Profile picture for PhillipCh

Backing out from the purchase contract

Hi,

The seller recently accepted our offer and I just locked in the loan.  We have 1 month and half left before closing date.  But just little while ago I did some research on google about the builder after I already made the offer.  All the reviewers are from the homeowners of this builder and all of them give bad review.  Most of the reviewers complain that they start fixing the house as soon they own the home and these homes are new built home.  Basically the built quality is very poor.  And the builder does not respond back on time when they ask to fix the issue.  After reading these reviews, I feel worry and whether I should move forward with the purchase. I plan to visit that neighbor community to ask for real reviews from the real homeowners.  So my question is that if the real homeowners give bad reviews to the point that I feel no confident to continue with the purchase, what can I do?  What kind of penalty will I have?

thank you.
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November 15 2013 - Seattle
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Answers (13)

Phillip - thanks for the follow up post ....good information to share ...hopefully you get the  customer serice to  come throught soon to make the necessary repairs  ...feel free to stay in touch
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January 28
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Dave Skow,

We ended up purchasing the home.  I had home inspector came in, but couldn't find any potential issue.  Now after living in the home for almost a month, we've noticed some defects such as carpet floor with squeaky sound, door frames are not alignment so when we close them, they make noise, and bathroom  moister built up under the air fan on ceiling when taking warm shower.   All of these defects have been reported to the seller, but one week and half has gone, seller hasn't responded yet.  But the overall we love the home, neighborhood, and the floor plans; however just like in the research that I did, the build quality is not where I hope it to be, and the service is slow.  I wouldn't recommend this builder to a friend, but the floor plan is definitely yes.

thanks Dave for the follow up.
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January 28
phillip - what did you end up doing ?
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January 27
The other day there was a question from a buyer on the benefits of using a buyer's agent to buy new construction.  Here's your answer.
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November 15 2013
You need to carefully review all of the contingency clauses in your Agreement of Sale. Examples are home inspection contingency and mortgage contingency.  If you are not satisfied with the outcome of the home inspection, for example, you can terminate the Agreement and get your deposit back, as long as you had a proper home inspection contingency clause in your Agreement of Sale. This is why it is so important to have a good Buyer's agent representing you in the process, even if it is new construction.
 
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November 15 2013
You should have an inspection done whether it is a contingency or not.

Either use the report that the inspector generates or have the inspector with you to do the builder's walk-through. Note every single issue that comes out of the inspection and refuse to close until everything is complete to the inspector's satisfaction, if you can.

Note that the inspector is not an expert on anything and he/she may recommend that you have another specialist consult on specific systems.  This is why it may be better to do the inspection in advance of the walk-though.

Your broker should be able to recommend an inspector that has new construction experience.
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November 15 2013
Just remember, you do not have to close until you are satisfied (unless your requests are irrational). I do strongly recommend ALL items on your puchlist be remedied prior to closing or you will have trouble getting them back to do small items.  Builders are crazy busy, their workers are very busy and often don't show up and you probably work 9-5 so it would be hard for them to get in for leftover unfinished projects anyways.

So often the buyer pushes the builder and lender so hard to close, the close on an unfinished house which in not a good idea for anyone. 

Also, keep in mind, builders are usually much savvier on codes and safety than private home inspectors but the more help you have to make you feel comfortable, the better.
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November 15 2013
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thank you for all the responds.  I did a quite few researches on home builder but it was hard to find the review so I stopped searching until comes to this builder there are some reviews by the homeowner themselves, but I did the research was kind of late.

Right now I haven't talked to my real estate agent yet because I just found out the reviews last night.  So I would like to bring this concern to him for his inputs.  The seller already gave me the walkthrough appoint which is a month away.  So far the seller is very responsive.  Often takes them only 2 days to get respond back.  However there are few reviews saying that before they get your money, they're very responsive to your need but as soon as they get your money, you would be on your own. 

The contract or the loan that I'm having does not include home inspection.  But everywhere on the web, they suggest to do home inspection even if the house is new built and that is what I plan to do.  I already brought this up with real estate agent that I would like to have home inspection and he said he would make appointment as soon as the seller gives us their schedule to go in.

thanks
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November 15 2013
I have been selling new construction for many builders for 10 years. Just as in any profession, there are a few bad builders but for the most part they are very qualified and knowledgeable in their trade. You should have researched the builder prior to the transaction but if you have a non refundable deposit and still want to proceed address the concerns you have with the builder. 
How far a long is the house? Request a walk-through with the builder and bring a private home inspector to your prior to close walk thru.

Most builders get bad reviews because the buyers that purchase their homes are lazy and think the house will be "maintenance free". They don't want to hang shower curtain rods or change light bulbs. They do not understand that even 3 coats of top of the line Sherwin Williams paint will sink into primed drywall after 1-3 years and they will have to repaint. Or that the grade will settle (like in all houses) and they have to build it back up around foundation in 6-12 mos. They also think anytime a cabinet door is crooked the builder should come running with a team of carpenters to straighten it...perhaps they should learn to use a screw driver. Don't let lazy people's complaints frighten you, research the claims so you feel comfortable.

City codes are very tight and it is hard for builders to pass off poor quality work.. unless it is cheap finishes which then you can upgrade at a later time.

Good luck with your research and keep an open mind :)
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November 15 2013
Read. Your. Purchase. Contract.
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November 15 2013
Did your offer include a Home Inspection clause?  Are you out of the inspection time period?  Your realtor should be able to assist you with this.  If not, best advice would be to seek a good real estate attorney.
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November 15 2013
Reviews on an Internet board are more likely to be negative .but certainly worth reading / considering ... Asking existing homeowners is a good idea but will likely lean towards being more positive ( I would think) If possible to ask questions to previous owners - you might receive most accurate feedback Regarding exiting contract - review / discuss options with your real estate agent ( assuming you have one)
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November 15 2013
The best advise would have been to research the builder before considering making an offer. Have you discussed this with your Realtor? In your current situation I would strongly recommend contacting a Good Attorney, sooner rather than later. Good Luck!
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November 15 2013
 
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