We signed the purchase agreement back in December 2020, and it was scheduled to be completed by 4/15/2021. However, the builder has been delaying the building, and recently we were told that they wanted to cancel our contract due to building cost increase, or we can accept the $100K increase in price. BTW, the builder hasn't even started digging yet.
What options do we have now? Does this happen to other buyers / owners? I'm mad because if they could have told me much earlier that they couldn't deliver on time / price, then I would have moved on to another house. After months of delay and big appreciation in general market, it's hard to find another house at that price range.
Like to hear your suggestions. The house is in Texas.
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
5y
@Melanie Liu It's not surprising as lumber prices have skyrocketed in the last year. If the builder followed through with the build, he might end up with a significant loss.
That said, a contract is a contract. If there's no language in the contract about unforeseen increases in material pricing, he may be stuck and you need the advice of an attorney.
My suggestion is to see if you can get him to pay you for the release. Again, work with an attorney on that.
Rental Property Investor · Dallas, TX · Member since 2015 · 38 posts · 12 votes
5y
@Melanie Liu.
I wouldn't necessarily call it a newbie mistake. If you are able to read, and understand a contract you don't necessarily need an agent. That being said, I am in Texas and can tell you that prices here are rediculous. That is why your builder wants out so he can flip it for more than he agreed with you. People are offering $50k to $100k above list and still not getting the property. Most likely, there is specific language in the contract that allows them to do this. If not, then the builder is a newbie. Go over your contract with an attorney if you don't see or can call out this language in the contract. But this isn't surprising here in Texas. Properties are over priced and people just keep paying up.
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
5y
First of all I want to say sorry for your situation. This is horrible. You are not alone.
What builder is this?
What does your realtor say?
Has your realtor arranged for you a free consultation with one of their board certified real estate attorneys? Great realtors have plenty of great relationships with all kinds of people in the business including attorneys. Often when we run into situations like this, our network will give you a free consultation. If you're going at it alone, they'll probably want $500-$1000 to read it and give you basic advice as to where they want to go with it. Maybe ask them for simple advice and a demand letter to the builder. Sometime threat of a lawsuit is all it takes.
Then again it depends on who the builder is. Big national builder may have money, but they probably also have big time attorneys who will bleed you dry. If it is a small local builder, they probably working job to job with no real money in reserves to tap, even if you win the lawsuit.
If went out it alone like a lot of people there may not be a whole lot you can do. You might be lucky to get your deposit back. Personally I'd ask for all my money back and the lot is liquidated damages. But they might not even own a lot yet.
Now it's probably the time to lawyer up if you can find one that will take your case as a contingency....or consider alternative investments. Don't roll over though. Push and push and try to get something out of them.
Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
5y
@Melanie Liu Foes the contract give them the allowance to raise the price? If so, your only option is to cancel. If it doesn’t you should be able to sue for non-performance.
Sorry to hear of this tough situation. As my Father would tell me "To avoid disappointment always have an alternative." Might be time to move on but some see recourse for you... @James Wise, nice of you to rub it in:-( "...saw this coming a mile away" Monday morning Qback!
Again, thank you all for your responses! To be fair to the builder, he offered to have my deposit back or accept the new market price. During the past 7 months the builder released more homes in phases in the same sub-division, each time with higher prices. I'm curious what he'll do with those buyers. I totally understand that material prices have gone up, and it's tough on builders. I'm willing to accept some price increases, but not the new market price. One way to another, that's the basic rule I'll stick to.
I appreciate all your feedback, advises, and philosophical thinking ("Life is too short for anger." - love it). Year 2000 is unprecedented, and I wish everyone good luck in real estate investing.
I think you made the right decision to take your deposit and walk away. Every builder contract I have seen is one sided in their favor and life is WAAAAYYYY to short to be in a lawsuit. As a long time investor, I learned a long time ago that there is always another deal out there. Good Luck!
Again, thank you all for your responses! To be fair to the builder, he offered to have my deposit back or accept the new market price. During the past 7 months the builder released more homes in phases in the same sub-division, each time with higher prices. I'm curious what he'll do with those buyers. I totally understand that material prices have gone up, and it's tough on builders. I'm willing to accept some price increases, but not the new market price. One way to another, that's the basic rule I'll stick to.
I appreciate all your feedback, advises, and philosophical thinking ("Life is too short for anger." - love it). Year 2000 is unprecedented, and I wish everyone good luck in real estate investing.
Tell yourself you are walking away with your deposit back because you don’t have a better option, not because it is fair. The builder wouldn’t have offered you a lower market price or walk away with your deposit if the market had gone the other way. The builder is lucky he is dealing with you. I would not have let him act unethically and get away.