, who transferred me to the RE guy in his practice. He asked who the builder was and told me straightaway that they would not change anything. If we cancelled, we would be out the GF deposit. He told me to not bother paying him to read the contract - that I should read it myself and send him sections that I needed clarification on.
In our case, the builder required a larger deposit, a percentage of the total purchase price.
After they added in our options, we're talking about a GF deposit of $27 grand.
Yeah, I hated it. But we signed and could not be happier.
OP, I think you probably found your answer, or at least the quick and dirty one. But yes, of course talk to your agent - not just about the possibility of getting out of the agreement but about your concerns and why you are thinking that you want to including the questions Mike J posted upthread.
Buying a home is a huge undertaking and building new construction is an order of magnitude bigger than that. So without knowing your full thought process here, it's certainly possible this is normal cold feet and you just needs to more detailed answers and reassurance, along with some discussion of the options you do have at this point if you really do want to walk away.
Another question is how popular this subdivision is. I live in a super hot area full of new construction and I do know some people who were let out of their contracts because they builders have waitlists of people who are only too happy to take over the purchase.
One thing I wanted to add - just because the contract has a non-refundable deposit doesn't mean you are stuck buying a house that is all messed up. I had two inspections on mine - pre-drywall and then again before closing. Pre-drywall, there were a couple of minor things the inspector pointed out that were taking care of without any formal report. Pre-closing, I gave a copy of the inspection report to the builder and they created a punchlist with I think 27 separate items based on the report and every one of them was completed prior to closing, along with things the building superintendent and I had noted ourselves as we walked the house and blue taped anything we noticed. And there were still issues that came up after closing that were taken care of during the first year warranty.
There's no denying that the contract favors the builder. But that doesn't mean the builder is looking to screw over their customers. Even a tract builder depends on good reviews and favorable word of mouth and wants to end up with satisfied customers as long as their expectations are realistic.
how do you sign a purchase agreement without having the loan/mortgage in process?
I would think that if you didn't get a mortgage loan, that would be an easy out.
My thoughts also.
This sounds like a good way for builders to convince unqualified purchasers to provide construction capital in the form of a deposit with the intention of flipping the completed home after the original buyers suddenly get turned down for a mortgage.
Beazer got in massive trouble over this practice during the housing crash.
Hi all,
We signed a purchase agreement, paid earnest money and now we are having second thoughts about the purchase.
It is a new construction (subdivision of 50+ homes, volume builder). The estimated date of completion is 4 months away.
I have paid earnest deposit of about 2%.
Here's the contract text:
1. I assume that there is no chance of getting the deposit back if I back out.
2. From the above text, looks like worst case is I'll lose the earnest money I have paid. Is there anything else I should look out for?
Thanks!
You need to speak to your real estate attorney. I wouldn't count on getting any money back after signing a contract agreeing to build a house.
......Seller shall be entitled to keep, as liquidated damages and not as a penalty, Buyer's Initial Deposit not to exceed five percent (5%) of the Total Purchase Price,.......
It looks to me like it will cost you up to 5% to get out of the contract. 5% is pretty darn cheap to get out of an expensive contract if you really don't want the house. It could be a lot worse.
Reading Seattler's post, it reads as though they bought almost on impulse, with nether buyer's agent nor an attorney. And later they state they still don't know what they want to do. If no HOA out is available and they really want out, their best hope is openly saying they screwed up and could they please get their earnest money back? I'm afraid an attorney would simply add to their loss. One might think the builder would react more favorably if faced with a lawyer, but more likely they've got plenty of their own on retainer.
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