As soon as the builder broke the contract with her they should have had a certified check with all her down payment and any extras she paid them. Otherwise I would consider it fraud and theft by deception.
depending on how far along they progressed, and the materials purchased, he could just drop the equipment off in her front yard and theres the down payment back
@@azza-in_this_day_and_age can it? I mean she didnt buy that, she bought a house, and she wasnt the one that cancelled. Giving something that is supposed to worth the same amount doesnt sound like it'd be legally plausible.
@@KaleSerpent nah she did. its literally her money what paid for it, and would be part of her house. some guys just keep the materials on site, as theyre not theirs
The buyer who offered $50,000 over, no inspection, and quick close was probably a corporation or hedge fund. They will update the house and rent it. They are doing this all over the US. It's mostly starter homes and it pricing out first-time buyers.
@@bartleymollohan1090 there was a 60 minutes or similar program on another network that talked about a couple of investment groups buying homes for rentals. Maybe not on this particular case because it is a new build but homes that are 10 to 50 years old . They like to buy in " up and coming" areas . Supposedly it is only 1% of the house up for sale.
This is why when my wife and I had our house built, we bought the land up from. we then had our lawyer draft a contract for the builder that stated he got paid in installments based on reaching certain milestones. This way if the contractor for any reason walks away, we haven't paid for any work that was not done. In fact any work that was done we would not be paying for unless he reached the agreed upon milestone.We could then hire a new builder to pick up where he left off and the original builder would be responsible for any additional costs incurred by our having to hire a new builder.
@Cooking With Pop, "we then had our lawyer"...there you go. I am not a lawyer, and have nothing to gain by other people hiring lawyers, but I strongly recommend doing so in such a situation. You're not so much *spending* money on a lawyer as you are *protecting* money with one. I've hired lawyers to look out for my interests, and so far haven't regretted it a single time. Kind of like hiring a professional (and disinterested) home inspector.
@@kcirful this is true, but at least the funds are protected and sitting in the bank so you have the opportunity to hire someone else to finish the job. Due diligence in finding a reputable builder and a good contract protecting your interests are the two most important steps you can take before breaking ground. My construction did not go without hiccups, but that contract kept me protected. At the end of the build I failed the final inspection for some minor things. The builder wanted to get paid and said i could hold back some money and he will be back to fix them. I told him ,no, I will hold back the entire last payment (25% of total) until the job is complete as stated in the contract, and the job is not complete unless it passes final inspection. Amazingly all the inspectors concerns were fixed and within a weeks time, the inspector was back and the house passed inspection. I have no doubt that had I paid the builder it would have been weeks if not months before he would have been back to fix the issues.
I hope this builder has prime real estate in hell for this. Who knows, depending on the builder, this could be a blessing. Blaming it on material prices is one thing if it actually is the case, however with how much more people are paying over market for houses right now it also is just the builder being greedy. This house was done and ready to close in a couple weeks. There should have been the option to have the materials lists reviewed and just paid the overage. This builder just was to make a lot more by selling in a hot market.
This happened to hundreds of pre-buyers here in BC, Canada. The developer figured the pissed off buyers and lawsuits were worth it. They did pay a fine and had to pay back all down payments but they still made millions. I know damn well my builder wanted to do it to us. My realtor caught their realtor doing some shady shit so they didn't dare pull any more stunts.
I did over 25 years in construction I've been in insurance and I'm a home inspector and a commercial inspector. I went to college for construction management and a few other fields. What I'm seeing in this market right now is insanity on steroids!
There's plenty of affordable places to live in great areas. You just don't want to live there and you're unwilling to admit you cannot afford the area you do want to live in. I want beach front property in the Bahamas, but the houses are out of my range. That situation is no different then yours.
@@srmofoable lol, your comment was the perfect blend of ignorance and arrogance. Telling someone they can afford a house when most starter houses are priced far above what the average salary can afford without eating ramon is absurd.
@@srmofoable yes it is different. That's like telling someone who complains about milk being unaffordable, "hey, well the price of the fillet mignon I want is unaffordable, so we're really in the same situation.". There aren't any affordable places in great areas. There are affordable places, and there are great areas, not both.
@yboul I remember feeling that way 30 years ago. We are now living in a home that is paid off. Keep saving your $ and be ready for a good deal when the market cools down. Then the delay will provide great satisfaction rather than anger.
I think your right, Steve. Anyone who can afford a home at that price would be well advised to have a reputable attorney review the contract BEFORE signing it! LOL!! Still, that builder should be chastised for treating his clients that way. I was a general contractor for 20 yrs. and never even thought about doing something like that.
You likely didn't hire illegal aliens, subcontractors with under paid and under qualified employees, and alway use incorrect materials, and purposely choose to not follow every part of the designs, and build over property lines, just to get the owners to pay more, including $300,000 lawsuit for the home being on or over the property lines. You might not have mentioned to the next door neighbor about suing the owners of the new house and property, either, or had your family members move into the completed house, without any legal rights on your part. Maybe, you are an honest person of integrity. Thanks. We who have met the other contractors appreciate those qualities you possess and exercise.
@@ajcongdon1772 I would have never mis-represented any condition or quality of materials to a client. Building inspectors would not allow anyone to move in until after final inspection. My subs would take care of hiring their own labor so can't guarantee all were legal. However I was on-site 95% of the time so any "fudgeing" would have been caught before it even happened. I also never had any "call-backs" to correct problems. I made sure it was done right the first time! I cannot say the same for all of my competition😞
It honestly sounds like she couldn't afford it, especially if $5000 is preventing her from looking at other properties. She probably had the whole thing set up for a mortgage with a modest down payment and signed a ton of paperwork without proper counsel. Doesn't mean she deserved to get screwed, obviously, but she was probably in over her head.
My wife and I hired an attorney when buying and later selling a house in NJ. Did I like spending the money? No. Did I like having someone else explain to the buyer that if he backed out he would pay a penalty? Yes. The attorney fee was about 1/2% of the cost of the house. It was worth it.
I believe in NJ you are actually required to have a lawyer for closing. I had a few minor issues after the fact because the former owners left a the sewer bill unpaid and tried to get me to pay it. My lawyer covered any issues from 3 years of closing that were related to the previous owners.
@@themonkeyhand I read it to mean that the attorney fees ended up amounting to about 1-2% of the cost, not that the attorney charged based on a percentage of the cost.
This Happened to me in 89' in New Jersey. The Builder ran into major issues when building (water table too high), wanted 50k more for home, canceled contract. But I was working for IBM at the time and when House was being built, I installed audio wiring, projection installations and high amperage wiring for Audio Room. I took the case to trial and won on "Equitable Estaple"
@@thomasheerjr9268 The problem is that most small claims courts (from what I understand) would consider $5,000 too much for their court. I want to say, just offhand, that most are around $1,000 to $1,500 these days. I could be wrong, but I'm pretty sure it's nowhere near $5,000 - which means regular court and attorney fees.
I've always bought the land prior to construction. If a builder wanted to sell a house out from under me, I would get to name the price for leasing or selling the land it sits on. If the builder then finds no one wants to buy it, he's already exited the contract and the price house on my property is whatever he's willing to accept.....which will be lower as his loan to cover labor and material would be coming due shortly.
I bought the land and hired people to do certain things and then I did a lot myself. I did all the electrical including the meter. I also did all the plumbing except the well and pump. They dont require building permits, engineering or inspections here if you dont use a bank. I overbuilt everything because my labor is cheap.
@@rasizdraggin7965 Actually, it's based on my last two builds. If I own the land, a builder can't break the contract and sell to someone else. I've never had a builder try to get out of a contract, but they can't (with any benefit) if you bought the land prior to the construction. That's reality, not fantasy.
@@Chris_at_Home My last experience was similar. My current house uses SIPs with a galvanized skin. I paid for the foundation work then cashflowed the materials. SIP houses go up fast and require much less onsite labor. They also require much less heating and cooling.
@@wisenber Nice, I looked into SIPPs but with shipping they are real expensive up here. I went with double stud 2X4 with a. 2x8 top plate.its filled with 30 PSI R40. We went a traditional ceiling but has 60 worth of batts.
When my mother passed away in December of 2020, I was selling her home and for an offer from a “we buy houses” company that was a little more than asking. Glad I sent it to my attorney. He pointed out a clause that said they could back out any time up to day of closing without cause. They were upset that I didn’t accept their offer.
I get those in the mail and they charge you for both sides of the realtors fee in the cost. So they are doing a cash offer but deducting 6% + other cost where there are no realtors involved. Then they turn around and rent the house out or AirBnB it and it causes first time home buyers a bunch of headaches.
Most of the "we buy houses" people don't actually buy houses. They set up a sale with somebody else, then pocket the difference between what they paid you and what they sold it to the other guy for. If they can't find somebody willing to buy it for more then they back out.
@@azza-in_this_day_and_age I'd be inclined to agree with you, except that according to the video, this has happened to several people with this builder. And add on the fact that they are unreasonably difficult to get ahold of, it kinda adds up that this isn't due to rising costs.
Ethics are only as good as your morals... they are most definitely not the same thing. This is why ethics training is so worthless and meaningless and why nobody takes it seriously. We all know that training people on how to behave cannot replace a firm moral foundation. And there is no firmer moral foundation than Jesus of Nazareth.
This is why you never buy an unfinished house on a lot that you dont own, you can purchase a finished house, or you can purchase a lot and pay a builder to build the house. But unless you own that property the builder has no obligation to sell you the home your reserved. I had something similar happen to a friend of mine about 15 years ago. She was looking for a highrise condo in dallas within walking distance of her work. Her realtor had her meet with a developer to purchasea condo in a new highrise that was being built, the building was about 80% complete, the way it was built only a few of the corner condos on the lower floors had balconies. She chose to purchase a corner condo with a balcony and paid cash for it because they were only something like 80k with a 400$ monthly building fee that didnt start until she moved in. The 400 included all services, a gym, a pool, access to several community spaces, 2 garage parking spots and 24/7 onsite security. So it was steep, but not bad for what you get. Time came and the building was completed. She got her call that her condo was move in ready. She gets to the building and the concierge greets her and takes her up close to the top, telling her that they “upgraded” her condo to a higher floor “for a better view”. The condo she is taken to is an inner unit and not a corner, has no balcony, and the office that was supposed to have a window is half the size and is tucked into this weird little corner down a hall that only leads to it and has no door or window. She made a fuss and at first they pointed to the contract telling her she when she bought a condo she was buying A condo, and not THE condo they showed her. However when she purchased there was a 18k dollar difference between the condo she thought she was getting and the condo she received. They ended up reimbursing her the difference so they could sell the more premium condos at a higher price, but the only reason she even got this concession was that there was a 180 sqft difference between the condo she originally paid for and the one she received. She was not the only person to have this happen and many of the other tennants were equally pissed. In the end her building went bankrupt because they sold just under half the units which was not enough to cover the operating and maintenance costs. the developer was trying to sell the condos at nearly double the original price of a unit and it ended up getting bought for much less than that per unit by a rental firm who rented the condos to buisnesses instead. Eventually my friend left her job for greener pastures and ended up selling her condo to the appartment company for a decent premium, and bought a home out in the suburbs near her new job.
That is also part of the reason why my recent investment is in a "used" property. I didn't want to wait anymore and honestly new construction is too expensive even for my comfort in my target area. This investment is meant for rental income so buying to expensive also means asking for very high rent. My other property was for resale. However buying preconstruction is a lot less expensive albeit with certain risks. When I had invested in my other property, I had to wait over 2 and 1/2 years for delivery and had to fight to maintain my original purchase price. The following day after I got the keys, I put it on the market for sale. I was going to make a 5 figure profit but it didn't sell immediately. There was one guy that was going around and making low ball offers. He countered my price by saying I should not be greedy and make a 5 figure profit in 1 day. He said he had visited this project when it was in the presale phase. I told him that I took the risk of buying presale, had a large quantity of money in deposit with 0% interest for 2.5 years. He should of bought then and that he can be the "greedy person". Property values have also gone up quite a bit in 2 years and he was hoping to get the unit at the price of 2 years ago... Luckily I was in a financial position to hold and leave the unit empty. I told him to no bother with any offer unless it was serious. He did eventually find a unit at a price he liked (still more than the price of 2 years before) because another owner was desperate to sells. His financial situation had changed because of the delays and needed to sell asap. I ended up selling and set the highest sale price in that project at the time. Just out of curiosity, I just went back to see if there are any new listings in that area and see none. I do know that more recent sales have been higher than my sale price. I did raise the bar!
I went through a similar situation with a major builder. I won't name names, but their brand name starts with an "L". I only got a positive turnaround to the buffoonery when I threatened to make a formal complaint about them with the CFPB, HUD, and the VA.
Why not call the builder out by name? Same thing Steve didn't do in this video, the actual article States what builder it was. Consumers need to know who to watch out for.
@@danr9584 who to watch out for? All of them. These days, it sounds like the only way to get a fair shake out of a builder is if you have their family as collateral. Real estate hostages, sounds ever so modern and civilized! If I ever retire, I think I'll retire to a civilized country.
TC 5:52 The construction materials price hikes are true. But waiting until the last minute to pull the rug on the buyer is inexcusable. Keeps the $5000 yet more egregious .
I wish I still had my uncles old house in Houston. It had an owl in one of the oak trees in the back yard. Really cool mother bird. Taught her babies well.
And then they stop work and demand more money to continue. They threaten to put liens on the house and property if you don't pay the extra money, or they threaten to leave out things like the roof or the windows if you don't cooperate. Buyers have lots of ways to get screwed by unethical builders.
Not true, obviously. All it would have taken is making sure you didn't sign a one sided contract that allowed the contractor to do this. Edit- and if a builder won't sign a fair contract, find a different builder and location. The fact that they own the land going in does give them a lot of leverage though. Time to lobby for some restrictions on builder contracts.
@@TheRealScooterGuy Well it's part of the solution. THe other half is to act as your own GM and to sub out each segment of the built. Hire a roofer, framer, plumber, electrician, etc. If someone balks, fire them and hire another.
And that's exactly how my Dad built all three of the homes he has built in his lifetime. First he acquired the property. Then he hired a general contractor. He worked closely with the Contractors, too. I don't know about the first home, I was only ten at the time. But when he was building a summer home, he talked to the contractor every weekend he went up there, sometimes at his private home. There were many changes. He actually shortened the house by five feet to save $2000 before construction began. In the home they live in now, they worked closely with the builder, utilizing wood from a barn on their previous property. It can be done, but it helps if you educate yourself and are willing to sort of do things the hard way.
Having worked as a contractor doing software development, I've NEVER regretted money spent on a contract review by my lawyer. And yes, I do read them first myself. What some people will try to slip by you in a contract is asTONishing.
@@actaeon299 unfortunately life is not that easy all the time. In the last year there have been numerous issues that have slowed construction and driven up costs. While it's easy to have the perspective that this is a profit driven contractor, the costs due to price changes, labor shortages, COVID restrictions, and 'supply chain' issues are substantial and putting some builders out of business. We don't have the particulars of the story available for this case. If you want a house for a set price, buy a finished house in a stable market. Otherwise, the price can go up.
When you said the builder had done this to others it sounds like the contractor used them (the sure buyer at a sucker price) to get the bank to finance the construction because they didn't have the money, then backed out to increase the price. I will be surprised if she really gets her additional money back.
Who would have ever thought that allowing 50 million no skilled/low skilled workers into the country just before and during the pandemic would result in a shortage of affordable housing and fuel efficient cars? Uhhh... Me!
As a home builder this makes me so angry, I could never imagine doing this to one of my buyers. I know in this market that by the time closing comes my owners have 40k in equity but that only makes me happy for them.
This story is similar to the video you did about auto dealers raising the price of the car even though you have a purchase agreement with the dealer. It really feels so unethical. Great videos Steve! Keep ‘em coming.
Even though the contractor may do this as per contract the FTC might still consider this an illegal bait and switch. This particular use of the clause in the contract may also be considered as unconscionable if taken to court. Everyone, please read all comments in this thread before posting as people are repeating what others have said. I'm fine with having a discussion but please make sure you are advancing the discussion and that your point hasn't already been put forward.
Yes, the unconscionable/violates-public-policy angle is what I think could be pursued. But this woman can't afford a $50K bump in house price (presumably split up into many monthly mortgage payments). She may not be in a position to pay for competent legal representation. I'm sure this seedy builder's company takes such matters into consideration too, when they decide who they're going to screw over.
The woman was financially harmed by the last minute cancellation of her contract as she would have had to cancel and lease/rental agreements, move her stuff and/or paid for storage of her stuff. For a "custom" home there are usually dozens of meetings to go over finishes, and upgrades, appliances, etc. This is time the builder cost her. There should be limits to the time from a closing date that a contract can be cancelled and I'd at least think it should be based on the notice period required to get out of a rental contract, plus a couple weeks. This way the buyer doesn't end up homeless. Sure this buyer is staying with family, but not all buyers have that option. And she may end up in a new rental that costs more, is the builder going to pay that rent increase for the buyer? Of course not, because the contract is one sided. There's no state protections that supersede these contracts I bet. I'm ok with builders wanting to not lose money, but when prices goes up above what was budgeted, they should have talked to the buyer then to make either arrangements to increase their deposit, or cancel then or try to sell their stake to someone that could assume the contract for more and get some appreciation.
@@clandestine5959 incorrect. The FTC moves at government snail pace. On top of that, cases like this often require consumer complaints to get their attention. Just because it doesn't appear like they are doing anything doesn't mean that these practices are going unnoticed.
Canadian home builder allowed people to work on their own homes to lower cost. When the market had an upswing houses were sold out from under buyers who discovered the contract that allowed them to work on their home that devalued their labour "for tax purposes" also devalued their labour for payment. $50 contract for months of site cleanup was common, and you'd also see $200 contract to tile,etc.. A few took it to court, but the judge was not sympathetic, pointing out they also tried to take advantage.
This has been happening for years here in Australia. Sometimes they get it by deliberately delaying construction, which triggers automatic cancellation clauses that have the appearance of protecting the purchaser from non-delivery. Other times it's more like in this story. Utter scumbag behavior from the builders.
"sunset clauses" its usually the land in the cookie cutter estates or high rise developments , they use your deposit to develop the previous stage of the subdivision, drag their feet on your stage while finishing the previous one (and getting paid in full for those block on settlement) then they sunset your contract, give you back your deposit then sell your block to someone else for a higher profit. they are also Liars when it comes to settlement dates, they always say "oh its a couple of months away" when they havnt even put in utilities or roads.
They probably do this so they can essentially borrow money without interest because the customer puts all the money down and they don't pay it back until it sells. Would be interesting to try to sue under the claim that it's a loan scam. Seek maximum possible interest as a penalty.
@@Smart-Towel-RG-400 Builder loans, construction loans, etc are common. The land can even be used as a down payment in some cases. A set amount from the bank, used in pieces for draws to pay the contractor. After completion, it’s swapped over to a mortgage. Happens all the time.
@@jk-kr8jt I'll bet that half the new subdivision being built ( 50ish homes all around the $700k mark) are builder financed with the home owner pre purchasing the land. It gives the builder something to put a lean against. The others are spec homes that are totally builder financed.
Sure, but it's a much longer process. There's a huge difference between buying a new construction from a large builder and you get to choose your tileset vs buying a plot of land and looking for a builder who will build a home to your specs or using existing blueprints they may have and getting a quote for it. All the while, you're already making payments on the land. And let's say you can't find a builder who will build the home for what you had estimated it would cost. Now you're stuck with a plot of land that you cannot afford to build a home on, lol.
As long as they have her $5000, has the contract really ended? NAL, and definately not good at US contract law, but as a layman in EU contract law, even if not written in, the party breaking a contract will have to pay damages to the other party. And if they have taken additional money under the duration of the contract lenght, that has presidence over cancellation clauses.
I would have liked for the Reporter to ask the Builder if it was a Private Person who purchased the Home or A Corporation like Blackrock, who is using U.S. Taxpayer money to buy up Real Estate. If it was a Private Person who purchased the Home, what the Builder did was fine, but if it was for a Corporation like Blackrock, that is disgusting!!
When we last moved, we signed on a new house before listing the old one. (We were fortunate enough to be able to swing the new downpayment without needing the equity in the old house) Before we had moved, we listed and had an interested buyer in the old house. Our realtor wanted us to sell the old house with no contingencies. I said, "No, it needs to be contingent on us actually closing and moving into the new house." She said, "But you already have a closing date. Banks prefer home contracts with no contingencies." She kept trying to convince me to let it go and I said, "You seem to think we're negotiating here. We're not. I'm not signing that without a contingency." She asked what could possibly happen since we already had a closing date, the sellers of our new house had moved out, and our loan was approved. I pointed out the new house could burn down or a pipe could burst and flood the house for a month without anyone knowing it until we do the last walk-through. If that happens, I didn't want to be stuck in a situation where we had no home. She finally understood, lowered her head, and said, "OK fine, we'll add the contingency." :-)
"think the Southfield, Farmington Hills area" Why did I not see this coming, you literally have a WRIF sticker... good to know we've got guys like you around!
Is there nothing like a futures contract for lumber/materials? Someone places a house order in February and the builder calls up their suppliers saying "I need X delivered in June, Y delivered in August, ..." And locks in the price for those deliveries/knows what those prices will be before pricing the build? This seems like a failure of project management.
@DeathNikki the materials shortage is everybody running out right now and buying what they need for the next year. Everybody telling their suppliers what they need for the next year let's the suppliers properly allocate capacity.
@DeathNikki lots of the crunch happened because companies at the beginning of 2020 thought they would have a drop in demand and called up suppliers and cancelled orders. The suppliers did the same. When companies realized that they needed those orders they had to get back in line. Sometimes dealing with long lead times etc. If you know you need wood in 6 months and tell the mill, they'll make sure to have the raw logs scheduled for delivery. (The oil markets, grain markets, etc have operated this way for decades). The other supply shocks - like toilet paper - weren't so much tied to a lack of raw resources as they were tied to "60% of the supply chain is set up to deliver to commercial customers/commercial grade TP" and suddenly you need like 95% of the demand met in grocery stores.
This is happening a lot in New Zealand, and in some Australian States (those whereit's not prohibited by law). The contracts are supplied by the builder/developer and include "sunset" clauses which are written so as to allow the builder/developer to do this. The "extra" amount on the price is often over $100,000 more than the initially contracted price.
Clauses like these are why don't friends of mine bought the land and then found a builder to put a house on it. Harder to sell the house out from under you if you already have deed to the land.
I'd take them to small claims court and go for damages. You can't take money and back out of a contract without paying some sort of interest for that loan.
They are making so much on the deal they won't care. She made a small down payment and paid an extra $5K for some options -- the interest on that won't amount to nearly as much as they are making at the other end of this deal.
@@TheRealScooterGuy The thing is that you're footing part of the bill for it to be built, while getting nothing in return. The interest could easily be $1k considering she had 8500 put into it for over a year. I'm sure she could get something out of them, considering they broke contract and weren't timely in repaying.
Ugh, that poor woman. To think you've got just a week to go to move into your brand new home only to have it ripped out from under you and resold....that's just horrible! Yes, get a lawyer. I've always had a lawyer with my real estate transactions. The realtors would be pissed but I needed to protect myself and my investment.
After watching the TV show Homestead Rescue, I am shocked by how many people buy houses without an inspection. Salt water well? Heavy metal Poisoned land? Huge trees leaning over the house or barn? No water at all? Giant drain pipe off a hill aimed at the house with major signs that water has flowed many times under the house? The posts holding up the house rotting and broken? Dead trees lining a multi mile driveway/fire road? If you are not capable of finding these problems, get an INSPECTION.
Wouldn't be a great thing if all legal documents were required to be in plain language? Oh, wait, how many lawmakers are lawyers or are owned by corporations with slush funds and lots of lawyers? Asking for a friend.
@@murraystewartj Even if a contract is written in plain language, you need knowledge of how the contract interacts with existing law, the foresight to know the practical ramifications down the line, a keen eye to spot gaps in the agreement, the hustle needed to negotiate the contract, and the experience of how to deal with the legal process if it ever comes to that. Lawyers provide a valuable service, and I would rather pay a lawyer than the guy trying to screw me over.
@@godowskygodowsky1155 True. Like Shakespeare wrote, only fools rush in. But the Bard also had something to say about lawyers which may have something to do with that profession's way of obscuring the law from, you know, the regular people bound by those laws. Those folks who then have to pay for a fucking lawyer to untangle the mess that fucking cunt lawyers created to ensure that they have a living.
@@YudronWangmo That's the problem, it wasn't paid for. She had only given earnest money, along with an upcharge for upgrades. She technically didn't own the house yet. If she had purchased the lot up front, then took a construction loan, this couldn't have happened.
The “documentary” joke took me a bit too long for my liking. I should’ve caught that quicker but you played it off so well that I was slow on the uptake😂
You have an allowable amount of wiggle room. When building material goes up 200 to 400% .. who can plan for that. That's insane. I bought sheets of 1/2" CDX when I was redoing my roof in the spring of 2020.$15.50 a sheet. In 2021 it was $60 a sheet or more. Think about it. The builder would be screwed. It's unfortunate but during the pandemic..construction was a scary industry to be in.
@@leozmaxwelljilliumz3360 So they realized that they had to charge her extra 1 WEEK before closing? AFTER the build is COMPLETED? They could have let her know as build was going on, they had at least 3-4 months (when the closing was delayed) to tell her that they will have to charge her more or as soon as materials started to rise in $$ beyond their wiggle room. It is highly deceptive to "get" her in bad circumstances so that she has NO WAY BUT to cough up the $50k they wanted or walk away.
@@strangerland9791 Yeah it's pretty clear the change was motivate by them realizing they could sell the house for more to somebody else since housing prices in the area had gone up, and not just them trying to recoup increased costs.
At the very least, this is highly unethical. There needs to be changes in the law to prohibit this kind of activity. Yes, I understand that prices of building materials go up, but that is the chance you take as a builder/contractor when doing business. Allowing them to back out of the contract, defeats the purpose of the contract.
Adding to what C Y just said, if the building materials had gone down in price (which sometimes happens), you can bet your last dollar that they wouldn't have offered her a discount.
Well yes and no. The contractor shouldn't be forced into losing a ton of money because materials went up. But they shouldn't get to charge more for materials already used. This is where the contractor is a scum bag. He took the money and bought materials at lower costs with her money, then ripped her off to make way more money
@@drunklink350 That's the risk the builder or any business for that matter takes. No one is guaranteed an ROI on their work. If prices are going up that is a heck of an incentive to work quickly and/or to buy your materials up front.
@@currentsitguy When your contractor goes bankrupt them contact or not you're screwed. Plus your way guarantees cut corners and shit work. Also your way will force much higher bids across the board in anticipation of higher building material prices. So congrats you played yourself. This is why many contracts are done in sections with the contract stating the estimate is subject to change due to material costs. By doing so both sides get the best outcome.
If the builder ends up breaking all of their contracts now who in their right mind would ever be willing to enter in a contract with them in the first place. A contract holds no value if they have no plan of honoring it in the first place. Should they not have to pay interest on these deposits, or are we allowing them to take interest free loans with no oversight.
This is happening a lot in New Zealand, and in some Australian States (those whereit's not prohibited by law). The contracts are supplied by the builder/developer and include "sunset" clauses which are written so as to allow the builder/developer to do this. If the original buyer wants to keep the new house they have to agree to the higher price. The "extra" amount on the price is often over $100,000 more than the initially contracted price.
@@KiwiCatherineJemma its a scam so they can use your deposit to finish the subdivision then sell it at a higher price once finished, if the land prices go up enough. They shouldnt be allowed to sell land thats not titled yet.
I call BS on the builder and the company claiming that rising costs of materials is the reason for breaking up contracts when greed was the driving force. Anyone in the construction biz knows what a change order is, and if any material or work costs a few more bucks then it can be negotiated on what to do like looking for alternatives or paying the added costs. If Steve has taught us anything, it would be reading the fine print.
The builder may be 100% correct on the rising cost of materials. However, IMO, he signed that contract to do the work for X price and he should be legally bound to do said work for that price.
You are right 100% - Read and understand what you are signing. Unfortunately the law and the courts are most often concerned with what is "Legal" not what is right, equitable or moral.
Legal or not, breaking a contract in such an unprofessional manner is going to leave a stain on your reputation. If they want to napalm a bridge like in this situation, they are going to find themselves out of business in the next few years because no one will trust them. Then they will wonder, 'How did this happen?'
@@simbriant so what happens if the builder is a shell company who contracts all the actual building out to the subcontactor who is the real company? When the rep gets too tarnished, they just discard the shell and form another one. Hell, the new one even gets to claim its a new company but brings on people with years of experience and it'd technically be true.
I'd love to be a judge in a case like this. I'd create new case law called, "if the shoe was on the other foot test," essentially saying like you pointed out in the video, if the lady was locked into the contract but the market crashed could she get out of the contract? That applied with is the contract relatively equal to both parties...I'd void the contract in favor of the lady or enforce it against the builders. That aside, I'd also consider ruling in favor of the builder in part, in that they can cancel the contract. However, due to breach of contract and lateness of returning the deposit, I would award the lady $5,000 (her deposit) and another $495,000 in penalties, interest, and punitive damages. I'd either be a very popular or very unpopular judge but you know what the best part would be? I wouldn't give a damn either way because you can't do jack crap to sitting judges lol.
I sold a house to Zillow in August. I think if I had put it on the market I could have gotten $235k-$250k. Just for the heck of it I contacted Zillow to see what they would offer, fully expecting the same kind of offer you get when you trade in a car. They offered me $315k, no inspections. All I had to do was get it broom clean. Shortly after this is when Zillow stopped buying houses. I'm not saying I broke Zillow, but I certainly had a hand in it. They recently listed the house for $303k, dropped it to $299k and it has an offer pending on it. The house is in a desirable suburb east of Cincinnati, with a good school system. There is also has a K-6 school in the neighborhood, that's walking distance.
I sold houses for a while, though I wasn't a realtor, I worked for a particular builder and sat in their model home. Anyway, "earnest money" is non-refundable if the buyer decides to go somewhere else. The earnest-money is money given 'in earnest', so that the seller will take the house off of the market, even though the sale isn't finalized. I realize that the builder in this instance refunded the earnest-money, but it seems incredibly duplicitous that one of the two parties can back out at any time and with no penalty. _Read the contract,_ I guess.... though even if she had done that, she likely would've had no recourse, merely an understanding that this COULD happen.
I feel like there should be compensable damages here... lawyers are allowed to tack on ridiculous finance charges for collection suits, where's her interest on the money she's still waiting for?
They get sold to hedge funds. There should be something stopping large hedge funds from cutting the average individual's ability to own a home. They are crushing the only part of the American dream that is left.
I'm really curious if the builders contract went so far as to cover the land the house is being built on. If not that is one avenue to try and get the house back.
There's no way they could get away with this if the client they screwed already owned the lot. It would be a completely different case. I could see them asking for more money from the lot owner (if the contract was favorable enough to them). They couldn't just sell the house for more money to someone else.
Once upon a time here in East Tennessee folks went through a process like this. 1. Completion of excavation and footers poured contractor gets some money 2. Completion of 'under roof' with exterior sheathing in place contractor gets more money. 3. Complete plumbing and electrical ...more money. 4. Hang doors, complete finish work(moldings)...more money. 5. County inspections complete ....the last of the money. This lady obviously had a 'turn key' contract. I do not know if my old timey 1 through 5 method is used anymore but it would have prevented the problem this lady had.
As a Realtor I can say that Builder Contracts are really bad for the buyer. However, if you want a home built they will absolutely insist on using their own contract. They will not sign a regular real estate contract which has protections for both sides. So build at your own risk. You really have no other option. By the way, a Realtor is not allowed to review the builders contract and give you an opinion on it. This could be construed as "practicing law without a license by offering a legal opinion". Such activity could leave them open to suit, fines and even prosecution. That is why Realtors use contracts that offer protections for both parties that have become "standard and customary" in the industry over time.
This is why such people should be referred to competent real estate lawyers. (And in my opinion, if your customer comes to you and asks questions about a builder's contract, you could certainly take a highlighter to any parts you suspect are problematic and suggest they specifically ask a lawyer about those parts.)
@@TheRealScooterGuy You are 100% correct in the case referring to an attorney 100% of the time for builder contracts since they are not "traditional and customary" real estate contracts. However while I would absolutely refer to an attorney for any legal questions that came up. In the case of "traditional and customary" contracts, I have often found if a "knucklehead" attorney gets involved they will often make it impossible for the buyer to purchase the home. The foolish attorney (not all by any means) often takes an adversarial position and tries to skew everything to the benefit of their client. That may in fact be their "job". But it most often results in them getting paid a fee and the seller rejecting the contract because the seller will ask why the buyer is trying to screw them over with their modifications and just look for another buyer. An agent can make a referral but most often the buyer will seek out their own attorney. Prior to being a Realtor I was on the board of a club that owned land. We had to sell the land and relocate because part of our facility was on adjacent leased Federal Property and they refused to renew. We found a buyer and they wanted to have our respective attorneys meet to hash out a contract. I went to the meeting and the next thing they were doing was drafting a 40 page contract that included all sorts of side deals where we would essentially be business partners with the buyers. I told the board I thought we should approach the buyer and tell them either we both fire our attorneys and they pay our price on a standard contract or we would look for another buyer. We had a contract the following day.
Currently building a house with a non-tract (local) builder with a good reputation in the area. They only build in our county, so misbehaving would be bad for them. Price is fixed unless we change something, and we have to agree to cancel the contract. There are good builders out there, and you have to read every word of the contract. People need to understand what they sign, especially with large companies that don't care about their reputation.
@@currentsitguy Sounds easier than it is unfortunately. Probably need cash as well because Its going to be hard to finance. But if you have the time, skill set, connections and cash absolutely.
My daughter bought a house last summer. They had signed the contract nine months before. Be builder stuck with the originally agreed upon price even though they were charging new customers $150K more for the same house by then. We're happy that some builders remain honest.
Stole $5000 from her, nice work builder. A lot of them in Australia are as dodgy or even more so. 80% of new apartments (last 20 years) are defective and are not fire complaint. You cant ever trust a builder to do the right thing.
Don't worry it goes the other way to, my old boss got ripped of (two story house, all structural steel complete) and the guy spent months saying this isn't good enough and that isn't good enough.....after three months my boss simply had to give him all the steel becuase he couldn't afford to continue with it. (We tried to cut it all down and take it away, but the cops come and said we couldn't becuase it was on his land) The worst part is the boss (Micheal emery) was the most fair and the work we done was always better then it needed to be. (I still go past that house every now and then on my travels)
Lumber alone tripled in price! I built some furniture over this last year and I was very unhappy that I had paid so much for it. From the standpoint of the builder it was a proper decision, in execution it was terrible and the cost increases alone should have set off warning bells immediately and the buyer should have received much better notice. I feel for the buyers but the lumber crisis is serious right now.
Lumber prices increased, and if they'd just tried to recoup increased costs that would be fine (so long as it was in the contract), but it sounds like they were pure profit taking here.
@@nacoran Yeah it sounds like their motivation was more "oh wow houses are selling for way more today than we promised to sell this one for" rather than "oops materials cost more than expected"...
I would have lined out the unacceptable portions of the contract. Isn't that what we're supposed to do if we don't agree with it? Iron out the details prior to signing anything. Another great analysis Steve.
She either entitled to a portion of the profit or entitled to the house which ever is in her benefit because of the contractor operating in shady business practices! Not 1 person watching this video would feel any different if they had feel victim to someone with greater skills than them in a specified field became a victim because of an unknown ignorance in which 2 experts possibly took advantage of you! This is clearly one of those situations that happen where there should and could be a law to protect innocent people but there somehow never are laws on the books it's almost like it was meant to be isn't it
@@deusvult6920 Unfortunately, its in every contract a builder uses and if you don't sign it the builder will go on to the next buyer that will. Good builders have a waiting line.
The world is full of crooks. If she was aware of this clause then trust is to blame. It's a deteriorating world when the honest buyer gets screwed by the builder and their lawyers who are nothing but modern day thieves.
This happened to a family member of mine that was building a home in Calhoun, GA. Right before closing they raised her price by another $40,000. This is standard language in house building construction contracts in GA. Don't let these builders use the excuse of lumber prices. I was also in the market to build in GA and the builder I was talking to said the same thing. They were also building in another town an hour away. Houses the same size but $100,000 less due to the location. Sounds more like greed.
Yep, and I guarantee if they'd managed to build it for less than expected they wouldn't refund you the difference, so not sure why they get to raise the price if it costed more than expected.
I have seen the price of lumber more than double since Covid hit. A 2x4 went up 280% and has come down a little, but not even close to where it started. I was buying a new RV long distance and the dealer got upset when I said to fax the contract to my attorney. He said that they didn't do business that way and I replied that I wasn't about to sign a contract that my attorney hadn't reviewed first. Needless to say I didn't buy from them.
Something like that happened in Alaska , the buyer had paid for carpet, cabinets, appliances etc. When new realtors went to show the house to new buyer the interior of the house had been stripped down to the bare studs.
With the price of materials there's alot of small trades here in Ireland,uk that charge a day rate or price labor only. The client pays for materials from builders providers, bit like home Depot. The trades are paid either weekly or monthly.
Probably the builder or another developer partnering with the builder -- not the lady who thought she was closing next week. This kind of clause would not work in a contract to build on a lot you already own.
Love the shirt. Contracts used to be important. Now contracts are as meaningless as a handshake. Nobody has any integrity these days. I guess you best own the land before the building starts. They cant sell the house frim under you unless they move it.
Years ago when I owned a premium event the local resort that I was doing business with for a decade hired a firm to "oversee" all their events. That firm wanted me to sign a contract with similar ludicrous clauses in it. One clause stated that my crew was unable to bring food or water onto the property forcing us all to purchase exorbitant resort food and beverages at resort prices. I had a few good clauses in my own contracts also that allowed me to charge more if my "costs" go up. Their clause triggered my clause, so the existing events that I had agreed to do for a set price now went up in cost. I decided to raise those prices by $10K each for no other reason but for spite and because I could. The next day after getting my new fee schedule for all upcoming events the original company and the resort decided I did not need to sign their contract. Soon after that, the firm was fired, and all went back to normal.
Steve, in Canada you can file a "mechanic's lein" against a property for goods or services provided. Would this not hamper the closure of the property for their deposit & upgrades that not been repaid ?
I am so glad that my wife and I owned our own land before we had our home built on it. Although I wonder what would have happened to the house if they tried to sell it out from under us? Not sure if no trespassing signs would have worked or not. The water and sewer at the edge of the property were in our name also as an expanded road had been put in a year earlier.
After reading the contract I would have stipulated the following be in the contract otherwise I wouldn't sign. 90 days minimum notice must be given before closing date if builder wants to cancel. Builder must also pay buyer all monies given, including for upgrades with 10 % interest within 30 days of cancelling. Non payment of refund results in 10% penalty every 30 days until paid. I know no way they would allow that but I wouldn't sign it either.
While this may be legal, reviews on the contractor's sites explaining what they did, I'd think, would ruin this contractor's long term ability to sell houses on contract. From that point on they'd have to build strictly prebuilt, nothing to order.
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As soon as the builder broke the contract with her they should have had a certified check with all her down payment and any extras she paid them. Otherwise I would consider it fraud and theft by deception.
depending on how far along they progressed, and the materials purchased, he could just drop the equipment off in her front yard and theres the down payment back
@@azza-in_this_day_and_age can it? I mean she didnt buy that, she bought a house, and she wasnt the one that cancelled. Giving something that is supposed to worth the same amount doesnt sound like it'd be legally plausible.
I believe it's called conversion.
@@thomasbonse would that work tho? I mean that sounds like an equivalent of going into a grocery store and paying with bricks.
@@KaleSerpent nah she did. its literally her money what paid for it, and would be part of her house. some guys just keep the materials on site, as theyre not theirs
One of my favorite comments from r/legaladvice: "The only thing more expensive than getting an attorney is not getting an attorney."
Reminds me of an ad for a plumber... You can't afford a good plumber, but can you afford a bad plumber?
rule of acquisition number 17 A contract, is a contract, is a contract... but only between Ferengi.
🔥
The buyer who offered $50,000 over, no inspection, and quick close was probably a corporation or hedge fund. They will update the house and rent it. They are doing this all over the US. It's mostly starter homes and it pricing out first-time buyers.
blackstone? or blackrock or something?
What do you base your theory on? Do you specifically know whether this is the case?
@Bartley Mollohan how about you stfu? that's what he's basing his theory off.
@@bartleymollohan1090 there was a 60 minutes or similar program on another network that talked about a couple of investment groups buying homes for rentals. Maybe not on this particular case because it is a new build but homes that are 10 to 50 years old . They like to buy in " up and coming" areas . Supposedly it is only 1% of the house up for sale.
@@bartleymollohan1090 sir, google exists, there are tons of stories about this
This is why when my wife and I had our house built, we bought the land up from. we then had our lawyer draft a contract for the builder that stated he got paid in installments based on reaching certain milestones. This way if the contractor for any reason walks away, we haven't paid for any work that was not done. In fact any work that was done we would not be paying for unless he reached the agreed upon milestone.We could then hire a new builder to pick up where he left off and the original builder would be responsible for any additional costs incurred by our having to hire a new builder.
some people cannot get financing to do that , although I think they could if they looked ,many states have programs to help
@Cooking With Pop, "we then had our lawyer"...there you go. I am not a lawyer, and have nothing to gain by other people hiring lawyers, but I strongly recommend doing so in such a situation. You're not so much *spending* money on a lawyer as you are *protecting* money with one. I've hired lawyers to look out for my interests, and so far haven't regretted it a single time. Kind of like hiring a professional (and disinterested) home inspector.
All good but then you still have open permits if the contractor bails on you. That could be an added headache
@@kcirful this is true, but at least the funds are protected and sitting in the bank so you have the opportunity to hire someone else to finish the job. Due diligence in finding a reputable builder and a good contract protecting your interests are the two most important steps you can take before breaking ground. My construction did not go without hiccups, but that contract kept me protected. At the end of the build I failed the final inspection for some minor things. The builder wanted to get paid and said i could hold back some money and he will be back to fix them. I told him ,no, I will hold back the entire last payment (25% of total) until the job is complete as stated in the contract, and the job is not complete unless it passes final inspection. Amazingly all the inspectors concerns were fixed and within a weeks time, the inspector was back and the house passed inspection. I have no doubt that had I paid the builder it would have been weeks if not months before he would have been back to fix the issues.
Good idea. We got taken on a house because the builder never installed the kitchen cabinets.
I saw this and was stunned that this was legal for the builder to do according to the article I read.
Devil's in the details
Should have read the contract before signing
I hope this builder has prime real estate in hell for this. Who knows, depending on the builder, this could be a blessing. Blaming it on material prices is one thing if it actually is the case, however with how much more people are paying over market for houses right now it also is just the builder being greedy. This house was done and ready to close in a couple weeks. There should have been the option to have the materials lists reviewed and just paid the overage. This builder just was to make a lot more by selling in a hot market.
This happened to hundreds of pre-buyers here in BC, Canada. The developer figured the pissed off buyers and lawsuits were worth it. They did pay a fine and had to pay back all down payments but they still made millions.
I know damn well my builder wanted to do it to us. My realtor caught their realtor doing some shady shit so they didn't dare pull any more stunts.
Yeah it makes sense, if it’s in the contract then it’s legal for sure.
I did over 25 years in construction I've been in insurance and I'm a home inspector and a commercial inspector. I went to college for construction management and a few other fields. What I'm seeing in this market right now is insanity on steroids!
For many people my age, the prospect of buying a house, ever, is slipping away. I can tell you this is turning from despair to anger.
There's plenty of affordable places to live in great areas. You just don't want to live there and you're unwilling to admit you cannot afford the area you do want to live in.
I want beach front property in the Bahamas, but the houses are out of my range. That situation is no different then yours.
@@srmofoable lol, your comment was the perfect blend of ignorance and arrogance. Telling someone they can afford a house when most starter houses are priced far above what the average salary can afford without eating ramon is absurd.
Sheep is what they want
@@srmofoable yes it is different. That's like telling someone who complains about milk being unaffordable, "hey, well the price of the fillet mignon I want is unaffordable, so we're really in the same situation.". There aren't any affordable places in great areas. There are affordable places, and there are great areas, not both.
@yboul I remember feeling that way 30 years ago. We are now living in a home that is paid off. Keep saving your $ and be ready for a good deal when the market cools down. Then the delay will provide great satisfaction rather than anger.
One house-sale contract I read said the buyer could not criticize the seller on any medium. Now, THAT is a red flag!
I think your right, Steve. Anyone who can afford a home at that price would be well advised to have a reputable attorney review the contract BEFORE signing it! LOL!! Still, that builder should be chastised for treating his clients that way. I was a general contractor for 20 yrs. and never even thought about doing something like that.
You likely didn't hire illegal aliens, subcontractors with under paid and under qualified employees, and alway use incorrect materials, and purposely choose to not follow every part of the designs, and build over property lines, just to get the owners to pay more, including $300,000 lawsuit for the home being on or over the property lines. You might not have mentioned to the next door neighbor about suing the owners of the new house and property, either, or had your family members move into the completed house, without any legal rights on your part. Maybe, you are an honest person of integrity. Thanks. We who have met the other contractors appreciate those qualities you possess and exercise.
This is why you should if possible get a lawyer or at least a paralegal to help finalize home purchases, it help to prevent situations such as this.
@@ajcongdon1772 I would have never mis-represented any condition or quality of materials to a client. Building inspectors would not allow anyone to move in until after final inspection. My subs would take care of hiring their own labor so can't guarantee all were legal. However I was on-site 95% of the time so any "fudgeing" would have been caught before it even happened. I also never had any "call-backs" to correct problems. I made sure it was done right the first time! I cannot say the same for all of my competition😞
Should post the builders details on the Internet with a photo of the douchbag. Information is power.
It honestly sounds like she couldn't afford it, especially if $5000 is preventing her from looking at other properties.
She probably had the whole thing set up for a mortgage with a modest down payment and signed a ton of paperwork without proper counsel. Doesn't mean she deserved to get screwed, obviously, but she was probably in over her head.
My wife and I hired an attorney when buying and later selling a house in NJ. Did I like spending the money? No. Did I like having someone else explain to the buyer that if he backed out he would pay a penalty? Yes. The attorney fee was about 1/2% of the cost of the house. It was worth it.
What a life when you earn by the percent and not by the hours of actual work done.... lawyer probably worked the case while having his morning shit.
You mean 0.5% ?
I believe in NJ you are actually required to have a lawyer for closing. I had a few minor issues after the fact because the former owners left a the sewer bill unpaid and tried to get me to pay it. My lawyer covered any issues from 3 years of closing that were related to the previous owners.
Lawyers make life better if you can afford one.
@@themonkeyhand I read it to mean that the attorney fees ended up amounting to about 1-2% of the cost, not that the attorney charged based on a percentage of the cost.
This Happened to me in 89' in New Jersey. The Builder ran into major issues when building (water table too high), wanted 50k more for home, canceled contract. But I was working for IBM at the time and when House was being built, I installed audio wiring, projection installations and high amperage wiring for Audio Room. I took the case to trial and won on "Equitable Estaple"
Equitable estoppel?
Estoppel.
@@davidh4653 Sorry...... Google Didnt know this word and substituted ...... didnt look... lazy me
Could she take them to small claims court for the missing refund and if they fail to show, put a lien on the property and prevent the sale.
@@thomasheerjr9268 The problem is that most small claims courts (from what I understand) would consider $5,000 too much for their court. I want to say, just offhand, that most are around $1,000 to $1,500 these days. I could be wrong, but I'm pretty sure it's nowhere near $5,000 - which means regular court and attorney fees.
I've always bought the land prior to construction.
If a builder wanted to sell a house out from under me, I would get to name the price for leasing or selling the land it sits on.
If the builder then finds no one wants to buy it, he's already exited the contract and the price house on my property is whatever he's willing to accept.....which will be lower as his loan to cover labor and material would be coming due shortly.
What?! Nice fictional story thats not based in any reality
I bought the land and hired people to do certain things and then I did a lot myself. I did all the electrical including the meter. I also did all the plumbing except the well and pump. They dont require building permits, engineering or inspections here if you dont use a bank. I overbuilt everything because my labor is cheap.
@@rasizdraggin7965 Actually, it's based on my last two builds. If I own the land, a builder can't break the contract and sell to someone else. I've never had a builder try to get out of a contract, but they can't (with any benefit) if you bought the land prior to the construction. That's reality, not fantasy.
@@Chris_at_Home My last experience was similar. My current house uses SIPs with a galvanized skin. I paid for the foundation work then cashflowed the materials. SIP houses go up fast and require much less onsite labor. They also require much less heating and cooling.
@@wisenber Nice, I looked into SIPPs but with shipping they are real expensive up here. I went with double stud 2X4 with a. 2x8 top plate.its filled with 30 PSI R40. We went a traditional ceiling but has 60 worth of batts.
The builder should be boycotted at all costs
The builder was Heatherland Homes
When my mother passed away in December of 2020, I was selling her home and for an offer from a “we buy houses” company that was a little more than asking. Glad I sent it to my attorney. He pointed out a clause that said they could back out any time up to day of closing without cause. They were upset that I didn’t accept their offer.
Those companies screw people all the time. My wife is a realtor and I’ve heard many stories
I get those in the mail and they charge you for both sides of the realtors fee in the cost. So they are doing a cash offer but deducting 6% + other cost where there are no realtors involved. Then they turn around and rent the house out or AirBnB it and it causes first time home buyers a bunch of headaches.
Most of the "we buy houses" people don't actually buy houses. They set up a sale with somebody else, then pocket the difference between what they paid you and what they sold it to the other guy for. If they can't find somebody willing to buy it for more then they back out.
You did due diligence. These people,should’ve too
We get harassing letters and text messages from these companies trying to get us to sell our home.
This sounds like the builder has been entering these contracts with the intent to cancel and sell for more.
its not every year that homes double in value, so no, this is a fluke of governmental policy. thanks, quantitative ease, and covid restrictions.
@@azza-in_this_day_and_age I'd be inclined to agree with you, except that according to the video, this has happened to several people with this builder. And add on the fact that they are unreasonably difficult to get ahold of, it kinda adds up that this isn't due to rising costs.
@@nevskvaelor1864 sereval people, that year, im sure.
@@nevskvaelor1864 maybe hes a scumbag too, who knows.
And is possibly using the original “buyer’s” financials to get the home built. Seems dirty at a minimum
If she was not fully refunded then isn't the contract still in effect.
Funny how you mention that ethics are the first thing taught in law school, yet it is totally legal to be unethical.
Ethics courses teach you how to avoid ethics problems while being unethical. Just like tax law courses teach how to evade taxes.
Different words in the Dictionary, and for some, that's the only point that matters.
Ethics are only as good as your morals... they are most definitely not the same thing. This is why ethics training is so worthless and meaningless and why nobody takes it seriously. We all know that training people on how to behave cannot replace a firm moral foundation. And there is no firmer moral foundation than Jesus of Nazareth.
It's also a system made by sociopaths.
This is why you never buy an unfinished house on a lot that you dont own, you can purchase a finished house, or you can purchase a lot and pay a builder to build the house. But unless you own that property the builder has no obligation to sell you the home your reserved.
I had something similar happen to a friend of mine about 15 years ago.
She was looking for a highrise condo in dallas within walking distance of her work. Her realtor had her meet with a developer to purchasea condo in a new highrise that was being built, the building was about 80% complete, the way it was built only a few of the corner condos on the lower floors had balconies. She chose to purchase a corner condo with a balcony and paid cash for it because they were only something like 80k with a 400$ monthly building fee that didnt start until she moved in. The 400 included all services, a gym, a pool, access to several community spaces, 2 garage parking spots and 24/7 onsite security. So it was steep, but not bad for what you get. Time came and the building was completed. She got her call that her condo was move in ready. She gets to the building and the concierge greets her and takes her up close to the top, telling her that they “upgraded” her condo to a higher floor “for a better view”. The condo she is taken to is an inner unit and not a corner, has no balcony, and the office that was supposed to have a window is half the size and is tucked into this weird little corner down a hall that only leads to it and has no door or window. She made a fuss and at first they pointed to the contract telling her she when she bought a condo she was buying A condo, and not THE condo they showed her. However when she purchased there was a 18k dollar difference between the condo she thought she was getting and the condo she received. They ended up reimbursing her the difference so they could sell the more premium condos at a higher price, but the only reason she even got this concession was that there was a 180 sqft difference between the condo she originally paid for and the one she received. She was not the only person to have this happen and many of the other tennants were equally pissed.
In the end her building went bankrupt because they sold just under half the units which was not enough to cover the operating and maintenance costs. the developer was trying to sell the condos at nearly double the original price of a unit and it ended up getting bought for much less than that per unit by a rental firm who rented the condos to buisnesses instead.
Eventually my friend left her job for greener pastures and ended up selling her condo to the appartment company for a decent premium, and bought a home out in the suburbs near her new job.
That is also part of the reason why my recent investment is in a "used" property. I didn't want to wait anymore and honestly new construction is too expensive even for my comfort in my target area. This investment is meant for rental income so buying to expensive also means asking for very high rent. My other property was for resale. However buying preconstruction is a lot less expensive albeit with certain risks. When I had invested in my other property, I had to wait over 2 and 1/2 years for delivery and had to fight to maintain my original purchase price. The following day after I got the keys, I put it on the market for sale. I was going to make a 5 figure profit but it didn't sell immediately. There was one guy that was going around and making low ball offers. He countered my price by saying I should not be greedy and make a 5 figure profit in 1 day. He said he had visited this project when it was in the presale phase. I told him that I took the risk of buying presale, had a large quantity of money in deposit with 0% interest for 2.5 years. He should of bought then and that he can be the "greedy person". Property values have also gone up quite a bit in 2 years and he was hoping to get the unit at the price of 2 years ago... Luckily I was in a financial position to hold and leave the unit empty. I told him to no bother with any offer unless it was serious. He did eventually find a unit at a price he liked (still more than the price of 2 years before) because another owner was desperate to sells. His financial situation had changed because of the delays and needed to sell asap. I ended up selling and set the highest sale price in that project at the time. Just out of curiosity, I just went back to see if there are any new listings in that area and see none. I do know that more recent sales have been higher than my sale price. I did raise the bar!
I went through a similar situation with a major builder. I won't name names, but their brand name starts with an "L". I only got a positive turnaround to the buffoonery when I threatened to make a formal complaint about them with the CFPB, HUD, and the VA.
Why not call the builder out by name? Same thing Steve didn't do in this video, the actual article States what builder it was. Consumers need to know who to watch out for.
@@danr9584 who to watch out for? All of them.
These days, it sounds like the only way to get a fair shake out of a builder is if you have their family as collateral. Real estate hostages, sounds ever so modern and civilized!
If I ever retire, I think I'll retire to a civilized country.
TC 5:52 The construction materials price hikes are true. But waiting until the last minute to pull the rug on the buyer is inexcusable.
Keeps the $5000 yet more egregious .
I wish I still had my uncles old house in Houston. It had an owl in one of the oak trees in the back yard. Really cool mother bird. Taught her babies well.
The only way to protect yourself from this situation would be to buy the land upfront and then build.
And then they stop work and demand more money to continue. They threaten to put liens on the house and property if you don't pay the extra money, or they threaten to leave out things like the roof or the windows if you don't cooperate. Buyers have lots of ways to get screwed by unethical builders.
Not true, obviously. All it would have taken is making sure you didn't sign a one sided contract that allowed the contractor to do this.
Edit- and if a builder won't sign a fair contract, find a different builder and location. The fact that they own the land going in does give them a lot of leverage though. Time to lobby for some restrictions on builder contracts.
@@TheRealScooterGuy Well it's part of the solution. THe other half is to act as your own GM and to sub out each segment of the built. Hire a roofer, framer, plumber, electrician, etc. If someone balks, fire them and hire another.
And that's exactly how my Dad built all three of the homes he has built in his lifetime. First he acquired the property. Then he hired a general contractor. He worked closely with the Contractors, too. I don't know about the first home, I was only ten at the time. But when he was building a summer home, he talked to the contractor every weekend he went up there, sometimes at his private home. There were many changes. He actually shortened the house by five feet to save $2000 before construction began. In the home they live in now, they worked closely with the builder, utilizing wood from a barn on their previous property. It can be done, but it helps if you educate yourself and are willing to sort of do things the hard way.
@@tracedehaven2190 I didn't know a damn thing when our home burned, but I had a limited hard budget and I'm a fast learner.
Having worked as a contractor doing software development, I've NEVER regretted money spent on a contract review by my lawyer. And yes, I do read them first myself. What some people will try to slip by you in a contract is asTONishing.
It's sad that they can up the cost due to "changes in costs", but you know they'd never lower the price costs, when costs are low.
Exactly. Maybe they should have the building crews concentrate on a house, and build it faster. Instead, they spread it out over weeks/months.
Oh yeah, because anyone should be manipulated into working for nothing? That's the sense of your logic. Its stupid if you couldn't tell.
@@actaeon299 unfortunately life is not that easy all the time. In the last year there have been numerous issues that have slowed construction and driven up costs.
While it's easy to have the perspective that this is a profit driven contractor, the costs due to price changes, labor shortages, COVID restrictions, and 'supply chain' issues are substantial and putting some builders out of business. We don't have the particulars of the story available for this case.
If you want a house for a set price, buy a finished house in a stable market. Otherwise, the price can go up.
@@brianfarris5676 No, they should put a reasonable price in the contract that accounts for them making a profit and then stick with that price.
@@elmateo77 wrong. Prices of materials and else changes. The buy needs to pay those costs.
When you said the builder had done this to others it sounds like the contractor used them (the sure buyer at a sucker price) to get the bank to finance the construction because they didn't have the money, then backed out to increase the price. I will be surprised if she really gets her additional money back.
Since she finances many of the materials, she should get interest at about 10% (working capital).
she didnt finance the materials.
Agreed, and put a lien on the house until she is paid in full if possible.
I have a better idea. Can’t live in carbon.
Who would have ever thought that allowing 50 million no skilled/low skilled workers into the country just before and during the pandemic would result in a shortage of affordable housing and fuel efficient cars? Uhhh... Me!
@@bronzegod8037 what 50,000,000 people?
As a home builder this makes me so angry, I could never imagine doing this to one of my buyers. I know in this market that by the time closing comes my owners have 40k in equity but that only makes me happy for them.
if the builder continues to delay paying back the $5K, maybe she could put a lien on the property?
That's what I was thinking. The lein would delay any sale of the home which would give the original buyer temporary leverage.
This story is similar to the video you did about auto dealers raising the price of the car even though you have a purchase agreement with the dealer. It really feels so unethical. Great videos Steve! Keep ‘em coming.
Even though the contractor may do this as per contract the FTC might still consider this an illegal bait and switch. This particular use of the clause in the contract may also be considered as unconscionable if taken to court.
Everyone, please read all comments in this thread before posting as people are repeating what others have said. I'm fine with having a discussion but please make sure you are advancing the discussion and that your point hasn't already been put forward.
Yes, the unconscionable/violates-public-policy angle is what I think could be pursued. But this woman can't afford a $50K bump in house price (presumably split up into many monthly mortgage payments). She may not be in a position to pay for competent legal representation. I'm sure this seedy builder's company takes such matters into consideration too, when they decide who they're going to screw over.
@@joesterling4299 It costs nothing to file an FTC fraud complaint.
The FTC is in a coma.
The woman was financially harmed by the last minute cancellation of her contract as she would have had to cancel and lease/rental agreements, move her stuff and/or paid for storage of her stuff. For a "custom" home there are usually dozens of meetings to go over finishes, and upgrades, appliances, etc. This is time the builder cost her. There should be limits to the time from a closing date that a contract can be cancelled and I'd at least think it should be based on the notice period required to get out of a rental contract, plus a couple weeks. This way the buyer doesn't end up homeless. Sure this buyer is staying with family, but not all buyers have that option. And she may end up in a new rental that costs more, is the builder going to pay that rent increase for the buyer? Of course not, because the contract is one sided. There's no state protections that supersede these contracts I bet.
I'm ok with builders wanting to not lose money, but when prices goes up above what was budgeted, they should have talked to the buyer then to make either arrangements to increase their deposit, or cancel then or try to sell their stake to someone that could assume the contract for more and get some appreciation.
@@clandestine5959 incorrect. The FTC moves at government snail pace. On top of that, cases like this often require consumer complaints to get their attention. Just because it doesn't appear like they are doing anything doesn't mean that these practices are going unnoticed.
Canadian home builder allowed people to work on their own homes to lower cost. When the market had an upswing houses were sold out from under buyers who discovered the contract that allowed them to work on their home that devalued their labour "for tax purposes" also devalued their labour for payment. $50 contract for months of site cleanup was common, and you'd also see $200 contract to tile,etc.. A few took it to court, but the judge was not sympathetic, pointing out they also tried to take advantage.
"Sign this contract. It means absolutely nothing."
This has been happening for years here in Australia.
Sometimes they get it by deliberately delaying construction, which triggers automatic cancellation clauses that have the appearance of protecting the purchaser from non-delivery.
Other times it's more like in this story.
Utter scumbag behavior from the builders.
"sunset clauses" its usually the land in the cookie cutter estates or high rise developments , they use your deposit to develop the previous stage of the subdivision, drag their feet on your stage while finishing the previous one (and getting paid in full for those block on settlement) then they sunset your contract, give you back your deposit then sell your block to someone else for a higher profit. they are also Liars when it comes to settlement dates, they always say "oh its a couple of months away" when they havnt even put in utilities or roads.
They probably do this so they can essentially borrow money without interest because the customer puts all the money down and they don't pay it back until it sells.
Would be interesting to try to sue under the claim that it's a loan scam. Seek maximum possible interest as a penalty.
Her refund should represent the value when the contract is dissolved plus interest.
Same thing was happening in 2005 & 2006 . If you don’t learn from the past your destined to repeat !!!
Buy the land first, then you have the builder by the proverbials
Yes but that's much harder because you have to carry a mortgage for the whole time of construction if you can even get that kind of loan
@@Smart-Towel-RG-400
Builder loans, construction loans, etc are common. The land can even be used as a down payment in some cases. A set amount from the bank, used in pieces for draws to pay the contractor. After completion, it’s swapped over to a mortgage. Happens all the time.
No builder worth his salt would enter into that deal.
@@jk-kr8jt I'll bet that half the new subdivision being built ( 50ish homes all around the $700k mark) are builder financed with the home owner pre purchasing the land. It gives the builder something to put a lean against. The others are spec homes that are totally builder financed.
Sure, but it's a much longer process. There's a huge difference between buying a new construction from a large builder and you get to choose your tileset vs buying a plot of land and looking for a builder who will build a home to your specs or using existing blueprints they may have and getting a quote for it. All the while, you're already making payments on the land. And let's say you can't find a builder who will build the home for what you had estimated it would cost. Now you're stuck with a plot of land that you cannot afford to build a home on, lol.
As long as they have her $5000, has the contract really ended?
NAL, and definately not good at US contract law, but as a layman in EU contract law, even if not written in, the party breaking a contract will have to pay damages to the other party.
And if they have taken additional money under the duration of the contract lenght, that has presidence over cancellation clauses.
I would have liked for the Reporter to ask the Builder if it was a Private Person who purchased the Home or A Corporation like Blackrock, who is using U.S. Taxpayer money to buy up Real Estate. If it was a Private Person who purchased the Home, what the Builder did was fine, but if it was for a Corporation like Blackrock, that is disgusting!!
The reporter could just pull the county tax records and look up who the new owner of the property was. It’s public information.
Great story and video👍👍
We live in times where fraud is perfectly legal. Signing a contract means nothing.
Why is it fraud? You signed. It’s your fault
When we last moved, we signed on a new house before listing the old one. (We were fortunate enough to be able to swing the new downpayment without needing the equity in the old house)
Before we had moved, we listed and had an interested buyer in the old house. Our realtor wanted us to sell the old house with no contingencies. I said, "No, it needs to be contingent on us actually closing and moving into the new house." She said, "But you already have a closing date. Banks prefer home contracts with no contingencies." She kept trying to convince me to let it go and I said, "You seem to think we're negotiating here. We're not. I'm not signing that without a contingency." She asked what could possibly happen since we already had a closing date, the sellers of our new house had moved out, and our loan was approved. I pointed out the new house could burn down or a pipe could burst and flood the house for a month without anyone knowing it until we do the last walk-through. If that happens, I didn't want to be stuck in a situation where we had no home. She finally understood, lowered her head, and said, "OK fine, we'll add the contingency." :-)
"think the Southfield, Farmington Hills area"
Why did I not see this coming, you literally have a WRIF sticker... good to know we've got guys like you around!
Is there nothing like a futures contract for lumber/materials? Someone places a house order in February and the builder calls up their suppliers saying "I need X delivered in June, Y delivered in August, ..." And locks in the price for those deliveries/knows what those prices will be before pricing the build? This seems like a failure of project management.
@DeathNikki the materials shortage is everybody running out right now and buying what they need for the next year. Everybody telling their suppliers what they need for the next year let's the suppliers properly allocate capacity.
@DeathNikki lots of the crunch happened because companies at the beginning of 2020 thought they would have a drop in demand and called up suppliers and cancelled orders. The suppliers did the same. When companies realized that they needed those orders they had to get back in line. Sometimes dealing with long lead times etc.
If you know you need wood in 6 months and tell the mill, they'll make sure to have the raw logs scheduled for delivery. (The oil markets, grain markets, etc have operated this way for decades).
The other supply shocks - like toilet paper - weren't so much tied to a lack of raw resources as they were tied to "60% of the supply chain is set up to deliver to commercial customers/commercial grade TP" and suddenly you need like 95% of the demand met in grocery stores.
@DeathNikki Actually GPUs are in stock and available to order now, and prices have been dropping fast. Sadly not the case for housing. 😒
Love the shirt.
Both of my parents were born and raised in Air Force families. I myself was born at Shaw.
This is happening a lot in New Zealand, and in some Australian States (those whereit's not prohibited by law). The contracts are supplied by the builder/developer and include "sunset" clauses which are written so as to allow the builder/developer to do this. The "extra" amount on the price is often over $100,000 more than the initially contracted price.
All the home builders in my area have added surge charges on all old contracts due to the steep increase on material.
Clauses like these are why don't friends of mine bought the land and then found a builder to put a house on it. Harder to sell the house out from under you if you already have deed to the land.
Steve I enjoy watching your comments
I'd take them to small claims court and go for damages. You can't take money and back out of a contract without paying some sort of interest for that loan.
They are making so much on the deal they won't care. She made a small down payment and paid an extra $5K for some options -- the interest on that won't amount to nearly as much as they are making at the other end of this deal.
@@TheRealScooterGuy The thing is that you're footing part of the bill for it to be built, while getting nothing in return. The interest could easily be $1k considering she had 8500 put into it for over a year. I'm sure she could get something out of them, considering they broke contract and weren't timely in repaying.
Ugh, that poor woman. To think you've got just a week to go to move into your brand new home only to have it ripped out from under you and resold....that's just horrible! Yes, get a lawyer. I've always had a lawyer with my real estate transactions. The realtors would be pissed but I needed to protect myself and my investment.
After watching the TV show Homestead Rescue, I am shocked by how many people buy houses without an inspection. Salt water well? Heavy metal Poisoned land? Huge trees leaning over the house or barn? No water at all? Giant drain pipe off a hill aimed at the house with major signs that water has flowed many times under the house? The posts holding up the house rotting and broken? Dead trees lining a multi mile driveway/fire road? If you are not capable of finding these problems, get an INSPECTION.
The woman on the phone was likely a secretary for a shared office space.
ALWAYS have an attorney look over a contract before signing it, making changes as necessary. People don't read their contracts.
Wouldn't be a great thing if all legal documents were required to be in plain language? Oh, wait, how many lawmakers are lawyers or are owned by corporations with slush funds and lots of lawyers? Asking for a friend.
@@murraystewartj Even if a contract is written in plain language, you need knowledge of how the contract interacts with existing law, the foresight to know the practical ramifications down the line, a keen eye to spot gaps in the agreement, the hustle needed to negotiate the contract, and the experience of how to deal with the legal process if it ever comes to that. Lawyers provide a valuable service, and I would rather pay a lawyer than the guy trying to screw me over.
@@godowskygodowsky1155 True. Like Shakespeare wrote, only fools rush in. But the Bard also had something to say about lawyers which may have something to do with that profession's way of obscuring the law from, you know, the regular people bound by those laws. Those folks who then have to pay for a fucking lawyer to untangle the mess that fucking cunt lawyers created to ensure that they have a living.
Even for a custom home paid for in cash by the buyer?
@@YudronWangmo That's the problem, it wasn't paid for. She had only given earnest money, along with an upcharge for upgrades. She technically didn't own the house yet. If she had purchased the lot up front, then took a construction loan, this couldn't have happened.
One of thee first things we learn in law classes is contracts. And this is a great example (case law study).
The “documentary” joke took me a bit too long for my liking. I should’ve caught that quicker but you played it off so well that I was slow on the uptake😂
Since they had no intention of selling her the home, I assume they owe her interest for like 2 years on her $8500.
"don't have the extra cushion to pay the spikes in cost"
We have a term for that: risk. Sounds like the builder failed to properly plan for risk.
You have an allowable amount of wiggle room. When building material goes up 200 to 400% .. who can plan for that. That's insane. I bought sheets of 1/2" CDX when I was redoing my roof in the spring of 2020.$15.50 a sheet. In 2021 it was $60 a sheet or more. Think about it. The builder would be screwed. It's unfortunate but during the pandemic..construction was a scary industry to be in.
@@leozmaxwelljilliumz3360 So they realized that they had to charge her extra 1 WEEK before closing? AFTER the build is COMPLETED? They could have let her know as build was going on, they had at least 3-4 months (when the closing was delayed) to tell her that they will have to charge her more or as soon as materials started to rise in $$ beyond their wiggle room. It is highly deceptive to "get" her in bad circumstances so that she has NO WAY BUT to cough up the $50k they wanted or walk away.
@@strangerland9791 Yeah it's pretty clear the change was motivate by them realizing they could sell the house for more to somebody else since housing prices in the area had gone up, and not just them trying to recoup increased costs.
Great advice Steve…thank-you. I learn so much from watching your videos.
At the very least, this is highly unethical. There needs to be changes in the law to prohibit this kind of activity. Yes, I understand that prices of building materials go up, but that is the chance you take as a builder/contractor when doing business. Allowing them to back out of the contract, defeats the purpose of the contract.
Adding to what C Y just said, if the building materials had gone down in price (which sometimes happens), you can bet your last dollar that they wouldn't have offered her a discount.
Well yes and no. The contractor shouldn't be forced into losing a ton of money because materials went up.
But they shouldn't get to charge more for materials already used. This is where the contractor is a scum bag. He took the money and bought materials at lower costs with her money, then ripped her off to make way more money
@@drunklink350 That's the risk the builder or any business for that matter takes. No one is guaranteed an ROI on their work. If prices are going up that is a heck of an incentive to work quickly and/or to buy your materials up front.
@@currentsitguy When your contractor goes bankrupt them contact or not you're screwed. Plus your way guarantees cut corners and shit work.
Also your way will force much higher bids across the board in anticipation of higher building material prices. So congrats you played yourself.
This is why many contracts are done in sections with the contract stating the estimate is subject to change due to material costs. By doing so both sides get the best outcome.
This happened in Michigan. A local attorney said they could sue and win but the legal costs would be more then what the price difference was.
If the builder ends up breaking all of their contracts now who in their right mind would ever be willing to enter in a contract with them in the first place. A contract holds no value if they have no plan of honoring it in the first place. Should they not have to pay interest on these deposits, or are we allowing them to take interest free loans with no oversight.
This is happening a lot in New Zealand, and in some Australian States (those whereit's not prohibited by law). The contracts are supplied by the builder/developer and include "sunset" clauses which are written so as to allow the builder/developer to do this. If the original buyer wants to keep the new house they have to agree to the higher price. The "extra" amount on the price is often over $100,000 more than the initially contracted price.
@@KiwiCatherineJemma its a scam so they can use your deposit to finish the subdivision then sell it at a higher price once finished, if the land prices go up enough. They shouldnt be allowed to sell land thats not titled yet.
The checks in the mail. How many times have we heard that.
I call BS on the builder and the company claiming that rising costs of materials is the reason for breaking up contracts when greed was the driving force. Anyone in the construction biz knows what a change order is, and if any material or work costs a few more bucks then it can be negotiated on what to do like looking for alternatives or paying the added costs. If Steve has taught us anything, it would be reading the fine print.
The builder may be 100% correct on the rising cost of materials. However, IMO, he signed that contract to do the work for X price and he should be legally bound to do said work for that price.
You are right 100% - Read and understand what you are signing. Unfortunately the law and the courts are most often concerned with what is "Legal" not what is right, equitable or moral.
Legal or not, breaking a contract in such an unprofessional manner is going to leave a stain on your reputation. If they want to napalm a bridge like in this situation, they are going to find themselves out of business in the next few years because no one will trust them.
Then they will wonder, 'How did this happen?'
@@simbriant I hope so! If its a densely populated area they will probably survive though. :(
@@simbriant so what happens if the builder is a shell company who contracts all the actual building out to the subcontactor who is the real company? When the rep gets too tarnished, they just discard the shell and form another one. Hell, the new one even gets to claim its a new company but brings on people with years of experience and it'd technically be true.
Such good info. Thanks, Steve 👍 👌
I'd love to be a judge in a case like this. I'd create new case law called, "if the shoe was on the other foot test," essentially saying like you pointed out in the video, if the lady was locked into the contract but the market crashed could she get out of the contract? That applied with is the contract relatively equal to both parties...I'd void the contract in favor of the lady or enforce it against the builders.
That aside, I'd also consider ruling in favor of the builder in part, in that they can cancel the contract. However, due to breach of contract and lateness of returning the deposit, I would award the lady $5,000 (her deposit) and another $495,000 in penalties, interest, and punitive damages.
I'd either be a very popular or very unpopular judge but you know what the best part would be? I wouldn't give a damn either way because you can't do jack crap to sitting judges lol.
The worst part is he has practically rendered her homeless and the odds of her finding affordable housing now is low.
I sold a house to Zillow in August. I think if I had put it on the market I could have gotten $235k-$250k. Just for the heck of it I contacted Zillow to see what they would offer, fully expecting the same kind of offer you get when you trade in a car.
They offered me $315k, no inspections. All I had to do was get it broom clean. Shortly after this is when Zillow stopped buying houses. I'm not saying I broke Zillow, but I certainly had a hand in it. They recently listed the house for $303k, dropped it to $299k and it has an offer pending on it. The house is in a desirable suburb east of Cincinnati, with a good school system. There is also has a K-6 school in the neighborhood, that's walking distance.
I like your shirt! I used to be an engineer on the program.
I sold houses for a while, though I wasn't a realtor, I worked for a particular builder and sat in their model home. Anyway, "earnest money" is non-refundable if the buyer decides to go somewhere else. The earnest-money is money given 'in earnest', so that the seller will take the house off of the market, even though the sale isn't finalized. I realize that the builder in this instance refunded the earnest-money, but it seems incredibly duplicitous that one of the two parties can back out at any time and with no penalty. _Read the contract,_ I guess.... though even if she had done that, she likely would've had no recourse, merely an understanding that this COULD happen.
I feel like there should be compensable damages here... lawyers are allowed to tack on ridiculous finance charges for collection suits, where's her interest on the money she's still waiting for?
Hundo, unfolded, between the first and second columns of lawbooks, on the left side of the first shelf of the main cabinet. 40.
Thought so but wasn't sure. Good eye.
They get sold to hedge funds. There should be something stopping large hedge funds from cutting the average individual's ability to own a home. They are crushing the only part of the American dream that is left.
I'm really curious if the builders contract went so far as to cover the land the house is being built on.
If not that is one avenue to try and get the house back.
There's no way they could get away with this if the client they screwed already owned the lot. It would be a completely different case. I could see them asking for more money from the lot owner (if the contract was favorable enough to them). They couldn't just sell the house for more money to someone else.
Once upon a time here in East Tennessee folks went through a process like this.
1. Completion of excavation and footers poured contractor gets some money
2. Completion of 'under roof' with exterior sheathing in place contractor gets more money.
3. Complete plumbing and electrical ...more money.
4. Hang doors, complete finish work(moldings)...more money.
5. County inspections complete ....the last of the money.
This lady obviously had a 'turn key' contract. I do not know if my old timey 1 through 5 method is used anymore but it would have prevented the problem this lady had.
As a Realtor I can say that Builder Contracts are really bad for the buyer. However, if you want a home built they will absolutely insist on using their own contract. They will not sign a regular real estate contract which has protections for both sides. So build at your own risk. You really have no other option.
By the way, a Realtor is not allowed to review the builders contract and give you an opinion on it. This could be construed as "practicing law without a license by offering a legal opinion". Such activity could leave them open to suit, fines and even prosecution.
That is why Realtors use contracts that offer protections for both parties that have become "standard and customary" in the industry over time.
This is why such people should be referred to competent real estate lawyers. (And in my opinion, if your customer comes to you and asks questions about a builder's contract, you could certainly take a highlighter to any parts you suspect are problematic and suggest they specifically ask a lawyer about those parts.)
@@TheRealScooterGuy You are 100% correct in the case referring to an attorney 100% of the time for builder contracts since they are not "traditional and customary" real estate contracts.
However while I would absolutely refer to an attorney for any legal questions that came up. In the case of "traditional and customary" contracts, I have often found if a "knucklehead" attorney gets involved they will often make it impossible for the buyer to purchase the home. The foolish attorney (not all by any means) often takes an adversarial position and tries to skew everything to the benefit of their client. That may in fact be their "job". But it most often results in them getting paid a fee and the seller rejecting the contract because the seller will ask why the buyer is trying to screw them over with their modifications and just look for another buyer. An agent can make a referral but most often the buyer will seek out their own attorney.
Prior to being a Realtor I was on the board of a club that owned land. We had to sell the land and relocate because part of our facility was on adjacent leased Federal Property and they refused to renew. We found a buyer and they wanted to have our respective attorneys meet to hash out a contract. I went to the meeting and the next thing they were doing was drafting a 40 page contract that included all sorts of side deals where we would essentially be business partners with the buyers. I told the board I thought we should approach the buyer and tell them either we both fire our attorneys and they pay our price on a standard contract or we would look for another buyer. We had a contract the following day.
Currently building a house with a non-tract (local) builder with a good reputation in the area. They only build in our county, so misbehaving would be bad for them. Price is fixed unless we change something, and we have to agree to cancel the contract.
There are good builders out there, and you have to read every word of the contract. People need to understand what they sign, especially with large companies that don't care about their reputation.
This is why IMHO if your are going to build you are better off acting as your own GM and then everyone you hire is a Sub.
@@currentsitguy Sounds easier than it is unfortunately. Probably need cash as well because Its going to be hard to finance. But if you have the time, skill set, connections and cash absolutely.
Sue and get your interest plus find out where the money went and if she paid for material, skin them alive in court.
Too bad price gouging law doesn't apply to houses.
My daughter bought a house last summer. They had signed the contract nine months before. Be builder stuck with the originally agreed upon price even though they were charging new customers $150K more for the same house by then. We're happy that some builders remain honest.
Stole $5000 from her, nice work builder. A lot of them in Australia are as dodgy or even more so. 80% of new apartments (last 20 years) are defective and are not fire complaint. You cant ever trust a builder to do the right thing.
Don't worry it goes the other way to, my old boss got ripped of (two story house, all structural steel complete) and the guy spent months saying this isn't good enough and that isn't good enough.....after three months my boss simply had to give him all the steel becuase he couldn't afford to continue with it. (We tried to cut it all down and take it away, but the cops come and said we couldn't becuase it was on his land) The worst part is the boss (Micheal emery) was the most fair and the work we done was always better then it needed to be.
(I still go past that house every now and then on my travels)
Happened to a friend of mine in Australia. Exactly the same.
Lumber alone tripled in price!
I built some furniture over this last year and I was very unhappy that I had paid so much for it.
From the standpoint of the builder it was a proper decision, in execution it was terrible and the cost increases alone should have set off warning bells immediately and the buyer should have received much better notice. I feel for the buyers but the lumber crisis is serious right now.
Lumber prices increased, and if they'd just tried to recoup increased costs that would be fine (so long as it was in the contract), but it sounds like they were pure profit taking here.
@@nacoran Yeah it sounds like their motivation was more "oh wow houses are selling for way more today than we promised to sell this one for" rather than "oops materials cost more than expected"...
I would have lined out the unacceptable portions of the contract. Isn't that what we're supposed to do if we don't agree with it? Iron out the details prior to signing anything. Another great analysis Steve.
She either entitled to a portion of the profit or entitled to the house which ever is in her benefit because of the contractor operating in shady business practices! Not 1 person watching this video would feel any different if they had feel victim to someone with greater skills than them in a specified field became a victim because of an unknown ignorance in which 2 experts possibly took advantage of you! This is clearly one of those situations that happen where there should and could be a law to protect innocent people but there somehow never are laws on the books it's almost like it was meant to be isn't it
She signed a contract. She's not entitled to anything. Don't sign contracts that can screw you over. It's her own fault
@@deusvult6920 Unfortunately, its in every contract a builder uses and if you don't sign it the builder will go on to the next buyer that will. Good builders have a waiting line.
Should she also be liable for increased costs to ensure a minimum profit, or should it only benefit the consumer?
The world is full of crooks.
If she was aware of this clause then trust is to blame.
It's a deteriorating world when the honest buyer gets screwed by the builder and their lawyers who are nothing but modern day thieves.
This happened to a family member of mine that was building a home in Calhoun, GA. Right before closing they raised her price by another $40,000. This is standard language in house building construction contracts in GA.
Don't let these builders use the excuse of lumber prices. I was also in the market to build in GA and the builder I was talking to said the same thing. They were also building in another town an hour away. Houses the same size but $100,000 less due to the location. Sounds more like greed.
Yep, and I guarantee if they'd managed to build it for less than expected they wouldn't refund you the difference, so not sure why they get to raise the price if it costed more than expected.
Should e read the fine print, got a lawyer. Why is it everyone lane fault when you screw up?
@@dcg590 speak for yourself. I know how to read contracts and I do read them.
@@domdrty I do speak for myself. Built my house and knew better.
I have seen the price of lumber more than double since Covid hit. A 2x4 went up 280% and has come down a little, but not even close to where it started. I was buying a new RV long distance and the dealer got upset when I said to fax the contract to my attorney. He said that they didn't do business that way and I replied that I wasn't about to sign a contract that my attorney hadn't reviewed first. Needless to say I didn't buy from them.
Something like that happened in Alaska , the buyer had paid for carpet, cabinets, appliances etc. When new realtors went to show the house to new buyer the interior of the house had been stripped down to the bare studs.
With the price of materials there's alot of small trades here in Ireland,uk that charge a day rate or price labor only. The client pays for materials from builders providers, bit like home Depot. The trades are paid either weekly or monthly.
Ben between the first two stack of the Michigan law books on the left.
Yeah, that was a little harder to find, but I thought I saw him peeking out from there.
A contract is a contract is a contract… but only between Ferengi.
So, who owned the lot that the house was being built on?
Probably the builder or another developer partnering with the builder -- not the lady who thought she was closing next week.
This kind of clause would not work in a contract to build on a lot you already own.
Love the shirt.
Contracts used to be important. Now contracts are as meaningless as a handshake. Nobody has any integrity these days.
I guess you best own the land before the building starts. They cant sell the house frim under you unless they move it.
Years ago when I owned a premium event the local resort that I was doing business with for a decade hired a firm to "oversee" all their events. That firm wanted me to sign a contract with similar ludicrous clauses in it. One clause stated that my crew was unable to bring food or water onto the property forcing us all to purchase exorbitant resort food and beverages at resort prices.
I had a few good clauses in my own contracts also that allowed me to charge more if my "costs" go up. Their clause triggered my clause, so the existing events that I had agreed to do for a set price now went up in cost. I decided to raise those prices by $10K each for no other reason but for spite and because I could.
The next day after getting my new fee schedule for all upcoming events the original company and the resort decided I did not need to sign their contract. Soon after that, the firm was fired, and all went back to normal.
The Tom Hanks Doc was great and Wilson was hilarious.
Steve, in Canada you can file a "mechanic's lein" against a property for goods or services provided. Would this not hamper the closure of the property for their deposit & upgrades that not been repaid ?
I am so glad that my wife and I owned our own land before we had our home built on it. Although I wonder what would have happened to the house if they tried to sell it out from under us? Not sure if no trespassing signs would have worked or not. The water and sewer at the edge of the property were in our name also as an expanded road had been put in a year earlier.
After reading the contract I would have stipulated the following be in the contract otherwise I wouldn't sign. 90 days minimum notice must be given before closing date if builder wants to cancel. Builder must also pay buyer all monies given, including for upgrades with 10 % interest within 30 days of cancelling. Non payment of refund results in 10% penalty every 30 days until paid.
I know no way they would allow that but I wouldn't sign it either.
Thank you for the information.
While this may be legal, reviews on the contractor's sites explaining what they did, I'd think, would ruin this contractor's long term ability to sell houses on contract. From that point on they'd have to build strictly prebuilt, nothing to order.
Names change, people have short memories, and in this case it's likely they have a happy home buyer...just not the original one.
Need to publish that contractor's name. So that when the current bubble bursts, people will know what he has done in the past.