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View Full Version : Need to cancel my new house purchase...Am I screwed?



Invisible Sun
07-09-2007, 07:50 AM
Well after a long discussion with my wife, we've decided to cancel on our house that we are having built in AZ.
We are supposed to close on Aug 3. As some may now, my back has deteriorated and the doctors have told me that I need to change my occupation immediately. I've been trying to find alternative sources of income, but none so far have reached the level of income that we are accustomed to. Right now I think that we are better off investing the money that we had for a down payment in something other than the real estate market.
I figure that the $5K in ernest money is lost. Anybody have any ideas if I stand to loose more than that?
I feel like crap because I always stand behind my word, but this will put us into a financial hardship that I'm not willing to deal with on top of changing careers.
S

Tequila-John
07-09-2007, 07:53 AM
From what i am hearing out here. Buliders are keeping deposits for canceled new builds. I would look at your contract. I have read about people loosing 50k.
Sorry to hear about your situation

drtywhat
07-09-2007, 07:55 AM
I work here in AZ for a homebuilder. What I have seen is pretty much you are gonna lose your earnest money if you did not have any type of contingency tied into the purchase agreement. So you will probably be out 5k.

RitcheyRch
07-09-2007, 07:59 AM
That sucks. Changing careers can be tough. Been thinking about that myself lately.
Good luck in whatever you chose to do

Outnumbered
07-09-2007, 08:01 AM
Sorry to hear that. I was looking forward to having a new Hot Boat neighbor. I would just get a hold of the sales manager and explain your situation and see if they may help you out. Let them know that you would be glad to get them a letter from your Doctor??? Sounds lame but it may work. Good luck.

Tequila-John
07-09-2007, 08:02 AM
Sorry to hear that. I was looking forward to having a new Hot Boat neighbor. I would just get a hold of the sales manager and explain your situation and see if they may help you out. Let them know that you would be glad to get them a letter from your Doctor??? Sounds lame but it may work. Good luck.
Great idea John

Invisible Sun
07-09-2007, 08:05 AM
Sorry to hear that. I was looking forward to having a new Hot Boat neighbor. I would just get a hold of the sales manager and explain your situation and see if they may help you out. Let them know that you would be glad to get them a letter from your Doctor??? Sounds lame but it may work. Good luck.
Thanks, that is a good idea. I was hoping to really get into the community there as well.

Outnumbered
07-09-2007, 08:06 AM
BTW, they wont take more than your deposit as a worst case. Big builders don't generally sue for specific performance on tract homes.

Tequila-John
07-09-2007, 08:08 AM
BTW, they wont take more than your deposit as a worst case. Big builders don't generally sue for specific performance on tract homes.
Normally for a new build the builder wants a % to start the build right? Or do some just take a earnest money to start?

Ms.Havasu
07-09-2007, 08:09 AM
Most all real estate contracts have a built in loan contingency. If you don't qualify all of a sudden your earnest money deposit would be refundable.
If you gave the builder a 5K deposit it has been used for plans and permits and usually is clearly not refundable. If your 5K is still sitting in escrow as a earnest money deposit you should be able to get it back on the grounds that you no longer qualify.(You will need a letter from your lender stating they can no longer offer you the financing that was spelled out in the contract.
Hope this helps, good luck;
Michele

Baja Big Dog
07-09-2007, 08:09 AM
Two years ago the builder would have gladly given your deposits back, cause they would have sold the house for more than the price you were gonna pay...that was two years ago. Now today the builders are starving, and they will screw you (maybe not a good term) for any non-secured deposits you made.

Big Warlock
07-09-2007, 08:20 AM
Well after a long discussion with my wife, we've decided to cancel on our house that we are having built in AZ.
We are supposed to close on Aug 3. As some may now, my back has deteriorated and the doctors have told me that I need to change my occupation immediately. I've been trying to find alternative sources of income, but none so far have reached the level of income that we are accustomed to. Right now I think that we are better off investing the money that we had for a down payment in something other than the real estate market.
I figure that the $5K in ernest money is lost. Anybody have any ideas if I stand to loose more than that?
I feel like crap because I always stand behind my word, but this will put us into a financial hardship that I'm not willing to deal with on top of changing careers.
S
What do you currently do? Occupation?

LGCDEVIL
07-09-2007, 08:23 AM
New occupation: Developer. Why not build it and sell it. Hopefully it will be worth more than you have in it when it is complete.

Invisible Sun
07-09-2007, 08:27 AM
Two years ago the builder would have gladly given your deposits back, cause they would have sold the house for more than the price you were gonna pay...that was two years ago. Now today the builders are starving, and they will screw you (maybe not a good term) for any non-secured deposits you made.
Well they did raise the prices on the house about a month after we signed so I'm hoping that they will take this into consideration.
What do you currently do? Occupation?
European car technician. I've been on disability for the last 3 months now going to physical therapy to regain touch sensation in my left thigh. I have a pinched nerve that makes my left thigh numb and tingly.

Big Warlock
07-09-2007, 08:29 AM
New occupation: Developer. Why not build it and sell it. Hopefully it will be worth more than you have in it when it is complete.
It's so easy to be a developer!? LOL Think again! I have watched alot of people jump in. Even the big boys get in over their heads sometimes.

HM
07-09-2007, 08:30 AM
As many have said....they will probably keep your earnest money. I don't know the law in AZ, but in CA, if you used an escrow company, by law they have to give you back any and all money you had in escrow and it is up to the builder to go after the person who backed.
Next time, make sure you add a minor contingency clause on financing that the builder won't even look twice at and that is "Contingent upon acceptable financing." This little clause will help you get out of any deal as the builder/seller won't even think twice if you have decent credit and even have an approved loan in the works. The reason this clause works is because "acceptable" has not been defined...and you can simply say...I don't accept the financing - doesn't even matter if you were paying cash. I have seen that clause taken to court and the buyer got to keep ALL their money.

LGCDEVIL
07-09-2007, 08:33 AM
It's so easy to be a developer!? LOL Think again! I have watched alot of people jump in. Even the big boys get in over their heads sometimes.
I here ya. I was just saying that I doubt he would pay more to build a home than it would be worth when it's done. Save that for boats. Just a one time deal and wouldn't have to get boned on the down payment.

Wmc
07-09-2007, 08:52 AM
Well after a long discussion with my wife, we've decided to cancel on our house that we are having built in AZ.
We are supposed to close on Aug 3. As some may now, my back has deteriorated and the doctors have told me that I need to change my occupation immediately. I've been trying to find alternative sources of income, but none so far have reached the level of income that we are accustomed to. Right now I think that we are better off investing the money that we had for a down payment in something other than the real estate market.
I figure that the $5K in ernest money is lost. Anybody have any ideas if I stand to loose more than that?
I feel like crap because I always stand behind my word, but this will put us into a financial hardship that I'm not willing to deal with on top of changing careers.
S
If you can prove money hardship most often they will give you back your deposit. I have a frend that did that and they got most of the deposit back. Get a note from doctor, etc.

Wmc
07-09-2007, 08:55 AM
Also I work for a lender, and if you get a letter from your lender that you no longer qualify and give it to your builder then you should be able to get your deposit back. I did that for one of my broker friends and it worked. Good Luck.

Invisible Sun
07-09-2007, 08:57 AM
I here ya. I was just saying that I doubt he would pay more to build a home than it would be worth when it's done. Save that for boats. Just a one time deal and wouldn't have to get boned on the down payment.
The problem is that we can't sell or lease it out according to the contract for one year. I don't think that I could make the payments for a year before we listed it. Not to mention the time it would take to actually sell. We are already sitting on about $30 to $50K in equity before we even close. It seems like it'd be a good investment, but 2 payments aren't in the budget without a job making decent money.

Wmc
07-09-2007, 09:01 AM
The problem is that we can't sell or lease it out according to the contract for one year. I don't think that I could make the payments for a year before we listed it. Not to mention the time it would take to actually sell. We are already sitting on about $30 to $50K in equity before we even close. It seems like it'd be a good investment, but 2 payments aren't in the budget without a job making decent money.
If you don't have a job, you don't qualify. The lender is not going to fund a loan knowing the payment can't be made. That is your out. The builder HAS to refund your deposit, if your unemployed.

Not So Fast
07-09-2007, 09:18 AM
What about the threat of litigation to get back your escrow money if indeed it hasnt been spent on plans & permits as mentioned?? Doesn't this tie up the property while its in dispute and wouldnt that be a turn off to the seller as it might take a while due to our legal system?? NSF

Outnumbered
07-09-2007, 10:10 AM
Normally for a new build the builder wants a % to start the build right? Or do some just take a earnest money to start?
$5k earnest money to start in his case. Some builders require earnest plus a % of any selected options in cash up front. His builder is a big tract builder, not a custom builder. Most likely they will just keep his money and sell the house to someone else.:(

Outnumbered
07-09-2007, 10:15 AM
If you don't have a job, you don't qualify. The lender is not going to fund a loan knowing the payment can't be made. That is your out. The builder HAS to refund your deposit, if your unemployed.
True, but the builder does their own financing and pre-approves at time of purchase. I am pretty sure they have a stipulation in there to keep his money if he cannot close for ANY reason. This is not a custom build with a loan approval contingency. Big volume tract builder with PA written on THEIR contract so you play by THEIR rules.

Classic Daycruiser
07-09-2007, 10:44 AM
Tell them you still want the house, but it might take a few extra months to qualify. Put the burden on them to give you back the money.

AZJD
07-09-2007, 10:48 AM
If you have any info on the place post it. I know some people that know some people that buy shit like that.:D If you could deliver them a buyer it may help your case.....

BoneDaddy
07-09-2007, 11:07 AM
My vote is to go the unemployed route. If you are on disability (unemployed) a lender will not approve you for the loan.
Check your contract. See if there are any contingencies for loan approval and about getting your deposit back. Call the escrow company, if that is where your funds are being held and ask what their interepretation of the contract is. Lastly be upfront with the sales agent with the builder and see if they can help your situation out.
Oh, and find out what the sales person likes ie. chocolate, flowers, booze, etc.

Invisible Sun
07-09-2007, 11:15 AM
If you have any info on the place post it. I know some people that know some people that buy shit like that.:D If you could deliver them a buyer it may help your case.....
That's true. If I end up with an issue I'll be sure to post here and let someone get a good deal on the house.
The worst part is the wasted anticipation and excitement that we had while building a new house over the last 7 months. We've only owned one other house here in CA.
I really don't think they are going to have a hard time reselling the house. It actually has the biggest lot in the tract. The sales rep said that they could have sold that lot 100 times over. In fact the last time we visited we overheard a couple in the showroom talking about how cool it would have been if they got lot 25. Well now they have a chance!
S

Invisible Sun
07-09-2007, 11:17 AM
Oh, and find out what the sales person likes ie. chocolate, flowers, booze, etc.
A little Chocolate can go a long way!

Big Inch
07-09-2007, 11:44 AM
If you want the opinion of someone in the business. I would go to them and explain your situation and hope for the best. None of these things, like not qualifying for lending, are going to give you an absolute out. These contracts are written with a contingency period for loan qualification. It is very possible that if you are currently on disability that you would truly not qualify for the loan but I'm sure by this point you have already released your loan contingency to them. They probably had you pre-approved by their own lender. What this means is that you are still under obligation to purchase the home regardless of whether or not you qualify for a loan. The penalty for not being able to perform will be the forfeiture of your deposit.
Explain your situation to them and hope for the best. Even in this market not every builder has completely dismissed good business practices.

BEER&WATER
07-09-2007, 12:18 PM
where is the home at

All-Star
07-09-2007, 12:31 PM
Most all real estate contracts have a built in loan contingency. If you don't qualify all of a sudden your earnest money deposit would be refundable.
If you gave the builder a 5K deposit it has been used for plans and permits and usually is clearly not refundable. If your 5K is still sitting in escrow as a earnest money deposit you should be able to get it back on the grounds that you no longer qualify.(You will need a letter from your lender stating they can no longer offer you the financing that was spelled out in the contract.
Hope this helps, good luck;
Michele
EXACTLY..
Sounds like changing jobs into a brand new line of work would not allow you to qualify. ie... you dont qualify any more. You need a two year history in that line of work.
Plus if you do not have A job anymore, then you sure as hell dont qualify.
There is your answer.
Tell your lender that they need to write you a letter, and you should be fine.

NashvilleBound
07-09-2007, 01:43 PM
Well they did raise the prices on the house about a month after we signed so I'm hoping that they will take this into consideration.
How did that happen if you are in contract? Or did you make a change? Read your contract word for word. Most are straight forward. Your earnest money is gone, but if I read this right $5000 lost is the better way to go...... unfortunately. ANY doubt at all go consult with an attorney. Good luck and get better.

Invisible Sun
07-09-2007, 02:38 PM
How did that happen if you are in contract? Or did you make a change? Read your contract word for word. Most are straight forward. Your earnest money is gone, but if I read this right $5000 lost is the better way to go...... unfortunately. ANY doubt at all go consult with an attorney. Good luck and get better.
I'm sorry, you misunderstood me. They raised the prices on all the homes which gave us instant equity in the property. The purchase price on the house with all the upgrades, lot premiums etc is $329K. The base price for the same house (if you can get one) is currently $350K. We've got about $50K in equity once completed, but I can't sell or lease it for a year. 2 years to if I want to avoid the tax implications
where is the home at
About 10 minutes south of Lake Pleasant in Peoria AZ (North West side). I was really looking forward to being close to the lake and making some new friends.

havasuready
07-09-2007, 02:50 PM
I work for an in house lender for a large builder in CA and if we can not qualify someone due to losing their job etc. they always get their deposit back!
Good Luck

21 SXT
07-09-2007, 04:04 PM
The problem is that we can't sell or lease it out according to the contract for one year. I don't think that I could make the payments for a year before we listed it. Not to mention the time it would take to actually sell. We are already sitting on about $30 to $50K in equity before we even close. It seems like it'd be a good investment, but 2 payments aren't in the budget without a job making decent money.
That addendum that you signed is just there to scare off investors. Due to hardships as it states in the contract you can sell your house or lease it.
If you try selling the house in a tuff market and against the Builder good luck. The builder can always use huge discounts to under cut the resale market and they have way deeper pockets then most of us do.
The person to talk with is the Designated Broker of the Home Builder and tell the who what and why you have cancel your contract.

21 SXT
07-09-2007, 04:10 PM
I work for an in house lender for a large builder in CA and if we can not qualify someone due to losing their job etc. they always get their deposit back!
Good Luck
The builder will give back the earnest money back in the 1st 30 days of the contract due to not being able to qualify. Not 6 to 8 mos into the contract when the house is ready to close.

Invisible Sun
07-09-2007, 04:19 PM
Just got off the phone with them. It looks like all they need is some proof that I am unemployable in my current line of work (doctor note) and a state disability check stub and I'll get back my deposit :D. Thanks for the input. Now I gotta find something to do with my life :eek: .
S

Outnumbered
07-09-2007, 04:21 PM
Just got off the phone with them. It looks like all they need is some proof that I am unemployable in my current line of work (doctor note) and a state disability check stub and I'll get back my deposit :D. Thanks for the input. Now I gotta find something to do with my life :eek: .
S
So my lame idea should work...cool:D

Invisible Sun
07-09-2007, 04:24 PM
So my lame idea should work...cool:D
You're the winner!!!:D

OCMerrill
07-09-2007, 04:31 PM
Thanks, that is a good idea. I was hoping to really get into the community there as well.
I don't think you need to build a home to do that. Just park your boat in the channel and you belong? (as long as your on ***boat)!
Also...
This may look to you as a set back right now but you just never know what door will open down the line.

Invisible Sun
07-13-2007, 05:04 PM
Just an update:
The doctor wouldn't write me a letter to give to the builder without a full diagnosis in my condition. However, the sales rep called me and said to just send her an email stating that I wanted to cancel, and the reason for the cancellation. I asked her if she had some bites on the property, and she told me that she's got a lot of people ready to move on it once she gets a letter from me. I asked her about the earnest money, and she told me it wouldn't be a problem due to the popularity of that particular lot. They stand to make about an extra $50K now, so the $5k to me is a drop in the bucket I'm sure. Well, it looks like everything is working out fine. Thanks for the support!
S

socalmoney
07-13-2007, 05:17 PM
Even if you do loose your 5K, getting out now is the best thing. Better than loosing 30-40% on your new home in the next 4 years. Get a new job going and come back an buy for less a few years from now. Now is the time to have cash in your pocket. Your doing the right thing.