Home Buying in Oklahoma City>Question Details

Madowner, Home Buyer in Oklahoma City, OK

my builder gave me $8000 in credits toward my new home. we used a portion to cover closing costs. the estimated closing costs were, of course, more

Asked by Madowner, Oklahoma City, OK Wed Jun 16, 2010

than actual closing costs. Now, we are trying to get the builder to give us the difference in the form of a gift card beacuse this protion was not used on our home. the builder refuses to let us have it stating that there is no difference to "it was your realtor's fault" excuses. We had to fight the builder for money back for our fence since he did not put it up(the neighbor put one up first). The builders excuse that time was " you already contracted for a fence". We informed him that he could not charge us for a fence someone else put up.
So, are we able to get the diffence reimbursed in some form from the unused credit that ws promised to us? Of the $8000 that was supposed to be available for us to use we only were able to uses $7500. We feel as though we entitled to the whole $8000. Please offer any advice.

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It depends on how the contract was written. Keep in mind that it is illegal for a buyer to walk away from the closing table with more money than they brought. Let's say that you had a contract and put down $1000 earnest money. Your total closing costs are $5000, but the contract says 'Seller will pay buyer's allowable and non-allowable closing costs up to $8000.' You would not have to pay the $1000 because the $8000 would cover it, so you get a check back at closing for $1000 or it can apply to your down payment. The seller CANNOT pay any part of your down payment. The remaining $3000, the seller keeps.

One way to chew up a large amount like that is to apply the closing cost money to the PMI or MIP up front fee, or a VA the funding fee. Those fees are 'allowable', but you cannot only partially apply funds to those fees. It an all or nothing matter. If you have $8000 in closing costs covered by the seller and your actual closing cost is $6000 you have $2000 left. Depending on the price of the house that is probably not going to be enough to cover the fee so it will be rolled into the loan. If you apply it to the fee first, you will be short on normal closing costs and will have to make up the difference by bringing more to the table.

Either way it plays you are not entitled to the overage. The builder could offer $100,000 in closing costs, but if those costs are only $6000 that is all you get.

The question I have is how did you have $8000 in closing costs? I sell a bunch of new construction 14 last year, it is about 25%-33% of my business, and closing costs have rarely exceded $4000. We had one this year that was $7000 and that was due to some outrageous lender fees.

As far as the fence goes it depends on how the contract was written. If it says that the builder will include a fence, 'up to 200' of 6' cedar stockade privacy fence with 2x4 cross bracing, set with capped steel posts, and will include 2 gates, one on each side of the house.' then he has fulfilled the contratual obligation and I can't imagine why you would think that you would get money back. IF, on the other hand, the contract was written with an allowance for various items, like '$2700 allowance for up to 200' of fencing' then you can reallocate left over fencing funds to other areas of the house. For this reason we do not write contracts with a fencing allowance. We price it with the home. Light package, appliance package, trim package, and others all have a specific dollar amount allocated to them. We had one girl who was allocated $900 for the light package and she only spent $300 on the whole house by shopping hard for 2 months. She was able to allocate the $600 to other upgrades in the house.
1 vote Thank Flag Link Wed Jun 23, 2010
Wow. Sounds like you've been through quite an ordeal. The best answer I can give is it depends on how the contract is written and any addendments to the contract that address upgrades. If it states that the $8K will only go to closing costs and there are only $7500 of closing costs, then your builder is technically right. Legally you cannot receive any unused seller's concessions at closing.

So the easy answer is probably not. But there are ways to negotiate with the builder to accomodate for this $500 shortfall in a legal way. Feel free to call if you wantto go over these.

By the way, I am a lender and not a licensed realtor. Please consult your realtor before making a decision. Thanks!

Will Koenig
1 vote Thank Flag Link Wed Jun 16, 2010
If a state contract was used, it stipulates what should happen if there is a dispute over how the contract plays-out. Our, you can sue, which will cost more than a gift card is worth! If you took-out a loan, gift cards to Buyers are HIGHLY frowned-upon in Oklahoma, (it's a RESPA thing).

Ultimately, if no gift card or "credits" addendum was done prior to closing, and nothing else is in writing to cover what part of the $8000 went where, you may be "out" the $500. If your Realtor is persistent enough, and the Builder hopes to sell another home in your community, he/she may give-in and provide something. Client and Realtor feedback can make or break a Builder's presence in a community, (I know from experience on both sides).

Best of luck!
Web Reference: http://www.ubhometeam.com
1 vote Thank Flag Link Wed Jun 16, 2010
What does your Realtor say about all this mess? Sounds like everything was not complete when you went to the closing table. Did the builder oringialliy agree to giving you the difference if all the $8000 was not used at clsoing? Did the builder or inspector give you a "punch list" of items stillneeding repair or finishing? There are many things that could have happened in this situation and its immpossible to come up with answers with out more information. Also, it could have been worded in your contract that the builder would pay UP TO $8000. Meaning if you only needed $7500, that's all the builder would be intilted to pay.

Good Luck!

Jennifer Henning
0 votes Thank Flag Link Fri Jul 23, 2010
It depends on the contract that was signed; did the builder have his own contract or was it written on the State of Oklahoma Real Estate Commission's contract?
0 votes Thank Flag Link Wed Jun 23, 2010
The question is - was $8000 in credit promised to be used towards closing costs, or did he promise $8000 in credits for the purchase of the home?

It appears by your statement that the builder promised to give a credit of $8000 towards closing costs. If your closing costs were actually less than $8000, then the builder does not have to give you the difference. In fact he probably can't. If he does, then he could be in violation of the Real Estate Settlement Procedures Act (RESPA). He gets to keep the difference.
0 votes Thank Flag Link Wed Jun 16, 2010
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