I need a feedback and ways to re-negotiate a price with the builder on my new house.
I purchased it and signed the contract 7 months ago. I haven't closed yet and won't be doing so for another 2 months.

However, I am sitting at a peak price. Builder has droped inventory prices by upto $40K on the similar homes in my neighborhood
When I asked to readjust the price they are not honoring it - stating that contract is done and I need to start a new contract etc. etc.
but no lot available to accomodate this floor plan any more and so I will end up going to a higher price home (bigger home/lot).

I am about $17K in the upfront hole. So if I backout I will lose that money.
However, one can argure that the $40K loss is greater than $17K upfront.

Problem is that I need this house as my son is already going to the school in that school district.
All other homes in the area are still about $100K more in price so I need this house.

Please advise on how to get some credit back from the builder before I close this house??

Thanks in advance.

I'm with you man... I have the exact back-out cost too - $10K + realtor. You aren't using Lennar by any chance are you?

My similar post

There has been lots of press about this kind of situation. My read is that -$17K > -$40K. Read you contract, look for provisions where the builder can sue you for losses beyond your deposit, and provisions where you can cancel the contract AND get back your deposits. You will need to ask a lawyer.

deallover said:Problem is that I need this house as my son is already going to the school in that school district.
All other homes in the area are still about $100K more in price so I need this house.Hope you're ready to stick with the original contract, because you're bluffing big time...you need that house more than the builder needs you.

I'm with nycll here - if the builder can't go after you for the balance past your deposit, you may be able to get some of your negotiating power back, otherwise you are probably SOL.

#1: Consult with a RE lawyer to find out exactly what options you have under the contract you've signed.

#2: Try to find a reasonable amount to ask the builder for.

For example, if that 17K upfront is forfeit when you back out, realize that the builder can find someone else to pay the -40K current price AND pocket your 17K, so he only loses 23K compared to your contract. If you are expecting him to come down 40K, how does that make sense for him? If you asked him to come down 15K, he will be choosing to either lose 15K on your contract vs. the risk of losing 23K if you walk.

Your other potential leverage in this situation is the appraisal and financing. If you haven't gotten financing yet, and the appraisal comes in at a lower price, you might regain some bargaining power. Have your lawyer check the contract for what happens to your 17K if the appraisal comes in lower than the sale price. If it favors you, you might get the builder to agree to adjust the sale price to match the appraisal.

Just remember, that you did agree to pay a particular price. You're not dealing with Target who will match the lower price if the item goes on sale later. Now, the contract does spell out situations where you can back out and not go through with the sale. It's perfectly legal to exercise those, but be prepared to pay the penalties associated with them (forfeiture of deposit). Of course, the builder would rather not see you walk away, and have to find a new buyer in this market, but you don't sound like you want to walk away either.

xarien said:Do you have any contingencies left on the house or have they all been removed? Having an active financing or appraisal contingency will swing the favor largely to your corner as you can take your EMD back.

Builder did not allow any contingency but I will check the contract tonight.
That is a very good point.

Also, I will get the appraisal done. If they use current comparables, my house would definitely come lower than the current price.

Redbeard25 said:One more thing - how long are you going to be in the house? If you plan for 7+ years, then a $40K hole now will/should be made up.

Most likely for 7-10 years or if I die early
So in the worst case this is what I would think too.....over these many years of spread, 40K would be corrected over time.
Also by then, all areas at a convenient location to downtown would be full so it would maintain the value.

Why can't you view at it saving 60k if houses are 100k more in same area? Your builder may not want to bargain if they're saying lose the upfront cash and rewrite a contract.

I was in a similar situation, however, there was a base price guarantee in my contract whereby the builder had to give me the lowest price that my model was selling for if it dropped after we were in contract. We ended up completely getting out of the contract because the builder was almost a year behind schedule.