Jb, Home Buyer in San Ramon, CA

Can you re-negotiate with a builder once you are already under a contract? To be specific it is a Shapell home in San Ramon & the prices are

Asked by Jb, San Ramon, CA Thu Jul 22, 2010

declining Does anyone know what a buyer can do if they are already in a contract with a builder and the market starts going South? Since the time from when you sign a contract till the close of escrow is about 5 months what can you do if the home prices really start declining? Can the price be re-negotiated with the builder or am I completely out of luck? Thanks for any help or advice.

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JB,

It is important that you look at your contract and not give a huge deposit. Most builder contracts say that if you do not perform then you lose your depsit but if you are willing to risk your deposit and walk some builders will conede on prices than risk a fallout. New home sales contracts are written in favor of builders and the sales agents do not represent you, they work for the builder.

The problem is that if they lower the price for you what are they going to do for all the other contracts in their escrow pipeline? It then becomes a business decision for the builder that may not work out favorably to the buyer.
Web Reference: http://bob2sell.com
1 vote Thank Flag Link Fri Jul 23, 2010
It is very important to read and understand the Builder contract. As stated earlier it is constructed in the builder's favor. I've seen language where there was no appraisal contingency, or that the buyer accepts the price and pays the difference, and even passive instead of active contract where if no response by the buyer and the time frame has passed the buyer accepts regardless.

Sometimes your contract will be a price for a Lot reservation and then you negotiate on price later. One of the problems with appraisals on new construction comes into play with the value of upgrades and lot premiums. Since builders often times do not put these into the MLS an appraiser will not know if one of the comparable homes was a result of a builder concession or buyer paid improvement.

There is no harm in asking, you will need to understand what rights and duties you have in the contract should you decide not to go forward with the purchase. In addition to your deposit you may also have to pay for any upgrades or changes orders you agreed to.
Web Reference: http://terrivellios.com
0 votes Thank Flag Link Thu Jul 29, 2010
Rainskat, Sorry I was in initial withholding stage and ready for contract. Did not sign a contract.
0 votes Thank Flag Link Wed Jul 28, 2010
Fiolibuyer - How were you able to get out of your contract with abbington? Did you have an agent represent you when you signed the contract? Did you have builder write in additional contract terms to protect yourself?
0 votes Thank Flag Link Wed Jul 28, 2010
I had last october thought of purchasing Abbington (came out of contract because of price issue of 5k, then shifted to Fioli). My agent said that, if the appraisal does not come to selling price, Shapell would bring the price down to appraised price.
All the best in negotiation. Also I donot see any harm in asking through agent or yourself directly.
0 votes Thank Flag Link Tue Jul 27, 2010
That's comforting to know fiolibuyer. Fioli's builder is Centex. I hope Shapell will do the same. If not, I may consider walking too. I think if enough buyers do that, there's a better chance they will negotiate.
0 votes Thank Flag Link Tue Jul 27, 2010
Hi Jb,

I know of an instance in Fioli Windemere where they rewrote all contracts when they decreased prices by 10% last March. My understanding is, they rewrote voluntarily.
0 votes Thank Flag Link Mon Jul 26, 2010
Indeed, home prices have dropped in both Athena and Solaire over the last month, and inventory is up significantly with resales across San Ramon.

Walking away while losing your deposit may be a pretty good option, especially if you can pick up a similar resell home for much less. Good luck..
0 votes Thank Flag Link Sat Jul 24, 2010
It depends. If the property appraisal gets cut and the value isn't there you should be able to negotiate being that the property is brand new.
0 votes Thank Flag Link Thu Jul 22, 2010
You would need to review your contract but without seeing it I would assume you would have to forfeit your deposit. I hope you have a buyer's agent. Having a buyer's agent on your side when negotiating a deal on new construction can be invaluable. Even if you have no legal recourse you may want to take your concerns to the builder and see what they are willing to do considering the market decline..... it never hurts to ask!
0 votes Thank Flag Link Thu Jul 22, 2010
If you have a realtor representing you throughout the contract they can try to negotiate with the builder. If not, look at your contract for a clause that states you can withdraw your offer for various reasons. Do you have a contingency period to protect you in case you want to withdraw? Each contract is different. Good luck to you.
Suzanne Looker
0 votes Thank Flag Link Thu Jul 22, 2010
I am also in contract with Shapell. Are the prices really dropping? Which community? I always thought that they would at least keep the price the same (on the surface) but offer more options. I hope someone has a good answer for us because backing out would mean more than just loosing our deposits.
0 votes Thank Flag Link Thu Jul 22, 2010
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