Getting cold feet when buying a new house

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Tribune

New member
Hello everybody,

I am quite new in this home buying process. We have put our names in some of the Stonegate communities in Irvine, CA and I am wondering what happens when our name comes up. I appreciate it if somebody can answer my questions below

1. Let's assume that I get a call from the builder and we decide to go ahead. The price is locked now (?) and I should put some earnest deposit money in escrow (25k ?). Is that correct ?

2. We will decide about the upgrades and in six months time the house is built. At that time I should get the loan and sign the contract (?) and officially become the homeowner.

3. What happens if I decide that I do not want that house (after it is built) ? I am told that I cannot be forced into buying the house and they cannot keep the earnest deposit money as well. Is that correct ? What other losses (money/credit/...) may I be facing ?

4. If I decide not to buy that house, what does builder do with a customized house that might not be sold easily ?

5. Is this something that builders deal with all the time or all/majority of the new home buyers keep their promise and buy the property that they originally sign for ?

Thank you very much in advance,
 
1. Yes
2. You sign purchasing contract first, 6 months in advance. You will open the escrow (if you use loan) 45 days before closing date. For all upgrades you choose, you also put in some deposit as well (25% if I remember correctly for TIC)
3. You will lose your deposit unless it is something like a job loss or some major financial emergency.
4. The builder already got your $25k deposit plus whatever deposit you made for the upgrades. So they have enough margin to not lose money on a standing inventory
 
Pretty much everything that CCC already said. 

You put down $25,000 as deposit.  You will lose that money unless there are changes in factors that are out of your control...i.e. you no longer qualify for the loan (remember pre-qual?) or you have some emergency. 

I do not know if it is how every builder works but it is how TIC works and it is the new norm after bursting of the bubble left the builders with a lot of inventory and, more importantly, carrying costs.
 
Most people cancelling their contract and not buying before they close is fairly infrequent but not uncommon.  The builder will offer it to the next people on the waiting listing.  If there is no waiting list, they might list it on MLS. 
 
It may be easy to purposefully not qualify for the financing contingency. Tell your lender that you will likely lose your job in 30 days and that your spouse decided to quit and stay at home and you won't get financing and could back out of your contract.

This is unethical though. If you make a $25K deposit you had better be willing to forfeit it if you walk. I only had to make a $10K deposit on my new home and the builder didn't start on many of the customizations until the financing contingency was satisfied.
 
Tribune said:
Hello everybody,

I am quite new in this home buying process. We have put our names in some of the Stonegate communities in Irvine, CA and I am wondering what happens when our name comes up. I appreciate it if somebody can answer my questions below

1. Let's assume that I get a call from the builder and we decide to go ahead. The price is locked now (?) and I should put some earnest deposit money in escrow (25k ?). Is that correct ?

2. We will decide about the upgrades and in six months time the house is built. At that time I should get the loan and sign the contract (?) and officially become the homeowner.

3. What happens if I decide that I do not want that house (after it is built) ? I am told that I cannot be forced into buying the house and they cannot keep the earnest deposit money as well. Is that correct ? What other losses (money/credit/...) may I be facing ?

4. If I decide not to buy that house, what does builder do with a customized house that might not be sold easily ?

5. Is this something that builders deal with all the time or all/majority of the new home buyers keep their promise and buy the property that they originally sign for ?

Thank you very much in advance,
Click to expand...

It sounds like your not sure purchasing a new home. You should be all in, when you decide to purchase a house. In the contract, it will state the "liquidated damages" if you cancel the contract.

You should check out the following good links below, that can help you out.
http://homebuying.about.com/od/marketfactstrends/qt/020508_WalkAway.htm
http://realestate.msn.com/slideshow.aspx?cp-documentid=28039218

 
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