Need advice on house I purchased that I'm not sure is a good idea

FrancieB

Hi Folks,

Need a little advice on a property i bought. I paid a 12k deposit on a 286k house last March. The house was to be ready in August 2008

The builder messed us about since day one and only last week we only got the call to snag it. Since then we had to move to a different house to rent because our lease was up. We had to take out a new lease in a new house. We have furniture and floors stored in everyones houses. Disaster!!!

Anyway, the 286k we agreed last March seems a lot more than the current price of houses.

Is it possible to get the builder to re negioiate the price or are we committed at this stage?

spockety

FrancieB wrote: »

Hi Folks,

Need a little advice on a property i bought. I paid a 12k deposit on a 286k house last March. The house was to be ready in August 2008

The builder messed us about since day one and only last week we only got the call to snag it. Since then we had to move to a different house to rent because our lease was up. We had to take out a new lease in a new house. We have furniture and floors stored in everyones houses. Disaster!!!

Anyway, the 286k we agreed last March seems a lot more than the current price of houses.

Is it possible to get the builder to re negioiate the price or are we committed at this stage?

Does the contract with your builder say the house would be ready in August 2008?;

godtabh

FrancieB wrote: »

Is it possible to get the builder to re negioiate the price or are we committed at this stage?

Why not speak to your soilcitor and/or the builder?

Caoimhín

It is certainly gone down in price more than €12,000. If you see what i am saying...

MysticalSoul

Not sure if possible to change price, but you can always ask them to renegotiate the price, and see what he says.

spockety

Caoimhín wrote: »

It is certainly gone down in price more than €12,000. If you see what i am saying...

I presume you're not advising that it's possible to just leave the 12,000 with the developer and walk away and assume that's grand that's that?

A contract was signed and the developer expects the buyer to fulfill their half of the bargain, i.e. hand him 298,000 Euro. If he completes the build of the house as per the contract, but the buyer doesn't hand over the 298,000, he can go after the buyer through the courts to get his money.

A contract is a contract.

godtabh

spockety wrote: »

A contract is a contract.

Only when it suits it appears some times

uncanny

FrancieB wrote: »

Anyway, the 286k we agreed last March seems a lot more than the current price of houses.

So what?

You signed a contract. Was there a clause in the contract that stated the market value could not go down or something?

Do you know what a contract is?

Are you over 18?

Victor

Has a contract been signed? What does it say?

FrancieB wrote: »

Is it possible to get the builder to re negioiate the price or are we committed at this stage?

Yes, it is possible to renegotiate, although I don't know how far you will get.

spockety wrote: »

Does the contract with your builder say the house would be ready in August 2008?;

Such things are often fuzzy.

spockety wrote: »

A contract was signed ..

Where does it say that?

FrancieB

Yes a contract was signed. Unfortunately this works in favor of the builder because he has 18 months to complete. So on that basis I cant back out.

Do you think the price would have dropped more than 12k? I keep hearing that house prices are falling but it must only apply to second hand homes. From looking at websites like Daft etc new homes dont appear to be dropping in price.

Just to note I am very keen to proceed, I just dont want to be ripped off

FrancieB

spockety wrote: »

I presume you're not advising that it's possible to just leave the 12,000 with the developer and walk away and assume that's grand that's that?

A contract was signed and the developer expects the buyer to fulfill their half of the bargain, i.e. hand him 298,000 Euro. If he completes the build of the house as per the contract, but the buyer doesn't hand over the 298,000, he can go after the buyer through the courts to get his money.

A contract is a contract.

So you mean if i backed out and let the builder keep my deposit, he could actually come after me for the rest? Are you familair with the expression....you cant take feathers from a frog? On a serious note though, I spoke with my solicitor about that and he has advised that such a thing would never happen

FrancieB

uncanny wrote: »

So what?

You signed a contract. Was there a clause in the contract that stated the market value could not go down or something?

Do you know what a contract is?

Are you over 18?

Am i over 18? What difference does that make?

am i bovvered

Hi Francis,
The fact is the property is worth less than the 12k deposit.
In my opinion whether you should preceed or not depends on a few factors,
* can you stomach walking away from the 12k
* how long you are prepared the live there

My advice would be to try to cut a deal with the builder, he wants you and probably needs you to complete, call him direct tell him you can only secure a mortgage for X and offer him that, take it from there.

FrancieB

am i bovvered wrote: »

Hi Francis,
The fact is the property is worth less than the 12k deposit.
In my opinion whether you should preceed or not depends on a few factors,
* can you stomach walking away from the 12k
* how long you are prepared the live there

My advice would be to try to cut a deal with the builder, he wants you and probably needs you to complete, call him direct tell him you can only secure a mortgage for X and offer him that, take it from there.

You mean contact the building firm (big outift) directly or through my solicitor?

I would really hate to lose the money plus i love the house but the question is, would i get a better deal elsewhere?

I'd be prepared to lose the 12k if i could buy another house for 20 or 30k less

Craft25

look you bought at the worst time and have no doubt lost a fortune in equity.. so, what are ya gonna do, everyones in the same boat!!

if you were buying the house for long term purposes then you should really just grin and bear it, what's the difference what it's worth now if you're not gonna sell for years?

yes the builder probably layed off 90% of his workers and is completing the job with a skeleton crew over a longer period than he originally planned.. he's passed on a bit of the brunt to you but i dont think he's 'ripped you off'... he's just trying to spread his resources like everyone else

am i bovvered

Its hard to give advice without knowing the property, area etc. You need research that yourself, do the figures. like I said if this is a family home and you see yourself living there for a long time,and you love this house, through your solicitor put a lower offer in, worst case they refuse.
Have you considered the fact that this slump has meant that interest rates are significantly less which will save you alot of money too.

FrancieB

Thanks for the advise. I'll put in an offer lower than the agreed price.

My mortgage has lapsed also. The bank might want to revalue the house again when i re apply. What would happen if they were to find the house is worth less than the agreed price?

Victor

FrancieB wrote: »

Thanks for the advise. I'll put in an offer lower than the agreed price.

My mortgage has lapsed also. The bank might want to revalue the house again when i re apply. What would happen if they were to find the house is worth less than the agreed price?

They are likely to restrict the loan to the revised valuation or even only a percentage of the revised valuation.

Here, you may be lucky as most contracts are subject to loan approval.

FrancieB

I wouldnt be too confident about that. My solicitor would have mentioned that if it were the case.

I will call him again and confirm this

am i bovvered

Sorry, I thought you had loan approval for the origional amount.
Your first move should be to contact the bank ASAP, there is no point doing anything until you know how much money you can offer.

Here, you may be lucky as most contracts are subject to loan approval.
Today 20:31

Check the contract, if this is so the ball is totally in your court

ntlbell

FrancieB wrote: »

Thanks for the advise. I'll put in an offer lower than the agreed price.

My mortgage has lapsed also. The bank might want to revalue the house again when i re apply. What would happen if they were to find the house is worth less than the agreed price?

if the price had increased by 80k would you give the developer 80k?

would you be happy if he raised his price by 80k?

contact your solicitor and see where you stand.

everyone wanted to go to the party no one wants to stay and clean up

spockety

FrancieB wrote: »

So you mean if i backed out and let the builder keep my deposit, he could actually come after me for the rest? Are you familair with the expression....you cant take feathers from a frog? On a serious note though, I spoke with my solicitor about that and he has advised that such a thing would never happen

:eek:

On a serious note, are you familiar with the cartoon character, Lionel Hutz, attorney at law?

FrancieB

spockety wrote: »

:eek:

On a serious note, are you familiar with the cartoon character, Lionel Hutz, attorney at law?

On a serious note..No Im not. Are you?

FrancieB

ntlbell wrote: »

if the price had increased by 80k would you give the developer 80k?

Yes i would give him 80k if he agreed to accepting 206k less than agreed price.

would you be happy if he raised his price by 80k?
If he raised it by 80k i wouldn not be happy at all.

contact your solicitor and see where you stand.
I intend to

everyone wanted to go to the party no one wants to stay and clean up

Nonsense. I have stated I want to proceed. If he agrees we have a deal. If not its the easiest 12k he'll ever make. He can sell the house on for a resonable price. If not he can knock it. It probably didnt cost much more than 12k to build it in the first place...

astrofool

FrancieB wrote: »

If not he can knock it. It probably didnt cost much more than 12k to build it in the first place...

You have great faith in the property you agreed to purchase over decades of repayments.

FrancieB

I sure have. Not much point in purchasing the house otherwise

Ste.phen

FrancieB wrote: »

It probably didnt cost much more than 12k to build it in the first place...

So why did you agree to pay 286k?

daheff

FrancieB wrote: »

It probably didnt cost much more than 12k to build it in the first place...

do you really think so? Is it made from cardboard? 12K wouldnt build much of a house tbh

Makes you wonder how many people in total are in the same boat as this lad.

By which I mean hasn't a clue and might well end up ruining themselves financially because of it.

EnoughSaid

FrancieB wrote: »

Do you think the price would have dropped more than 12k? I keep hearing that house prices are falling but it must only apply to second hand homes. From looking at websites like Daft etc new homes dont appear to be dropping in price.

This is a very naieve sweeping statement. Of course the prices of new properties have fallen! Too many new properties have been built and thousands of them are lying empty. The only way builders will be able to shift them is to reduce the price. There is a good chance that many of them will only sell with huge reductions in price (30 to 40%). The prices on daft are the asking prices, not the selling prices!
In your situation, you need to find out how much mortgage you will be approved for. It will be a lot less than you would have got last year and the bank is likely only to give you a maximum of about 80% of the new valuation.

You also entered the contract at a very bad time...just after the peak of the market. Many commentators over at the www.thepropertypin.ie had been predicting big house price falls for about two years before you signed the contract.

FrancieB

Hi enoughsaid. Thanks for the genuine advice. A lot of smart ass's around here it would appear.

Getting the money from bank isn't the problem. If I can only obtain 80%, thats not a problem neither.

I have contacted the builder today and have being advised that the agreed price is not negioatable.

I will have decided that I will let him keep my 12k. This is extrmely annoying but I have another house in mind and if the price is right I'll be better off in the long run.

EnoughSaid

FrancieB wrote: »

I will have decided that I will let him keep my 12k. This is extrmely annoying but I have another house in mind and if the price is right I'll be better off in the long run.

You need to be carefull here because the builder may decide to sue you for not fulfilling the contract.

If you decide to look for another property then if I were in your shoes I wouldn't rush into it because property prices will continue to fall for the foreseable future. The reasons being...oversupply of properties, banks giving lower mortgages and asking for bigger deposits and, due to the recession, many people feel insecure in their jobs and have lost the appetite for big mortgages. On top of this, the buy to let investors have stopped buying property because the immigrants are now emigrating so there are fewer tenants. Other potential buyers are holding off buying too because they expect prices to fall further so this in itself reduces the demand.

You should be able to get good bargains from distressed sellers though, i.e. sellers who need cash urgently, such as couples getting divorced, builders suffering cash flow problems and properties that have been repossessed by banks. If I was looking at a property like this my initial offer would be very low. You should be able to tell by the sellers response to this how desperate they are for the money.

FrancieB

EnoughSaid wrote: »

Y

You should be able to get good bargains from distressed sellers though, i.e. sellers who need cash urgently, such as couples getting divorced, builders suffering cash flow problems and properties that have been repossessed by banks. If I was looking at a property like this my initial offer would be very low. You should be able to tell by the sellers response to this how desperate they are for the money.

I spoke to a few people who said that the builder would be desperate but not this guy!!!. Must be one of the ones that made a mint during the good times.

Pub07

FrancieB wrote: »

I spoke to a few people who said that the builder would be desperate but not this guy!!!. Must be one of the ones that made a mint during the good times.

Not that desparate now that the banks are being bailed out.

FrancieB

FrancieB wrote: »

I spoke to a few people who said that the builder would be desperate but not this guy!!!. Must be one of the ones that made a mint during the good times.

I'm sure he made a mint but I'm also sure he owes 2 or 3 mints back :pac:

Why would he be desperate to renegotiate the price with you when you've agreed(signed a contract) to pay the full amount?

I'm guessing (could very well be a bit off) since you payed 300k for a 3bed at the height of the peak, that your house could be worth 150k or under right now.
If that's the case then the builder wont just want to keep your 12k, as it'll be well worth him dragging you through the courts to get his 130-140k that he wont get if he has to sell the house on to someone else.

My only advice would be to start taking this very seriously. It sounds like you really don't know whats going on and I'm actually beginning to think/hope that you're a troll.

FrancieB

Dont be so ridiculous. He can drag me through whatever courts he wants. Where do you think I'll get the money?

I haven't got 100k in the bank.

padimus

FrancieB wrote: »

Dont be so ridiculous. He can drag me through whatever courts he wants. Where do you think I'll get the money?

I haven't got 100k in the bank.

Doesn´t matter if you don´t have it.

If he goes to court and gets a judgement registered against for you for 100k then the chances of you ever getting a loan from any lender are non existant

I know a couple of people in similar situations and you´re stuck I´m afraid. Back in the good times he might have let you walk away (less the deposit of course) but not a chance now

dny123456

FrancieB wrote: »

I spoke to a few people who said that the builder would be desperate but not this guy!!!. Must be one of the ones that made a mint during the good times.

You'd probably be better off if he was not one of the ones who made a mint during the good times. The best hope you have of getting out of it is if he goes out of business or goes bankrupt. If he has resources to bring you (and people like you) through the courts, he probably will.

Seek legal advice, would I.

FrancieB

dny123456 wrote: »

You'd probably be better off if he was not one of the ones who made a mint during the good times. The best hope you have of getting out of it is if he goes out of business or goes bankrupt. If he has resources to bring you (and people like you) through the courts, he probably will.

Seek legal advice, would I.

Legal advice seems sound. Solicitor has advised, I will lose my 12k, no question about that. Good news is... at my discretion...ALL BETS ARE OFF...

Thanks for all the help and suggestions guys. Hopefully not too many mugs fall into my category

subway

http://www.timesonline.co.uk/tol/news/world/ireland/article5213789.ece

Builders take Irish housebuyers to court - Sunday Times

Buyers attempting to pull out of property purchases because of falling values are being taken to court by developers

Mark Tighe

IRISH housebuyers who are trying to pull out of purchases because of falling property values are being taken to court by builders and developers.

Construction companies say they have been forced into legal action to secure sales that were agreed when the properties were valued at up to €100,000 more than they are now.

FrancieB

Yikes.

Hope I dont have to go to court. He can have 5k. Thats all I have. I have some furniture too if he wants that.

Troll.


lock it I guess.

astrofool

On a serious note, they can garnish your wages until you've paid back the debt. You'll also have 0 chance of buying another property at a reduced price with this debt hanging over you. A very serious situation to be in, and hopefully you are just trolling

bobbiw

the house has dropped and will continue to do so. you could expect it to hit 150 in the next two years.

I would walk away and say you couldnt get the loan or something. Builders are not going to get very far chasing you for it.

The choice is loose 12 or loose 150, thats the choice you have to make.

banchang

FrancieB wrote: »

A lot of smart ass's around here it would appear.

.

A piece of advice.


Listen.

oceanclub

I regard myself as a leftie, but occasionally I think that people should be chemically sterlised at birth and then only get the antidote required to reverse it once they prove they can be fit parents. I'm beginning to think similar thoughts about buying property.

P.

bobbiw

They might try but thats typical. The whole premise was that you lost your deposit if you couldnt buy.

It happened all the time when people couldnt get loans or something fellthrough.

Builders didnt care becasue they could sell it for more anyway so they would let people drop out.

the presedent was set back then so I doubt the courts would enfore anything.

They will not garnish your wages at all, its just scaremongering by a bunch of ignorant people

A Dub in Glasgo

FrancieB wrote: »

Getting the money from bank isn't the problem. If I can only obtain 80%, thats not a problem neither.

FrancieB wrote: »

Dont be so ridiculous. He can drag me through whatever courts he wants. Where do you think I'll get the money?

I haven't got 100k in the bank.

Hmmm, sounds to me that you could easily complete your end of the contract

bobbiw

even in most of those contacts it says that "if you back out you loose your deposit"

there is no way a builder is going to win, people hate them with a passion in Ireland and they are seen for the scum that they are.

But they have made their money so what can you do. they may never sell another house again but im sure they dont care.

Just tell them the bank refused your loan and thats it.

I wouldnt think they have a hope in hell, in fact I would go after them for the deposit.

Amazing how they were able to be late by a year on building a home but once they say its done you have a few weeks,

I would contact the estate agent or whoever you bought through and tell them the deal is off. It will take a little while to get it sorted as they willtry and negotiate etc.

Once you are off the hook you can go back to them in a year and offer 150k less as they wont have sold anyway.

iguana

bobbiw wrote: »

the presedent was set back then so I doubt the courts would enfore anything.

They will not garnish your wages at all, its just scaremongering by a bunch of ignorant people

The high court has already issued over 100 writs to force buyers to honour the contracts they've signed. Just because the developers were happy to allow people to forfeit their deposits in exchange for breaking the contract when it suited them doesn't set legal precedent. Precedent is set by the courts and as it stands now the courts are telling people that legal contracts must be honoured.

And the courts have the power to order you to pay whatever you agreed to when you signed a legally binding contract. In most case that will mean that if you don't buy and the developer then sells for €75k less than you agreed to pay, you then owe them that plus legal fees. And you will have to pay that at a rate the court sets or you could be found in contempt of court and imprisoned.

The best hope people have of getting out of these contracts is if they can take a case and have a judge agree that the developer has taken an unreasonably long time to complete his side of the contract. But these contracts were written by the developers solicitors so they are very well protected. It's possible that a judge in a test case will rule sympathetically to the purchasers. Personally I feel that expecting people to wait over 6 months past the agreed finish date to be a breach on the developers part. But I'm not a high court judge, and no doubt there are legal clauses in the contracts that even the fairest judges in the world can't overrule.

Mark Tighe wrote:

More than 100 homebuyers have been issued with High Court writs by developers who are trying to force through deals made at the height of the Irish property boom.
contd.>>>>>>>>>
http://www.timesonline.co.uk/tol/news/world/ireland/article5908617.ece

crocro

iguana wrote: »

It's possible that a judge in a test case will rule sympathetically to the purchasers.

Yes it is possible. Judges do not always rule by the book and often like to go along with their personal sympathies.

However, the law relating to this type of contract is very well understood and tested since the mid 19th century. In a forward contract where a buyer agrees a price with a seller months before delivery of goods, there will nearly always be an incentive for one or other party to abandon the contract and take advantage of the price movement in the meantime. Without legal backup, most of the forward contracts would be dishonoured by the time of delivery.

Best hope for the OP is that the builder goes bust and that the acquirer of his debtors doesn't pursue this case or else that the judge sympathises more with the buyer than the seller.

If I were the developer and lost a case based on the sympathy of the judge where there was a simple breach of contract, I'd appeal.

The OP has to consider the risk of having to pay for both sides' legal costs in the event of losing.