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All Forum Posts by: Shaun Alexander

Shaun Alexander has started 2 posts and replied 6 times.

My wife and I are currently building our home and have encountered a financing issue that we are trying to figure out. Without going into detail, we were forced to "mutually terminate" our agreement after it took him 12 months to get the foundation and utilities in.

We purchased our land in October 2016 outright for $107000 and got a construction loan for $320000 in May 2017. Being that we have been delayed so long construction prices have increased and we are having problems finding a builder that can complete the project within our current budget. I'm trying to find out if there are any brokers out there with experience with situations like this that could lend us some guidance. Here are the details:

-2.25 acres 2690 sq ft house Snohomish County, WA

-Current Loan Amount (construction to permanent): $320000

-Current amount drawn on the loan: $78400 (includes $9000 loan fee)

-Interest rate: 3.95% ARM

-Land Appraisal March 2017(bought outright with cash October 2016): $115000

-Completed Project Appraisal March 2017: $525000

-Current total yearly income: $92000

-Total monthly debts: $240 vehicle loan(owe $5000, we can pay off if debt to income is an issue)

-Cash in account: $22000 (We just put $17000 into firing builder/ foundation work out of pocket into the project)

-Cash remaining on loan: $241000

-Estimated amount we need to complete: $280000 minimum


We believe the project will appraise for $580000-$625000 currently based on redesigned plans (added 200 sq ft) and new comps in the area we are building. We would really appreciate any advice or guidance on getting the last bit we need to finish this project!

Post: New member with a big problem! Contractor wants more money

Shaun AlexanderPosted
  • snohomish, wa
  • Posts 10
  • Votes 0

I really appreciate everyone's advice here. We ended up getting a good construction attorney who looked at everything. Without going into details, there was some seriously shady stuff going on when we started getting invoices and comparing them to the draws. The lawyer sent a good letter and we got our unconditional lien release within a couple hours and settled up with the contractor for a reasonable amount for the unpaid work. We have a new builder (someone we know and got some references for) that rebid the job and will be able to complete the project within our remaining budget (had to cut some finishes but after this we're ok with it). We are taking some advice from this thread as well as having our attorney look at the new contract a lot closer this go around. We're not out of the woods yet but we feel like we are in a good position going forward. 

Some lessons learned:

-REALLY look at the contract before signing

-DO NOT trust a general contractor you don't know

-It's worth paying a good attorney

Thanks again for the advice in this thread.

Post: New member with a big problem! Contractor wants more money

Shaun AlexanderPosted
  • snohomish, wa
  • Posts 10
  • Votes 0

Thanks for the response Jon. I’m getting the project rebid currently. I’m expecting it to come in about 40-50k short to finish. My construction loan is running on extensions with all the issues I’ve had with this builder. Ideally I could slide a new builder in and I make up the cash difference, but I would be completely tapped at that point and they may not go for that. I don’t think it’s going to be difficult to get rid of the current builder.

There is equity here... Appraised for 525000 over a year ago and it should have increased 5+%. Bought the land with cash and have 70k into it to this point. I’m expecting new bids to come in around $270000 to finish. Getting the additional 40-50k into it is what I’m trying to figure out.

Post: New member with a big problem! Contractor wants more money

Shaun AlexanderPosted
  • snohomish, wa
  • Posts 10
  • Votes 0

The contractor currently is refusing to continue work and wants to be paid ~$13000 for extra foundation work based on a subsurface condition clause. I believe he is trying to settle up and walk off at this point. He only has a $12k bond and my attorney believes he may have some other pending lawsuits. I don’t think I would ever collect the damages awarded through arbitration (which is what our contract requires to resolve billing disputes). 

 I spoke with another bank about refinancing and getting a new construction loan with a new builder. I haven’t put through the preappoval paperwork but it sounds like I’m short. I sent the project in it’s current state to be bid by a couple other builders and am waiting to hear back with some real numbers. The only thing I have working for me with this thing is the project appraised at 525000 15 months ago and should have gone up at least 5%. I’ve drawn $80000 on the loan total and have all dirt work, foundation, backfill, well and permits done. Inspections are up to date and it’s ready for framing. The house is 2700 sq ft. 2 story and relatively basic. I have 229000 left on the current loan and I don’t believe I will be able to get more than that from a new construction loan.

I believe I need to pay an attorney to get me out from underneath this guy and find someone to get this thing built to at least get a certificate of occupancy within the budget I have. Does anyone have any suggestions as far as creative financing goes if no one can (or is willing to) finish this thing within this budget? Things are pretty desperate over here and I would really appreciate any additional advice.

Post: New member with a big problem! Contractor wants more money

Shaun AlexanderPosted
  • snohomish, wa
  • Posts 10
  • Votes 0

Thanks for the reply Dawn. There are no deadlines for completion on the project. I had the budget looked over by another contractor and he believes it was grossly underbid from the start. Unfortunately he believes the current numbers are now correct so if I change contractors it will not resolve the fact that there will not be enough money to complete.

The bank just informed me that they will not allow him to take from other line items to pay for his current overages. That essentially means either he's paying or I'm paying out of pocket for the differences. If anyone out there has experience resolving disputes with underbid fixed price contracts I would greatly appreciate the input!

Post: New member with a big problem! Contractor wants more money

Shaun AlexanderPosted
  • snohomish, wa
  • Posts 10
  • Votes 0

Hello, I have lurked on this site for a long time and leeched a lot of great information. I finally have something worth registering and posting about.

I made a long winded post regarding a contractor that wants more money beyond our contract price in the new construction forum and it unfortunately didn't get any traction so I will simplify it. I have a fixed price contract for a new home construction that was delayed by a 3rd party by approximately 8 months. The contractor attributed to almost 3 months of the delays. He is now claiming material price and labor increases over 6 months to the tune of $40000 (total project price is $292000). My attorney has reviewed our contract language and strongly believes I am not liable for this additional cost and that the job was significantly underbid. There is no escalation clause or completion deadline. The price increases are 25-55% on most line items (drywall 55%, lumber 45%, electrical 40%, etc). I believe these are unreasonably inflated but unfortunately, legitimate. 

We are currently attempting to resolve this with the contractor. His solution to start with is to cut all of the finishes that we added ($21000ish). He currently has not offered to make any concessions to his profit line except that he's doing the line items that are over "at cost" and is attempting to justify this by the fact that the home will still have significant equity even with the overages.

We are still moving forward, framing is set to begin next week. Does anyone have any advice for me as I'm feeling taken advantage of. I do not have any prior real estate investment experience. Any advice on how to proceed by anyone with experience in this field would be incredibly valuable!