Hi Don,

>> The fact that a builder is in financial trouble doesn't mean you're buying a defective product as someone has insinuated.

Please re-read my post - while I did not insinuate that she WOULD be buying a defective product. I did most clearly raise a possible concern that she may wish to take into consideration and I do stand by that. Business that are in trouble may choose to make choices based on that condition. Even if the house was build ok - if he goes under then who exactly takes care of "builder's punch list" and "standard builder maintenance" items? Any new house will have it's share of things that do need TLC for a few years afterwards.

Hi Olivia,

The bottom line is that buying this house is still a business decision. If you do have the ability to kill the deal due to lack of prior disclosure of it being a short sale, then this may well be to your benefit. You could then immediately turn around and renegotiate the whole thing for less (or walk away). This gives you Leverage - with a big capital L - especially in this market - with a developer that you NOW know to be under some degree of distress. Too bad for him and good for you.

I don't know if you actually have "your own agent" on this. When I built with a developer, we just used the builder's internal agent and design guy and bought direct. We happened to do quite well on it - but we built in 1999 and sold in 2007.

Super good luck to you!

Olivia

The FDIC has nothing to do with this. It is a deposit insurance corporation and doesn't make construction loans. Your builder may not have known the sale was going to be "short" when he signed it, particularly if he was also the developer. It's hard to explain but the commercial loans builders have are subject to a lot of lender manipulation. The fact that a builder is in financial trouble doesn't mean you're buying a defective product as someone has insinuated. It doesn't reflect on the true value of your deal either so calm down and take a breath. Give your agent a little time to sort this out. Both the builder, and his bank, know that selling homes is the best way to move forward. There may be some delays but I believe you'll get the home at the price you bargained for and it will turn out to be a great investment.

I hope that you are implying that the house is fully built already? You won't be able to count on the builder to honor any home warranty - he'll be out of business soon enough. So ... do you really want a house that was just built by a guy whose business has been going under for the last year? One might guess that he's been cutting corners as much as possible - with your new house.

But .... this could be a good situation ... well possibly. I don't know WA real estate law but it stands to reason that your contract may be voidable at no penalty to you - since there was no prior disclosure of the short sale situation.

Ok ... let's say that is true. So kill it - and then figure out what a new and Lower bid will be! You'll want to ensure that this isn't a "long" short sale - meet with the bank president and get his prior approval on the #s.

Olivia
I would contact an attorney that specializes in real estate. They will be able to answer your question at a reasonable cost to you. If you don't know a good real estate attorney I can recommend one here in Kirkland or you can call her for a referral in your area. Leslie Drake at Zeno, Drake and Halsley 425-822-1511
extension 223.
Mary

Did you use a Realtor? If so, then your earnest money should be in a non-interest bearing account no one can touch until signed off by all parties. As far as your offer, your Realtor should be able to speak to lender on your behalf. The bank nor government want to hold on to a property they have a solid, reasonable offer on. If you didn't use a Realtor, you may need to consult an attorney that can act on your behalf. Sorry, this sounds like a mess when buying a house should be fun and exciting. I hope you get this worked out quickly!