What should you do when your home builder starts reducing prices and
adding incentives to houses after you've already bought?
We close on our house August 22nd, and the builder is now offering an
additional $5K off the purchase price and backyard landscaping as part
of their incentives. I know that if I buy a TV at circuit city and it
goes on sale withing 30 days, I can take my reciept and get the
difference. Can I do this with a home builder?
You can buy that TV at any number of places. It is a commodity. Your
nearly completed house is not. What are you going to do? Not close
and start another house with another builder? Yeah, I'm sure that
wouldn't cost you way more than a few grand.
You have a signed contract with a stipulated sum. There is no reason
that the builder has to give you a guaranteed price or discount.
You could ask or hint around the subject, but it would be unrealistic
to expect anything. If you do get anything, treat it for what it is -
Actually, If we backed out of this deal it would cost us 10 grand in
earnest money. But there are houses avail for immediate move-in all
over Phoenix (where we currently live) for 30-60 grand off. So yes, we
have thought about backing out.
This house was originally supposed to close in the middle of July and
has been pushed back twice, first Aug 10th and most recently Aug 22nd.
Meanwhile My wife and I, our two small children, and two dogs are
living out of a one bedroom apartment.
Well, then, it's not a question of $5K but a lot more. If you can
indeed get an equivalent house for $50K less, and in immediate move-in
condition, why the sam hill are you asking here about a small discount?
You can always ask but don't expect the builder to say yes! Builders
were making large profits on these houses, and IMO are partially
responsible for the overinflated "value" of homes in at least some
areas of the country. They raised prices because they could. Now,
they're having to slash them to move inventory, and the fact they can
afford to slash prices by tens of thousands of dollars in some areas
tells me the prices were artificially high to begin with. Many home
buyers who bought while prices were at their peak are getting burned
now. The predictions that this would happen were there, but few paid
attention. The ones who did/will get burned the most are those who
took out risky loans to get in over priced homes. Now they're upside
down in their mortgages, their payments are going up, and they're
competing with their own builders to try and sell quick before their
finances are destroyed. Good luck. Maybe you might want to consider
not buying the house if you see it headed that direction, but then
again, getting out of a contract with a builder may not be easy now
that they can't sell the house for more to someone else!
You go to the sales people/builder and ask for the incentives now being
offered....and if they tell you no then you reply that a letter to the
editor of the local news and an interview with the local TV station may
influence others not to buy in that development....and by the way until you
close the seller/builder has no deal.
Let's see if I understand you correctly. You're advising that someone
who agreed to a deal at a particular price, and entered into a contract
with their eyes wide open, should complain to the media when the
economy changes. Does that sum up your position?
he's right that its not a done deal until it closes... its going to be a
touchy subject if the builder is good businessman he will work with the
buyer, if not he will screw him over. it doesn't really matter if they
agreed on a deal, if he is selling the same house for 10 grand less now then
when he started building then he should honor the new deals, if the price of
materials has truly changed that much then he could simply explain it,,
maybe he cant work with the price, maybe he can.... do the right thing for
10 people, someone might tell somebody what a good job you did, screw
somebody one time 7 they will everyone they know. if the builder had stayed
on schedule the deal would have closed & there wouldn't be a problem, likely
the simple fact that builder signed a deal to close months ago & has failed
to complete the project has already compromised the original contract. take
the high road & just ask the builder if he can work with you.
my 2 cents
You're reading a lot into the OPs post that simply isn't there. The
original post states the closing was supposed to be in the middle of
July and has been bumped back 4 or 5 weeks. Not sure where you get the
all the months ago and failure to complete stuff.
This is a simple case of buyer's remorse. You can almost always find
better deals after you've bought yours. Here's the question, would
the OP be offering the builder additional money, just to be fair, if
the market shot up and the OP discovered that the house he bought for
$300K was worth $400K at closing?
probably not but I had jobs go over a few times & usually the customer is
understanding & will work with you, in many cases they don't mind paying the
extra if you can justify it.. it doesn't hurt to ask.
On 5 Jul 2006 08:48:25 -0700, " firstname.lastname@example.org"
What does your contract say?
My guess would be that your contract does not contemplate price
reductions, and does not guarantee the builder will sell all
comparable houses at the price you paid.
You can approach the builder ... and ask if he would extend the
incentives to you. He may be willing to do so; depends on the
If he does, show gratitude. Would you be willing to increase the
price you're paying if he had raised prices on the others??
If you are thinking of abandoning your deposit and walking, please
consult a lawyer first. I can't see your contract, but I would be
walking away won't be easy.
Thats comparing apples and oranges. But if it happened to me I'd be upset
There's only one thing you can do - ask the builder. If he says yes, then
fine, and have your lawyer draw up or at least review the new papers. If he
says no, then go to plan B. People cancel new home contracts all the time.
Builders don't like it, but its a fact of life. Even if your contract is
ironclad, a builder would rather sell it for a little less to someone else
than spend time and money arguing with you about it. Chances are you'll get
all (or at least most) of your money back. You might need an RE lawyer to
help you through it, you might not.
If they dig in their heels, then don't feel bad about going to the media
(you expressed this in another post.) Why not? Its your money, and the
biggest purchase of your life. But probably just talking to the builder will
get you what you want.
And if the builder RAISED the price for newly sold homes would you be
willing to pay above the price you contracted for? Be glad you're not a
Seagate Homes customer in Volusia Cuonty, Florida... They are giving back
deposits becuase their costs went up. they're also being sued.
When I bought my home I wasn't dealing with a builder just a realtor so
I'm not sure how this would compare.
Anyway the home I was going to buy was not ready on the closeing date
(repairs had not been made that were supposed to have been made) they
tried to get me to extend but since I saw no effort made to make the
few simple repairs and the home had not been cleaned I told them that I
would like my earnest money back and I would look elsewhere.
Now they did not want to give me back my money so I took them to small
claims court and they gave me my money back plus they had to pay cost
of court. Then I went on and actually found a better home than what I
was going to buy, and these people had everything ready for me to move
in when the time came.
Now my earnest money was only $2000.00 that was why I was able to use
the small claims court.
So if the builder has gone past the closeing date I assume that he has
defaulted on the contract and he should give you back your money and
then you can look elsewhere or he should bring the home inline with
That's my 2 cents.
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