I signed a ton of papers in March to buy a new built home.... Now with the market, I can't afford it... What can I do??? I signed at 6.5% and if it went over 1% I could get out. Well they are telling me it is 7.25% (wow only .25% away). I am willing to lose my 1.7K deposit if I can just walk away from this... Anyone have any experience or anything with this? Is there a way I can walk from my builder?
2007-11-16 18:01:13 · 8 answers · asked by sooners83 4 in Business & Finance ➔ Renting & Real Estate
You are actually in a very strong position.
There is a huge glut of property on the market and it will not cost you very much to walk away.
The market has declined since March. The price of the house that you are buying is probably far more than the fair market value of that property.
I recommend that you hire an attorney who specializes in real estate law and an appraiser.
Tell the appraiser that you are hiring him to protect your interests. Tell the appraiser that you are concerned that you may be paying too much for this house and that you want a second opinion.
I am certain that the appraised fair market value as determined by your appraiser is less than the amount that you offered for the property.
Give the seller two choices: Either reduce the contract purchase price to the fair market value as determined by your appraiser or agree to terminate the contract and return your earnest money.
If the seller agrees to reduce the purchase price to fair market value, the reduction in the loan amount will probably be sufficient to reduce your payments and the cost of your loan to the level that you originally had anticipated, even at the higher interest rate.
Normally when I purchase a property I use my own contract form written by my attorney that includes language that specifically permits me to do this.
I do not use the builder's contract or a REALTORs contract because those contracts often are very poorly written and often do not include the necessary language that you need to protect your interests..
Since this is a new built home, you are probalby using a contract that was written by the builder's attorney.
The language in these is usually rather draconian and is not in your favor.
Most judges that I am familiar with are extremely hostile to the draconian terms that are often written into builders contracts. Judges often consider the builder's contracts to be quite unfair to unsophisticated members of the general public and often go to great lengths to find a reason to invalidate the builder's contract.
Some people here have said that the builder can sue you. None of them have indicated that they are attorneys licensed to practice law, so I would expect that they are not attorneys licensed to paractice law and they really do not have the training or expertise to say whether or not the builder can successfully sue you.
The people who say that the builder can successfully sue you also have not seen the language of the contract. Without having seen the language of the contract they could not tell you whether or not the builder can successfully sue you even if they were attorneys licensed to practice law.
I recommend that you contact your own attorney who specializes in real estate law to review your contract and give you advice with respect to the proper course of action to take.
The attorney fees that you pay will be much less than the loss that you will face if you go forward with the contract as written or is you walk away and forfeit $1,700..
2007-11-17 01:30:12 · answer #1 · answered by Anonymous · 1⤊ 1⤋
Well you are stuck in the contract. If you walk away from it you are going to get a huge ding in your credit and you can plan on not buying another house for at least 4 years. Could you sell it and by finding someone to take it off your hands lose the deposit but keep your credit? Have you discussed this with a Realtor or an attorney? They can probably give you the best advice after looking at your contract and knowing what options you have. A few hundred dollars to a lawyer at this point might be money well spent!
2007-11-16 18:12:28 · answer #2 · answered by G.T. Hildebrand 5 · 1⤊ 0⤋
Good Luck! All builder contracts are different, I work for a builder and the only way that people can walk away with their Earnest Money is if there is a natural disaster to the home, they can't qualify for a mortgage with in 30 days of signing or it takes the builder over 1 year to build. If you have only put down 1,700 you are lucky - most people put down 5k plus. You may want to have a Real Estate Lawyer look over the contract and see what he/she says.
2007-11-17 06:33:49 · answer #3 · answered by sspice5757 2 · 0⤊ 0⤋
The last answer claims that breaking the contract will put a "huge ding" in your credit rating. I'm not at all sure that is the case. In fact, that's why you put up the earnest money (your 1700 dolllars) in the first place--to give you an out and the seller some damages. That way, everybody gets something. I don't think this involves your credit at all because at this time you don't have a mortgage because you don't have a house!
2007-11-16 20:50:12 · answer #4 · answered by C D 1 · 1⤊ 0⤋
If it is only $1,700 just walk away. You are getting off very inexpensively. Read your contract carefully, consult an attorney if necessary. Send a cancellation letter if you want out. If you think they broke the contract, sue.
Offer to take the home at 6.5% if they still want to honor the sale. With the housing slump they just might prefer a live buyer to an empty house.
Current 30yr fixed mortgage rates for conforming loans (those under $417K) are 6.375% with 0 points.
2007-11-16 18:08:24 · answer #5 · answered by Anonymous · 1⤊ 0⤋
Interesting comment about earnest money from the third respondent. Earnest money is NOT there to 'give you an out'. It's there to show your seriousness about binding yourself to this contract, but it doesn't let you off the hook if you change your mind.
The builder/seller will probably keep the earnest money to START, but he also may sue you for failure to perform your end of the contract, and the judgment he wins WILL put a serious ding onto your credit report. Don't be misled into thinking that giving up your earnest money will be the end of this situation.
2007-11-16 22:00:05 · answer #6 · answered by acermill 7 · 1⤊ 0⤋
You have some good answers here so i am not going to repeat them. I will say breaking a contract will NOT effect your credit. That guy is wrong.
2007-11-17 04:07:14 · answer #7 · answered by frankie b 5 · 0⤊ 0⤋
The answer is in the ton of papers you signed in March. Read the papers.The answer is there.
2007-11-17 03:34:17 · answer #8 · answered by !!! 7 · 0⤊ 0⤋