Is it common for builders to jack up the price of a house by $50,000?!

[ecstatic]

My parents found their dream home and over the past few months, they have visited the property faithfully at least 2 or 3 times a week while the final constructions were being made. They told everyone about "their" new home and they've already planned out and bought furniture for the rooms.

Now its closing time--the builders all of a sudden tell them that the price of the home is now $50,000 more with the excuse that if they don't raise the price it will lower the property value of all the surrounding homes (which I seriously believe to be BS). Now their home insurance will also skyrocket. The guy claims he'll add an extra $50 grand to the value of my parent's current home, but we all know which works out to be more costly (when interest is factored in). My parents are already so in love with this house that they are willing to go along with it.

Is this common practice or is this another example of "subtle" racism? I read somewhere that non-whites usually get worse deals in these types of situations.

[NJCher]

1. don't know

I'm just so horrified by the story that I had to remark on it. Stop your parents from following their hearts in this situation and talk to a lawyer! Do something but don't go along with this scheme!

Now, granted, it's hard to find an attorney who's not a crook but perhaps you have a family friend or a contact?


Cher

p.s. also, what part of the country is this? In my area, for example, it is not uncommon for a house to be solder higher than asking price but even in this ridiculous real estate market, I cannot imagine anyone pulling a stunt like this.

Also, the part about the property values is total garbage.

[ecstatic]

4. suburbs of Atlanta

:(

[displacedtexan]

2. time to make some calls

lawyer
area board of realtors
mayor's office
state attorney general

even if the contract language is vague, shining a light on this type of crap could help future home buyers.

[ecstatic]

3. they are so in love with this place

That I doubt they would do that. They feel that if they complain then someone else will buy the house and they'll be left with nothing.

[Walt Starr]

5. Tell them to get an attorney

If they signed contracts, the price was set at signing. Usually you are under contract when building a house and prices for the base unit etc. is in the original contract and you sign addendums for every upgrade you do from there. My wife and I recently built a house and I can tell you about the entire process.

If they did not sign contracts, then they have no case. The contract is the difference. Usually, if no contract was signed then the home was being built under "speculation" and the builder can put whatever final price they choose on the house.

DISCLAIMER: I am not a lawyer, but my wife is.

[Walt Starr]

8. Adding one more thing

If they are under contract and the builder is attempting to jack up the price, they are in violation of the law.

[Walt Starr]

10. And a final thing

If more than one year passes between the signing of the original contract and the closing, you could have been required to sign an extension. I'm not positive, but if the original contract specifies they can raise the price in an extension, that could be where the extra $50,000 came from.

The bottom line is, there are a lot of variables. I signed eight addendums to the original contracts for upgrades above the base contract including things like hardwood floors, a higher grade capret pad and carpet, cherry cabinets, porcelain tile, ceramic tile, upgrade power service from 100 amp to 200 amp, upgraded water heater, etc. etc. etc. I am positive I added nearly $50,000 to the base contract price of my home with the upgrades. I also signed an extension because it took more than one year to build the house, they could not raise the price of the house in my extension, ut if the proper language was included in the original contract I'm sure they could have.

Get all of the paperwork together and take it to an attorney, but save yourself some effort and add the numbers up.

[ecstatic]

12. thank you!

I'm talking to my mom right now. She's so sad about this entire thing.

[ecstatic]

9. they did sign contracts, with the original price of the house

and they paid 35,000 as a downpayment. The guy promised that he would in exchange for $85,000 cash for their current house. This new deal would mean that he only has to pay them 35,000 for their current house, and they'd have to pay an extra 50 k for the new house.

[Walt Starr]

11. Get the paperwork together and take it to an attorney.

That's the best advise I can give you here.

[BiggJawn]

15. They need to talk to an attorney.

And i don't care HOW much they "love" the house, they're getting screwed. Sounds like the builder is experiencing a "slump" and he wants your folks to carry his ass through the winter...

[Muddleoftheroad]

14. Continue to freak you out

But you are spot on in this thread.

[Walt Starr]

16. This sounds like a scummy builder

trying to bilk some older people out of extra cash because the value of surrounding homes has risen dramtically recently.

[Muddleoftheroad]

18. I agree

And he thinks he has them over a barrel. I hope he is the one who ends up over the barrel. As long as it is in a contract, I think they are OK. If it was a verbal agreement, then I think that's a problem.

[Walt Starr]

19. THAL said they have a contract

My builder was very careful to have me sign each and every addendum and everything they did above and beyond the basic equipment was in an addendum. If they had put in hardwood floors, for example, without me signing an addendum they either have to rip them out before closing and replace with the basic flooring, or they are a gift.

I had a spread sheet and tracked the cost of everything. I knew going into the closing the precise price to the penny and the precise cost of everything they did.

There are scummy builders who bilk people out of money. With an honest builder, you know up front when a price changes and it is because you want something special, not because they decided to charge you an extra 50 grand.

[ecstatic]

22. well, shes decided to make excuse after excuse for why the builder lied

I asked her to at least promise she'd get a lawyer's take on the situation and she won't. She's afraid she'll lose the 35 grand downpayment if she makes too many waves.

[Walt Starr]

23. She cannot lose the down payment if the builder violates the contract

The contract is binding. There is no way around it. If the builder now requires 50K more than is spelled out in the contract, the builder is violating contract law.

Plus, just talking to a lawyer is not making waves. They need all of the paperwork. It will cost a few hundred dollars, but that's much lower than 50K if the builders are bilking them.

[maddezmom]

6. what does the contract state?

sounds fishy to me.

[soup]

7. Don't know about 'subtle racism', but this

sounds, at best, and for lack of a better word - screwy.

raise the price of the house to raise the property values in the area- hunh?

Has there been an appraisal on the property? Wouldn't that determine the cost?

and how can he just add 50,000 onto the 'value' of their current home?
Is it for sale? Would a buyer be willing to pay that extra $50,000?

[ecstatic]

13. I just checked the values of nearby homes on MSN home value finder

The guy lied. If she agreed to the price hike, she would have the most expensive house in the neighborhood by FAR. Without the price hike it would still be one of the most expensive houses.

[creativelcro]

17. the property value of surrounding homes is BS!!!

houses go for what the market support. If you are in a location where houses and properties go fo 50K more than you spent that is GOOD for you! It means buyers are gonna pay that and you pocket the difference (tax free, when you sell your home). That CANNOT be the reason for charging you 50k extra. It does not make any sense... But if your parents had no contract, then, other than negotiating or changing company, there is not much that canbe done... If they HAVE a contract with a price, then they have a case. -CV

[FreakinDJ]

20. Its a Mark-off

Residential housing is the toughest contruction market to make buck in for all the little guys.

This however sounds more like the tactics of a large scale general contractor. If there exist a purcase agreement then clearly they are in the wrong. It also might have a clause requiring arbitration which i suspect they are playing on.

They will attemp to justify the cost increase through arbitration. If the cost increase is due to their actual construction cost then they have some ground to stand on. If they are trying to justify the increase bases on speculative sales figures then not. Either way these things are usually settled for pennys on the dollar

[Abbalon]

21. Yes nt

[roughsatori]

24. My sister-in-law is African-American

and she had something similar happen when she purchased a new car--a lemon. She was ripped off and over charged--he refused to take it back, etc. I did research on the statistics of over charging Black females in this area. After doing the research I also learned that Black females tend to get more phony interest points on their car loan then any other group (I went over her statements and he was charging her an APR (after doing my own calculations that was higher then is legal.) I also printed the stats out and found a lawyer for her. She and I then wrote a letter to the dealer quoting the statistics and the fact the she had found out he had charged 2 other Black women 5000 dollars more for cars then he had any other buyer--and that they would testify in court if she wanted them to.

He agreed to take the car back and give her a full refund and she never even had to meet with the lawyer. It was a disgrace what I found out researching this issue. I wanted her to sue to teach the dealer a lesson--but she said she just wanted to get him to take back the car.

"Subtle" racism it is not just an illusion. I have purchased and sold real-estate and what your parents are going through sounds like a swindle. I don't know if they are Senior citizens--but that is another group that the thieves and cheats focus on.

At the least, use one of those services where you phone the local bar association and tell them the problem and you get a phone consultation for 25 bucks. I've used them in PA and even faxed them Documents for them to review. I do know that some Realtors recommend you DO NOT purchase a home without having a lawyer review everything and represent you at settlement. Good Luck.