About a year my husband and I put down a deposit of $10,000 on a new home in Florida. This is a pre-construction home being built as our 2nd home.
Anyhow, recently we had a substantial loss in monthly income and may not be able to go forth with the close of the sale. The closing is in 3 months and we’re scheduled to begin the loan approval process for financing next week. With one income coming in how can we back out of the deal and get our earnest deposit back? What would make a seller agree to refund the money to the purchaser in times of hardship. Is there any proof we’ll need to provide them.
I would talk to the builder to see if something can be worked out. If you are lucky, prices and demand have increased to allow the builder to sell it to someone else at a higher price and to refund your money.
If they won’t work something favorable out, I would contact an attorney. Just my opinion.
In Christ
Follow ups:
I am sorry to say the builder will not refund your money under any circumstances. You signed a contract to buy this home and secure your financing, if you get denied financing you will not get the money back. It is not their problem. Chances are they pre-quailfied you way back when the contract was signed and viewed your credit and income to determine if you can close. The fact that things changed over 1 yr is not their problem now. Florida gives up 5day I think to cancel a contract on preconstruction homes…
Since your just getting ready to close and house is almost done, they was probably a spec home from abuilder using their funds to build and wait to sell to you to recoup their cost. Now would it be fair forthem tolook for a buyer now.
Builders sorta love canceled contracts because they can make more money, like when I do a lease option and get $15,000 down and after 12months the renter can not buy as agreed still. He leaves, not fullfilling the purchase option offered and i keep his $15,000 deposit towards the purchase. I do not give it back, it is mine, signed and sealed in the contract we signed.
My suggestion is to see what kind of equity you will have, go with a stated or NO DOC loan, many banks do 100% financing and allow closing rolled in, or at least you have 10K down and it can be used towards closing cost with 100% financing, the if you have alot of equity, refi the home or get a HELOC to float the home till sold, rented or lease option is done.
Also who is the builder???what area of a FL??
andrew
Refi on the loan or HELOC sounds like a tenp solution, but it seems like one would face major competition with other builders in the community selling inventory homes at discounted prices which is the case for this community. Not only that but operating cost until you could find a renter who will to pay the full mortgate or partial. It would really depend on how much equity is growing and one’s stress level.
Contracted at $200,000, builder selling similar home for $286,000with major perks. Add in upgrades $20K and minus binder $7500, & builder paying $8000 in closing costs, the equity would be about 81,500. The only caveat is that there 's a clause not to sell within a year.
I’ve read recent articles discussing how many investors are backing out of new home sales or finding it hard
to resell new homes on the market because of slow downs.
From an investment perspective, how much equity would one look to acquire in order to make a decision about whether the new home purchase is a sound investment.
Location is in Fernandina, FL. Builders in the community vary from ICI Homes to Mercedes Homes.
anothewr view is the $10k is a sunk cost (the money is already spent and gone). you need to only consider your future options. While it looks like there is plenty of equity, what the builder has to drop prices say $50k in 12 months. Then you are in real bad shape.
Given that it sounds that you are in a unsteady financial position, taking on additional mortgage debt might not be best.
Having two mortgages and a 2nd home that you are not able to sell may sink your entire financial ship.
just another viewpoint.
Where in FL is that city??? I guess your not in a Mercede’s home since they are assignable contracts…ICI builds nice homes also.
As for the resale thing, they have provisions to allow the sale such as financial hardship. New communities like control so they put those clauses in now, same as rentals for 1st yr. Now they are some ways around this. place the house in a Land trust with yourself and the person you plan on leasing the home to. This creates a legal binding contract to homeownership of both parties, giving them full tax advantages to the home. The can legally live there for 1yr, paying the trust the fee’s and then after 1 yr the home is sold and the trust pays each party what they are suppose to get according to the trust agreement.
Now with 81K in equity, thats pretty good, do you see the market going soft there and builders dropping prices now???