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Q: I closed on a $382,000 home last summer. About six weeks later the builder reduced prices drastically by $100,000. Do I have a case against the builder because of the price changes? The builder must have known the reduction was coming when I closed, didn't offer a discount to me and failed to disclose that the value of the neighborhood was decreasing.
A: Suppose you bought for $382,000, and the day after closing the local paper announced that a new technology center was opening two miles down the road, a center that would create 2,000 new jobs. Suddenly the builder raises prices to $450,000. Would you feel compelled to give back any of the new value now represented by your property?
It may well be that the builder did not know that prices would be slashed at the time your agreement was negotiated. It's in the builder's best interest to maintain prices, if not increase them. At the same time there comes a point where a slow market simply forces discounts.
As to local market trends, that's something buyers should know. Surely local brokers and newspapers had something to say about fewer unit sales, lower prices, more discounts, reduced construction levels and longer marketing times.
The best way for real-estate purchasers to protect themselves is to work with a buyer broker who is obligated to place purchaser interests first, line up financing from a reputable lender before entering the marketplace, and use a professional home inspector whether you're buying a new or existing property.
Q: I recently purchased a modular home, and even before the closing the well water was cloudy and had a lot of sediment. Also, huge amounts of ground water flowed into the septic pump. The builder promised to return to install a filter system and, when able, re-grade the property. He has done neither, and for two weeks I have had pure mud coming through pipes and sometimes no water at all. This builder has refused to respond to any government agency, my closing attorney's letters to his attorney, or the building inspector. Can I get this builder to buy back his albatross?
A: I doubt that there are any conditions under which the builder will buy back the house. However, a builder has an obligation to deliver a property that meets all building standards and health codes. Perhaps your attorney will want to contact the local health and building departments if nothing is done. They may have a great interest in such construction – and anything else the builder currently has under development.
Another approach would have been to require the establishment of an "escrow" account at closing. Money for the builder could have been set aside in such an account to assure the completion of the grading and work on the well. However, some builder contracts prohibit the creation of escrow accounts or trade discounts for the required use of the builder's settlement provider.
Q: My wife and I just finished our Chapter 13 bankruptcy agreement last November and are planning on selling our current house to buy a slightly bigger house. We're looking on having a nice family room and a garage that currently we don't have.
We think that applying for a mortgage agreement right after fulfilling our Chapter 13 is rather difficult, but in view of this plan, how should we prepare for this financial move? We both currently have high credit scores. We started by painting and fixing our current house to be more attractive for potential buyers, and we are making sure we are doing all our payments on time.
A: There's good news and bad news. First, you should be complimented for resolving your bankruptcy. That's the good news. The bad? Virtually all lenders will want you to have several years of good credit before they will consider you for financing. Thus fixing up your house is a great idea in the sense of having a better home, and selling is certainly possible, but financing a replacement home is unlikely, if not off the table. Before going further, call lenders and ask if they would be willing to finance you – and under what terms. The last thing you need is a toxic loan that will create more financial problems down the road.
Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to email@example.com.View Foreclosure Article Archives
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