Backing out of a deal for a house

[humes]

HI All,

I have a general question. I am under contract to buy a new construction house but I am now having serious second thoughts. I was in a rush to try to claim the tax credit and I got a ton of free stuff with the house so I thought, yeah, why not, but after further review I am not so sure.

I was always telling my realtor I felt it was slightly over-priced but he told me he had sold a couple of units in that development before and the price I was paying was considerably less than what they paid just a year before, not to mention I got  upgraded wood floors throughout, top of the line granite, upgraded energy saver stuff(insulation, thermal barrier, windows) and top of the line appliances(including refrigerator and washer/dryer) all for free. Quite honestly, my realtor did a better job of selling the place than the builder's salesperson.

Anyway, the builder's salesperson had told me how the development was 90% sold out and all of this and that. When I was negotiating, I didn't see any signs, within the past month, I have noticed several "for sale" signs on houses that have been completed for awhile. It looks like maybe half of the completed houses have been sold.  I also noticed on my block of homes that are being built, only about 1 out of every 4 or 5 houses has been sold, not to mention, they stopped construction on another block, right in the middle of the block. All of these are bad signs to me and I'm wondering should I follow through with this. It's a townhome so I was only planning on living here 3-5 years anyway and then selling, but I'm thinking if they can't sell brand new construction homes with all of these upgrades, how can I sell in the future? Also, when they gave me the GFE it didn't include the HOA and additional insuranace, which combine for about an extra $225 or so a month. The HOA fees are $150 a month, but there is no swimming pool, no doggie park, no nothing. I've asked what do these include and all they say is general maintenance. So it sounds like $150 a month to mow my front yeard.

Has anyone ever backed out of a deal before? What are the consequences, do they just keep your earnest money? Does it affect your credit? I've noticed that they have been checking my credit like twice a month.

[ShanetheMortgageMan]

Won't effect you credit, however if you back out of the contract based on something you have a contingency for you will assuredly lose your earnest money deposit, and in some states, can be sued by the seller.

You can ask the sales office to put in writing how many homes have been sold or are under contract, and how many total homes there are.

You may also have a contingency that provides you the ability to review the homeowners association documents, and if you don't like them, you can back out.  Often that contingency period is up soon in the process, so not sure if it is still there for your transaction.  Your real estate agent may also have other ideas.

[humes]

Hmm, so what could they potentially sue for? I'll probably contact a real estate attorney and ask him to look over it.

I'll talk to my realtor but quite honestly this has been rocky the entire time. I almost didn't sign the initial contract and waited 2 weeks before my realtor convinced me on how great a deal I'm getting.(all of the incentives supposedly had expired by then, but they didn't) Then I started to walk away again for reasons I won't go into but it had to do with the lack of professionalism by the salesperson. All my realtor did was try to steer me to a different development by the same builder where the houses were more expensive.

I'm just seeing more and more things which are reason for concern. I drove around and talked to someone who lived in one of the places. I asked her how did she like it and other questions, come to find out she was actually renting the place. I looked online and saw similar units in the development going for about $20-$30k less than I am under contract for. The development is only about a year old. I don't know if investors have bought up units and are renting units and selling other units but the listing is not through the builder.That raises a red flag as well, how many people have actually bought these units and how many are being rented out by investors? Not to mention, it has been a hassle with the financing company(through the builder as well0. They keep losing stuff and asking for the same info over and over. I have been prompt and professional the entire time but I have not gotten that back from teh builder and it's really irritating me.

I'm fine with losing my earnest money if I get out of a potentially bad deal where I could lose $20-$30k trying to sell it in a few years.

[ShanetheMortgageMan]

Could sue you for any losses they'd have by not selling it to you for the agreed upon sales price.  Here in California if a buyer backs out with no contingencies, and the seller isn't able to sell it for the same price, I've heard that they can sue the previous buyer for the difference.  Definitely good advice to consult a real estate attorney.  Your gut should tell you it's a good deal, you shouldn't need convincing by the real estate agent or the homebuilder.  If you back out it sounds like you may have made a wise decision.

[humes]

Thanks for the info. I'll check with my realtor first and then decide what to do.