Deposit Back??? I want out!!! HELP!!!

[Marie]

Ok this is going to make no sense what so ever I know I've ben walking around all day in a haze!

Origional House price being €225k

Got onto the builder's eventually got around him to lower the price to €210k he said that was the best he could do, so I managed to squeeze an allowance of 5k out of him for tiles, fireplace, kitchen&wardrobes, bathware, carpet, appliances.

Now he's pulling back on the allowance, says he has no memory of ever agreeing to this.

As of yesterday you can now buy the same house on the same ave for €199k with a full fit out?

I haven't moved yet? It's still another 6 week's to completion? Back out you say, the builder is a prick he's not worth the hassle, the house has dropped in value by 26k.

If I back out I loose my deposit of €21k, if I go ahead and try sale it out the bank needs to re value the house once it's completed, and will only value it at what they are selling the rest for??? Leaving me €26k short in my mortgage!!!

The builder then has the legal right to bring me to court and sue me for the remainder balance of €26k left outstanding on the property??? HELP!!!

[Dragonheart]

Have you signed anything saying that you're taking the house? Did you get a receipt for the deposit? I'm no expert on the legal side of martgages or house buying but I think that as long as you havent signed anything saying your buying the house for definate that he has to return the deposit. In other owrds theres no evidence that the money you gave him was for a deposit on a house, it could have been a loan to him for all they know. I also think that the mortgage is based on the agreed price for the house not what they value it at. Again, I'm no expert but I'm sure someone here will shed light on it, but thats my thoughts.

[Myfeckin FTO]

Presume you have spoken to your solicitor about this - what was their opinion?

What builder? (I know them all!).

[Marie]

Unfortunately we've signed contract's in July, however the prick I was dealing with insured me they couldn't possible drop the house price any further then the price I was getting it at, and when I was still unsure this is when the extra 5k in appliance's came into it, he said rather then give anymore money off the house the best he could do is give us some extra labour and kit out the whole house!!!

Now he is refusing to give the extra 5k, all the extra's in labour I was getting has rose from the price of €2200 to €3015, my solicitor is saying all of the extra's he's agreed to were outside the contract, but she is writing to his solicitors on my behalf about the matter.

Chieftain construction MARCUS MC NAMARA
He's not actually a builder, all the builders are lovely he's the office prick!

[kevinod]

I would be very slow to name names on a public forum if I were you, you're opening yourself up to potential legal problems and it probably isn't going to help with negotiation. Pm is your friend...

[Myfeckin FTO]

Is this the site in Corbally?

Know of the builder alright - problem is if you have nothing in writing with regard to extra allowances etc then you haven't a leg to stand on.

Check with your solicitor and see what the penalty for pulling out at this stage is - its surely unlikely to be your entire deposit? If the builder sees you getting cold feet he may meet you halfway.

[Marie]

I would be very slow to name names on a public forum if I were you, you're opening yourself up to potential legal problems and it probably isn't going to help with negotiation. Pm is your friend...

I am more then willing to go out with placards, and march up and down outside their new show house, warning people not to buy, Chieftain will drop the prices of the house's of their again, and not to believe a word they say on their allowances as they are not true to their word.

Shane to answer your question, it's the new bruachlan housing estate in corbally.

[Kace]

But didn't you sign the contract saying that you were happy to buy your house at that price ?

What's wrong with him deciding to drop the price of others to shift them - not sure why that should necessarily translate to all others (like yourself) who have agreed to buy at a certain price.

It's the same situation for all of the other people that are already living in their houses and that paid a higher initial price - they are surely not going to have any comeback either.

I don't think your situation is unique, we've all lost money on the houses that we own (either in equity or hard cash) over the past 18 months.

[soc]

Ok this is going to make no sense what so ever I know I've ben walking around all day in a haze!

Origional House price being €225k

Got onto the builder's eventually got around him to lower the price to €210k he said that was the best he could do,

So from this I take it the price is actually 210k now?

so I managed to squeeze an allowance of 5k out of him for tiles, fireplace, kitchen&wardrobes, bathware, carpet, appliances.

Now he's pulling back on the allowance, says he has no memory of ever agreeing to this.

If this allowance is not in the contract then you should just forget about it and move on - you don't have a leg to stand on here.

As of yesterday you can now buy the same house on the same ave for €199k with a full fit out?

So you'd be paying 11k over the current market value?

If I back out I loose my deposit of €21k

Unfrotunately yes.

if I go ahead and try sale it out the bank needs to re value the house once it's completed, and will only value it at what they are selling the rest for??? Leaving me €26k short in my mortgage!!!

I'm not actually sure what you mean by "sale it out" here?

The builder then has the legal right to bring me to court and sue me for the remainder balance of €26k left outstanding on the property??? HELP!!!

Not sure what you mean here either.

I think you need to figure out what exactly you want from this house - was it intended to be a family home or an investment? The answer to this question has a big bearing on your course of action.

1) Lets assume it's intended to be a family home. I assume you're ok with the mortgage repayments given it sounds like you were prepared to complete until you realised (a) the house had dropped in value and (b) the builder is failing to honour his verbal commitment to 5k worth of fittings. In this case I would advise you complete the sale and take ownership of your new home. The important work here being "home" - if you're comfortable with the mortgage then move ahead - property will eventually come back over time.

2) If you bought as an investment then this was not a very smart move. You now really need to look at how much you could lose over time if you complete. But this depends on many factors such as (a) how long you were planning to hold the property, (b) how comfortable you are with mortgage repayments, (c) do you need to rent it to cover costs? (d) interest only mortgage?, etc. You need to answer these questions before deciding what to do here - all I can say is expect a minimum of a further 20% drop in prices over the coming 6 - 12 months (and that is not scare mongering for anyone who's stoopid enough to believe we've talked ourselves into this position).

Kace has already mentioned that many people have "lost" money on their houses but in reality you only lose money if you sell at less than you paid (obvious right?). Everyone who purchased with 90+% mortgages post 2004 will be sitting tight now (unless forced to sell). I believe you can expect this to filter down to anyone who bought post 2002 as well in the not too distant future.

The reality is property is currently a depreciating asset and no amount of bailouts will fix this (only delay the inevitable).

[Marie]

Chieftain can't afford any bad publicity at the monent if they are trying to shift the houses by dropping so low in price, I understand there are alot of my neighbours worse off then myself, but if he's not going to honor he's promise of 5k, don't see why I should honor mine.

It's not as if this was a brief conversation about the 5k, we've had several meeting with him on this matter, we only entered into the contract because of this allowance, so the house would come fully finished, in turn key condition.

[TopCat]

...if he's not going to honor he's promise of 5k, don't see why I should honor mine.

Although I agree with this in principle, unfortunately it sounds like the difference is your promise is in writing. As they say...what you talked about in the meeting isn't worth the paper its written on. I have no doubt they remember well the promises, but this industry is known to be full of cowboys, unfortuately its buyer beware.

Soc seems to know what he's on about, so if you can afford to pay the mortgage, and don't plan on selling the house in the short term, I'd consider yourself lucky, and as frustrating as it is, try to move on.

Very sorry to hear about it though Marie, hope it works out to some degree.

[Mustang]

Chieftain can't afford any bad publicity at the monent if they are trying to shift the houses by dropping so low in price, I understand there are alot of my neighbours worse off then myself, but if he's not going to honor he's promise of 5k, don't see why I should honor mine.

It's not as if this was a brief conversation about the 5k, we've had several meeting with him on this matter, we only entered into the contract because of this allowance, so the house would come fully finished, in turn key condition.

Marie,
It appears that you have entered into a written contract based on a verbal promise -which is not contained in the written contract. This was unwise. Count yourself lucky it was 'only' €5k. He was wrong to mislead you, and this is morally wrong, but unless you can prove it -minutes of meetings, contract. witnesses etc. You really have no case as far as I can see.

Best now to focus on the main transaction. The value of the house has gone down since you signed the contract. This is unfortunate but it has no bearing on the contract and does not confere any right on you to expect the lower price. If the property had appreciated in value in the interim, would you pay the extra money to the developer after agreeing the lower price -of course not. You can not have an each way bet.

(5k allowance aside) it appears the developer has done nothing wrong.
The prospect of negative equity before you even move in is not nice. There are many people in your position, I've seen numerous posts of this kind on various forums.

While the builder is under no obligation to give you the house at the lower price -they have to be realistic, and they will not want to expend the time and resources and incur the negative public sentiment involved with pursuing a young couple through the courts.

Get a bank valuation done -this will have to be done anyway, if you are going to complete. This will be the basis of the money the bank are prepared to lend -90% of value or whatever. If after that there is a genuine shortfall, advise the builder of same and see if he will compromise. It's all very well taking people to court -the legal profession is not about right or wrong, but who can pay. If you can't pay there is not much point chasing you in the court.

The house are retailing at 199. your price is €210 , that's €11k negative equity. (fine if you beleive the value won't fall any more!!!)..................... If you walk away you loose €21k. You do the maths.

[soc]

Duplicate post

[soc]

Chieftain can't afford any bad publicity at the monent if they are trying to shift the houses by dropping so low in price,

I hate to say it but the bad publicity you refer to won't make any difference - property is sliding every day, developers are nervous and many are sitting in the edge of an abyss (big ones included) - you only have to look at the insane schems Grehan and McNamara are pushing to see how worried they are. Property HAS to fall or the economy here is fcuked - there has to be (will be) pain all around and that is a harsh reality everyone has to deal with.

There is already plenty of bad publicity for developers and property in general so I doubt wandering around his showhouse with a placard will make much difference.

I understand there are alot of my neighbours worse off then myself, but if he's not going to honor he's promise of 5k, don't see why I should honor mine.

Unfortunately it just doesn't work like that and I've no doubt your builder is fully aware of what he can and cannot get away with - it's harsh but that's the nature of these guys - they screwed people for years by manipulating the market fully in the knowledge the banks were lending people into a hole. Did they care then? Not a bit. Will they care now? Unfortunately, no.

It's not as if this was a brief conversation about the 5k, we've had several meeting with him on this matter, we only entered into the contract because of this allowance, so the house would come fully finished, in turn key condition.

Realistically you're only avenue here is if you have unbiased witnesses to all these meetings and you're prepared to follow the builder through the courts. To be honest I think it would be a waste of money as I don't believe verbal agreements are worth much in the eyes of the law - you'd really need to talk to a good solicitor on this one.

Best now to focus on the main transaction. The value of the house has gone down since you signed the contract. This is unfortunate but it has no bearing on the contract and does not confere any right on you to expect the lower price. If the property had appreciated in value in the interim, would you pay the extra money to the developer after agreeing the lower price -of course not. You can not have an each way bet.
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The house are retailing at 199. your price is €210 , that's €11k negative equity. (fine if you beleive the value won't fall any more!!!)..................... If you walk away you loose €21k. You do the maths.

Mustang is right on the money here but it really boils down to the answer to my question (family home Vs investment).

If the answer is investment you need to estimate how much more the house is likely to fall and if it will ever come back to the price you pay Vs how much you lose by walking away.

Currently you're looking at 11k negative equity Vs 21k by walking away. But I believe that in 6 months you could be looking at up to 20% further negative equity so that'd be 50k negative Vs 21k loss by walking away.

I hope the answer is family home and it works out for you.

[mcgon1979]

as the majority of posters have already said.. I would not be worried about 26k negative equity. Even if you buy the hosue at 199k your still looking at sizeable negative equity. If you are buying the house for medium to long term (5 years or more) I would not be concerned.
Unfortunately, word is worth nothing, you need signatures. I had the same issues selling my house i.e. What appliances and furniture were or were not included in the sale. If the builder did not stipulate on the contract that he would give you an extra 5k in labour or appliances, it means nothing. sorry.

[Marie]

point sorely takin.

[Mustang]

as the majority of posters have already said.. I would not be worried about 26k negative equity. (

I would just like to point out that I am not one of those posters. 26k is approximately one full years net pay for someone on avg industrial wage. It's probably at least two years of martgage payments (principal only)+the interest accruing on same. For those of us who actually have to work for a living €26k is a lot of money. People seem to dismiss house prices and mortgage amounts as mere abstract figures. If I was walking around with €26k in my pocket and found that it had gone missing I'd be very worried. This is no different. IT'S REAL MONEY. Money that has to be earned day in day out. (Sorry Marie this is not intended to depress you).
Marie I am genuinely sorry you find yourself in this position. However the plight of the property market has been widely publicised. And at a time when prices have been falling across the board, you have entered into a legally and financially binding contract. The environment has not changing that much in the last 3 months. It would be a slightly different story had you bought off the plans 12 or 18 months ago, when everybody thought the only was is up.

[mcgon1979]

[If I was walking around with €26k in my pocket and found that it had gone missing I'd be very worried.

Ok just to clear it up. I didn't mean to dismiss 26k as not alot of money. I've just had enough of the housing market in Ireland. If you buy a house and its worth 30k less in 6 months you did not lose 30k from your back pocket. You still have the house (as asset), and in 5 - 10 years the property will certainly be worth more than the equivalent value it was bought for. Yes the hosues are 199k now but marie agreed to pay the price she agreed on the contracts so she is not losing anything as such. Too many people caught up in the "value" concept of houses. A house is a home. Its an asset. I would not get hung up on its value unless you are buying as an investor. In which case, thats a totally totally totally different kettle of fish.

[Mustang]

[If I was walking around with €26k in my pocket and found that it had gone missing I'd be very worried.

Ok just to clear it up. I didn't mean to dismiss 26k as not alot of money. I've just had enough of the housing market in Ireland. If you buy a house and its worth 30k less in 6 months you did not lose 30k from your back pocket. You still have the house (as asset), and in 5 - 10 years the property will certainly be worth more than the equivalent value it was bought for. Yes the hosues are 199k now but marie agreed to pay the price she agreed on the contracts so she is not losing anything as such. Too many people caught up in the "value" concept of houses. A house is a home. Its an asset. I would not get hung up on its value unless you are buying as an investor. In which case, thats a totally totally totally different kettle of fish.

Fair enough MC. However I do not fully agree with the "a house is a home so the cost doesn't matter". Of course the cost matters, you've still got to pay for it. In the case of 26k we are talking at least two years of mortgage payments. That's a brand new car, college education for the kids, a new kitchen, 1300 bottles of vodka, or whatever you chose to spend your saved cash on. Ultimately it means less debt and a better quality of life. You may not have lost anything but you have missed the opportunity to save. Which in my book is much the same thing. Either way the money comes from your pocket -you can dress it up whatever way you like -cost matters. Yes you have the use of the asset but you are paying over the odds for same.

[Mustang]

If you buy a house and its worth 30k less in 6 months you did not lose 30k from your back pocket. You still have the house (as asset), and in 5 - 10 years the property will certainly be worth more than the equivalent value it was bought for.

That is exactly the type of mentality that got this country into the property mess it's in. Property is not a one way bet. It can and does rise and fall in value. You are assuming either capital appreciation, or that inflation will be greater that house price depreciation. Big flawed assumptions. YOU can loose your shirt any many have. Buyer beware.

[mcgon1979]

Fair enough MC. However I do not fully agree with the "a house is a home so the cost doesn't matter". Of course the cost matters, you've still got to pay for it. In the case of 26k we are talking at least two years of mortgage payments.

yeah I hear you mate. As I said though, Marie agreed that price on the contract. so if the houses are selling next door for 26k cheaper by the time the deal goes through its not really like her losing money? The value of houses is in permanent flux. If I buy for 300k and the house is worth 250k in 6 moonths, Im not really losing 50k I could have spent on cars. I never had it. It's all very fickle (housing market).

[mcgon1979]

If you buy a house and its worth 30k less in 6 months you did not lose 30k from your back pocket. You still have the house (as asset), and in 5 - 10 years the property will certainly be worth more than the equivalent value it was bought for.

That is exactly the type of mentality that got this country into the property mess it's in. Property is not a one way bet. It can and does rise and fall in value. You are assuming either capital appreciate, or that inflation will be greater that house price depreciation. Big flawed assumptions. YOU can loose your shirt any many have. Buyer beware.

but if you have a house to live in, why would you be concerned with its market value unless you want to sell it for profit or loss? The type of mentality that got the place in the state its in is the banks giving everyone money to buy houses (or second houses) for investment. If you buy a house to live in, it doesn't matter who tells you its worth 50k less in 6 months. Your not going to have your mortgage adjusted so why be hung up on its value unless you want to sell it?

[Mustang]

If you buy a house and its worth 30k less in 6 months you did not lose 30k from your back pocket. You still have the house (as asset), and in 5 - 10 years the property will certainly be worth more than the equivalent value it was bought for.

That is exactly the type of mentality that got this country into the property mess it's in. Property is not a one way bet. It can and does rise and fall in value. You are assuming either capital appreciate, or that inflation will be greater that house price depreciation. Big flawed assumptions. YOU can loose your shirt any many have. Buyer beware.

but if you have a house to live in, why would you be concerned with its market value unless you want to sell it for profit or loss? The type of mentality that got the place in the state its in is the banks giving everyone money to buy houses (or second houses) for investment. If you buy a house to live in, it doesn't matter who tells you its worth 50k less in 6 months. Your not going to have your mortgage adjusted so why be hung up on its value unless you want to sell it?

MC the point is that you said and I quote "in 5 - 10 years the property will certainly be worth more than the equivalent value it was bought for". You are saying that it will go up in value "certainly" as in no chance of it falling. It then becomes a no brainer. Lets all buy property as it only ever appreciates. This philosophy is simply wrong. The banks just made it easier for people to act on this flawed thinking.

It's the market value at purchase that i would be concerned about. as that will determine the installment amount and duration of the mortgage.
If I thought that a propective purchase was going to fall at the current rate, I would hold off to save myself money.

You can always plan to keep the house until you die -hang the cost. That's fine, until your best laid plans fall apart.
you have a family and find you've out grown your house and need to move.
Redundancy.
Illness,
emigration.

Now you are forced to sell. The up until then obscure concept of negative equity will bite hard then.

Nobody wants to posses a fast depreciating asset, house, car, tv whatever.
The price you pay and the price it's worth always matters.

[Marie]

[If I was walking around with €26k in my pocket and found that it had gone missing I'd be very worried.

Ok just to clear it up. I didn't mean to dismiss 26k as not alot of money. I've just had enough of the housing market in Ireland. If you buy a house and its worth 30k less in 6 months you did not lose 30k from your back pocket. You still have the house (as asset), and in 5 - 10 years the property will certainly be worth more than the equivalent value it was bought for. Yes the hosues are 199k now but marie agreed to pay the price she agreed on the contracts so she is not losing anything as such.

Except for the fact I'll be paying a much higher mortgage then the person down the road living in the same house!!!!

P.S Thank's for the support Mustang much appreciated

[soc]

duplicate post again... doh


note to self - pay attention more.