Can I back out or renogiate before closing?

**avizpa** · 12-08-2008, 12:32 AM

Hello Guys,
I signed a purchase agreement for a new home 9 months ago with a builder. I think I made a good deal when I negotiated the price. I got a price reduction of $32K when I signed the contract. I was happy with the price and they also offered "Price Protection" in case the prices went down before closing.

Now, 9 months later, the base price has gone down $25K (8% of the original base price $312K). However, when the builder applies the "Price Protection" I only get a reduction of $1600 (not the $25K I expected).

The "justification" is that the "protection" cannot be combined with any other offers or discounts. That's what the fine print of the "price protection" says too. So, that means the $32K discount I was able to negotiate at the beginning is not being applied at all with the price protection. I either take the original price minus the $32K adjustment or I take the new price minus some upgrades they're paying anyways (which is only $1600 lower compared to the home base price reduction of $25K).
What options do I have? Back out? renegotiate before closing? If I back out I'd probably lose all my down pymt ($15K) but at least I won't lose $25K and the risk that prices continue going down.

Appreciate your advise. Closing is in 1 month.

Avizpa

**Mike Taylor** · 12-08-2008, 03:23 AM

Avizpa -

You are in a tough position and I do not envy you. This kind of thing is happening all over and a major reason the builders are hurting so bad. My first suggestion would be to see if the builder will renegotiate the contract with you. Obviously, you will most likely have to threaten to walk away before they will take you serious.

If you do have to walk away, you will most likely lose your earnest money but it might be worth it.

**gelokron** · 12-11-2008, 05:38 PM

this is happening alot in florida where I am. How i have seen people get out of this is simple. By law in fl you are required to get some kind of community docs and it is either within closing or signing the purchase agreement( its a certain number of days i cant remember right now). Oh yea its condominium docs if you are in a community(not a single random lot). If this is the case you have a good shot of getting out. Speak with a real estate attorney and suggest this. Man i wish i knew what it was exactly. Good luck

**mWoods** · 12-11-2009, 06:30 AM

Not that it's much consolation to you but you're not the only one this is happening to. At least you have not actually purchased the home. Some builders are starting neighborhoods with higher end series then switching to mid prices series which leaves those that purchased in the beginning upside down in their mortgage vs. property value.