I put down a 25k earnest deposit in August 2007 for a new house here in Bay Area. The house was schedule to be completed in April 2008. It looks like the housing market in the area is down over 50k since I put down the deposit. Reading the contract, I think I'm screwed. They had me sign a page that waived all contingencies. My real estate agent says I should just go and ask for it back since it's still early from completion. 1. Is there any way I can get my earnest deposit back or is it gone? I noticed they haven't sold any homes in the last 2 months in the previous phase and framing has just begun for my phase. 2. Is it possible to write off this loss against my work income or trading income? Please help with any ideas or suggestions. Thank you.
Did you buy this to live in? Some people are able to get out of the contract by proving the builder didn't build exactly what he promised. For examle, he promises a clubhouse/pool for residents and doesn't deliver. Or the gross living area is less than stated. I'm betting this builder has a pretty good/ironclad contract.
YES YES YES you can get your money back. I have been a real estate agent for 5 years and a major real estate investor. Look through your Purchase agreement. You will find a form that is your financing addendum. If you cannot secure financing for the property via a mortgage you CAN GET YOUR $$$ MONEY BACK!!!!! I use the financing addendum to get my earnest money back all the time.
There was a page called "Removal of Contingencies". This removes all contingencies in the Contract. Including Financing, Sale of Buyer's Property, Title Documents... Goodbye 25k!
what the hell are you doing buying a home near the apparent peak of a local real estate bubble? you're lucky you're only losing 25k
How are you "screwed" by honouring your contractual obligations? Are you actually planning to try and stiff the builder by finding a way to weasel out of the deal? Let me ask you something. If you buy a call or put option, and then it goes way out of the money, do you try to get your premium refunded? If not, then I don't see why this is any different. You took a risk, in order to profit. You were wrong, you lost $25k. Take the loss like a man, and move on.
What I would do is contact a RE lawyer in your area. Find out if there is a standard contract that must be used for residential RE purchase in your state. If there is a standard contract that must be used ,the contract you have signed may be able to be voided. I'm not giving legal advice so contact a lawyer to check.
As a real estate broker (not in CA) I have to say that your post sounds strange. firstly to offer 'professional advice' to someone based on his post (not enough detail to render an opinion) and also depending on the state (dont know about CA) it appears your offering legal advice NOT real estate advice, and are you even Lic. in CA ?? to the OP, spend the money to talk to a lawyer for an hour that WORKS in real estate and see where you stand. Even if your to lose your deposit based on the contract you signed, often you can recover all / some of your deposit if for no other reason than to keep good relations for future business and to avoid the hassles / cost of litigation. This is based on my experience in my local market and may not fit your market. I would also think that if this builder has invested money based on your contract and will not be able to recover those costs because of the fall off in values that they may not be willing to budge as it may be whats putting food on his table in this market. Best of luck Edit / Disclaimer : I am Lic. for my own / friends real estate transactions and am not actively engaged full time as a working real estate broker.
For what its worth: 1) I think this in itself would not hold up in court under the statutes of contract law - and could invalidate the contract. I agree with another poster about going to attorney. 2) And I also agree with the poster that said "honor your contract". If (1) proves correct, then consider yourself lucky in that you don't have to worry about (2).