To Buy or Not To Buy

L

lollipoptree

Guest
Signed a contract for a new house in July 07 and paid a 10% deposit. In the current climate, our house price has reduced by 20-30k, and the new house seems to have a resale value of 20k less already, should we go ahead and purchase, or walk away and risk losing the deposit and possibly (we have heard) be sued by the builder for any loses he incures???? We are in a delimea as the new house is ready in Nov and we haven't sold our current home yet. We would be interested in what others think or any advice.
 
Re: To But or Not To Buy

In any circumstances buying a new home while not having sold the old one is risky unless you can easily afford to service two mortgages or the former is mortgage free etc. But especially so in the current climate. You should ask your solicitor for advice about the possible implications of pulling out of the new purchase.
 
Re: To But or Not To Buy

ClubMan said:
In any circumstances buying a new home while not having sold the old one is risky unless you can easily afford to service two mortgages or the former is mortgage free etc. But especially so in the current climate. You should ask your solicitor for advice about the possible implications of pulling out of the new purchase.
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1. On signing in 07/07 we were advised in writing a completion date of 06/08, but there was no activity on site till 05/08 and a closing date of Nov 08 was not confirmed till 06/08 despite many efforts to get calls and messages answered. At the time we were losing confidence in the builder and selling agent! We did not want to risk putting our home on the market before we knew when the new house would be ready.
2. If we pull out of the contract our Solicitor has recently advised us that the builder could sue us for losses, especially if he reduces the price to secure another sale.
Has anyone experienced a builder carrying out this action?
3. All around us builders are reducing prices and providing incentives to secure sales.... We have advised our builder of our problem (our home has dropped up to 30k in value potentially putting our new mortgage out of reach) and he has offered us a couple of extra months to sell our current home. Problem is these new houses (phase 1 & 2 built in 2006/7) are currently on the market privately with asking prices of 370,000 (& sold at 330-350,000 for quick sales) and we signed at 395,000 in 2007 for phase 3. Should we ask for a price reduction?
Has anyone experienced a builder reducing a price while in a contract recently?
 
In 07/07, you signed a contract, paid 10% and entered into what seemt to be a fair deal (nice house, price ok, ticked all the boxes, etc...).
Would you be happy for the builder to hike the price now shall the market have dictated so? probably not..
You have made a decision based on facts at a certain time, and you took a huge risk buying before selling.
Have you crunched the figures? What's your exposure shall you be sued?
 
Re: To But or Not To Buy

lollipoptree said:
1. On signing in 07/07 we were advised in writing a completion date of 06/08, but there was no activity on site till 05/08 and a closing date of Nov 08 was not confirmed till 06/08 despite many efforts to get calls and messages answered. At the time we were losing confidence in the builder and selling agent! We did not want to risk putting our home on the market before we knew when the new house would be ready.
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I'm not asking you to justify your position - I'm just pointing out that entering into a contract to buy a new house while not shifting the old one is risky especially if you cannot afford to service two mortgages (where applicable).
 
Yep all very true, but hey we only purchased a house once before and that a long time ago when it was all very different. Now we're only trying to move on up, with a growing family etc.... We never considered that we would have to furnish 2 mortgages at the same time nor did we envisage that the housing market would go so quiet! However this is the situation we find ourselves in now, tough luck for us I know. Really we just wanted to find out if we are the only ones in this boat at this time!!!
 
We are in a kind of similar position where we bought in summer 06 property due to be ready end of 07, property has not begun being built yet so will prob not be ready for another year if not longer.

In a few months time we will be out of current rent lease and cannot renew as not an option with landlord. Property which was bought has now changed spec to cheaper electrics kitchens etc.

Would we be mad to walk away from deposit of 15k if we got the chance as we need somewhere to live soon.
 
"Would we be mad to walk away from deposit of 15k if we got the chance as we need somewhere to live soon."

Foxylady, I wonder if perhaps you're in a better position than lollipoptree. You should check with your own solicitor to see when the completion date was ( when house was to be completed). It may be that, under the terms of the contract, you are entitled to rescind the contract if the house has not yet been built and indeed not even started. You may be entitled to recover your deposit. Builders are in trouble so builder simply may be unable to build due to lack of funds.

mf
 
foxylady said:
Property which was bought has now changed spec to cheaper electrics kitchens etc.
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You mean kitchen appliances and fittings? Surely in the greater scheme of things (e.g. a property worth several hundred thousands) the price differential cheaper fittings and appliances (possibly in the hundreds) is relatively small beans and should not be a deal breaker? On the other hand if the more expensive fittings and appliances were part of the original contract then get your solicitor to insist on them. Even if the appliances are cheaper try to insist on A rated ones to reduce the total cost of ownership/ongoing running costs.
 
mf1 said:
"Would we be mad to walk away from deposit of 15k if we got the chance as we need somewhere to live soon."

Foxylady, I wonder if perhaps you're in a better position than lollipoptree. You should check with your own solicitor to see when the completion date was ( when house was to be completed). It may be that, under the terms of the contract, you are entitled to rescind the contract if the house has not yet been built and indeed not even started. You may be entitled to recover your deposit. Builders are in trouble so builder simply may be unable to build due to lack of funds.

mf
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Solicitor served notice on them and they wont give the money back they keep insisting time is not of the essence.
 
ClubMan said:
You mean kitchen appliances and fittings? Surely in the greater scheme of things (e.g. a property worth several hundred thousands) the price differential cheaper fittings and appliances (possibly in the hundreds) is relatively small beans and should not be a deal breaker? On the other hand if the more expensive fittings and appliances were part of the original contract then get your solicitor to insist on them. Even if the appliances are cheaper try to insist on A rated ones to reduce the total cost of ownership/ongoing running costs.
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The appliances, kitchens and electrical technology was all used to market the development and lure people in and now they are being substitued with cheaper versions.
 
foxylady said:
The appliances, kitchens and electrical technology was all used to market the development and lure people in and now they are being substitued with cheaper versions.
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Be that as it may, are these issues really deal breakers?
 
The only chance lollipoptree has is to negotiate with the builder regarding the price and the time delay and what has happened in the meantime. Builder is in a strong position, though!
 
Hi guys,

Foxylady speak to your solicitor again. I had a similar situation with a client and as far as I recall, I served a completion notice on the builder. At the expiry of the notice time was then of the essence and we rescinded. Even if there is a question mark over the issue, it is very unlikely, imo, that a builder will succeed against you in court where there has been an unreasonably long delay in completing the contract.

Lollipoptree, I think it all depends on your builder. You did sign a contract, and you are legally bound to complete the purchase. However, I have had a lot of trouble completing sales for my builder clients over the last year because purchasers are having terrible trouble getting finance. You would be surprised at how flexible builders are becoming in these difficult times!!

If I were you I would contact my solicitor and ask them to make contact with the builder formally. Do you have a loan offer for the new house? Do you think you will have trouble getting one? I think you should try, through your solicitor, to negotiate the lower price for the property. Be calm, polite, but hold firm. It's definitely worth a go.

Kate.
 
Kate10 said:
Hi guys,

Foxylady speak to your solicitor again. I had a similar situation with a client and as far as I recall, I served a completion notice on the builder. At the expiry of the notice time was then of the essence and we rescinded. Even if there is a question mark over the issue, it is very unlikely, imo, that a builder will succeed against you in court where there has been an unreasonably long delay in completing the contract.

Lollipoptree, I think it all depends on your builder. You did sign a contract, and you are legally bound to complete the purchase. However, I have had a lot of trouble completing sales for my builder clients over the last year because purchasers are having terrible trouble getting finance. You would be surprised at how flexible builders are becoming in these difficult times!!

If I were you I would contact my solicitor and ask them to make contact with the builder formally. Do you have a loan offer for the new house? Do you think you will have trouble getting one? I think you should try, through your solicitor, to negotiate the lower price for the property. Be calm, polite, but hold firm. It's definitely worth a go.

Kate.
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Kate did u manage to get their money back for them. our solicitor mentions going to court and having to pay all sorts of money for barristers and also the fact that this will take approx a year if not longer. We cant really wait a year as it doesnt suit our circumstances.
 
foxylady said:
The appliances, kitchens and electrical technology was all used to market the development and lure people in and now they are being substitued with cheaper versions.
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Did your contract not state the value of these items? I thought they hadn't begun to build yet so how can you be at kitchen stage? Can you take an allowance instead of these items then you can pick your own.
 
Bronte said:
Did your contract not state the value of these items? I thought they hadn't begun to build yet so how can you be at kitchen stage? Can you take an allowance instead of these items then you can pick your own.
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First phase has been built and they were advertised with expensive kitchens, smart home technology and expensive appliances which are all factored in the price, an allowance of 8k was offered instead of cheap kitchens but if that was offered u can be sure that it would cost more t supply the originals.
 
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