AboutToni Yates Expertise As a real estate broker and agent for over 12 years, I am qualified to answer questions about buyer and seller agency, home ownership, second home ownership, lake property and basic real estate information and laws as they apply in the Commonwealth of Virginia.
Experience 12 years in real estate and a second home owner. Top producer for many years. Have specialised in resort and second home as well as primary home ownership. Also have expertise in equestrian properties. Owner and one of the founders of Re/Max Lake & Country as well as Greenway Horse Farm.
Organizations National Association of Realtors, Virginia Association of Realtors, Fredericksburd Area Association of Realtors, Richmond Area Real Estate Association and Charlottesville Association of Realtors. Re/Max and the Better Business Bureau.
Education/Credentials Real estate licensing and broker licensing courses as well as required and optional continuing education in my field.
Awards and Honors Top producer awards from FAAR and Re/Max.
Question QUESTION: My wife and I signed a contract last November to build with Ryan Homes. We immediately put our home up for sale after interviewing three agents. In February, my wife contacted Ryan and advised the sales rep that we had had no movement on our house at all even after reducing the price a couple of times already. We asked if they could push back the start date for building our home to which they replied that the schedule was already set and that when the time came they could work with us. In March, we paid Ryan the remainder of our 5% down payment, $21,000.00. At the beginning of April they began construction, however we still had no movement on our home. Since our closing date was at the end of June, we met with Ryan in early May and began to seek further options such as financial assistance to help with the sale of our home or pushing back the closing. Our requests went unanswered for three weeks. Finally, we were contacted by the sales rep and he said that he had been waiting on information from NVR mortgage as to what other programs they could qualify us for. Also during this time we went to an outside lender and found a better loan. The Ryan rep said that he would have to see if NVR could match this loan. The NVR loan was based on a sale or lease, although we were never told what lease amount they used to qualify us. The outside lender's loan was based solely on the sale of our house.
Needless to say, NVR never responded with whether or not they could match. Ryan offered $15,000 off the price of the home if it would help us sell ours. In response to that, we lowered the price of our home $10,000. By the end of June, we still had nothing. The Ryan sales rep contacted us with an alternative idea. He said that Ryan was going to market the new home for sale beginning immediately. This was two weeks prior to our closing date. If they received an offer on the home, and we still had not received a contract on ours (essentially a first right of refusal), they would sell the home to the prospective buyer and then give us another lot on which to build the same home at the same price. I told the rep we would think about that option. He responded that it wasn't so much an option. He indicated that regardless, Ryan was going to market the home. He said that if they sold it to someone else and we didn't want to move forward, then we would lose our deposit.
The months of July and August passed with still no movement on our house despite countless showing and open house with quality traffic. We offered price cuts totaling almost $26,000.00, special incentives, conveyed all appliances, basically anything we thought would help in securing a buyer.
By mid-August, we decided that we were mentally exhausted and weary from the entire process. We decided to contact Ryan to see about canceling the contract. I emailed the rep to inform him of our decision. Unfortunately he was on vacation for two weeks, beginning the day I sent the email. Upon his return I spoke with him by phone. I had received my email and went on to say that Ryan would draw up an MRA which would be executed and we would forfeit our deposit. I informed him that I disagreed with the deposit issue and he referred me to his sales manager. He also indicated that they had executed a contract with a deferent buyer on the new home within the days prior to our conversation.
The following day, I spoke with his sales manager who said that he was aware of the situation and that we had forfeited our deposit and that they had sold the home. He then backtracked to say that they had received a contract but hadn't decided on whether or not to accept it. I told him that I felt as though we had done everything we could to sell our home and that we shouldn't have to forfeit the deposit. He said we didn't satisfy the contract because we didn't sell our home. In a nutshell he said that it was our fault that the home didn't sell and that we had refused to rent the home. He also questioned our use of a home equity loan we had secured some 18 months prior to signing with Ryan. The second mortgage was the reason we were hesitant to attempt a lease because we wouldn't be able to secure a lease amount that would satisfy both mortgages. We also had no idea what amount NVR used to qualify us based on the lease. In addition, the outside lenders requirement was that we sell our home in order to be approved.
I asked why we hadn't been notified of the contract placed on the new home by another purchaser and he indicated it was because they knew we couldn't close. I asked again why we weren't notified per the agreement with the sales rep and he said I am notifying you now we have a contract on the home, and he asked if we could close. I said no. He said okay then, you are in default of your contract and you will be receiving a letter to that effect.
I know I am missing some details here, but do we have any recourse?
Thanks
ANSWER: Hi Kevin-
Thanks for your question. I am sorry you have had such a bad experience. Without a legal review of your contract with the builder, I am not sure what your rights are. I suggest you have a real estate attorney look it over. This market has played havoc with owners, realtors and builders alike. My personal feeling is that since they did get a buyer for your home, keeping your deposit is a little like "double-dipping." However, and this is a big however, if you contracted for a house with them and they were willing to move your deposit to a another house and lot and you turned that down because you were "mentally exhausted and weary from the whole process" (which is certainly understandable), that really is not a legitimate reason to cancel a contract and therefore they may well be within their rights to retain the deposit for breach of contract. In fact, it is possible that they could legally keep the deposit and still go after you for specific performance. Again, you should consult an attorney before you write-off $21,000. That being said, you certainly have the option of writing letters to them, their builders association, consumer groups and the press in order to have them reconsider their decision or perhaps you should consider moving forward with them. The market seems to be recovering somewhat and you did originally like the house you contracted for. Probably not the answer you wanted but I hope this helps. Best, Toni
---------- FOLLOW-UP ----------
QUESTION: Toni,
I appreciate the answer.
As a follow-up, we had a contract on a specific property,if they sold that property to another person, how can I still be tied to a contract just because they transfer it?
Also, as far as moving forward with them, what's to say that I do that and the house still doesn't move?
Thanks again.
Answer Hi Kevin-
In response to your follow-up, a lot depends on your contract. You need to look at what constitutes default and what their allowable remedies are. If their offer was only verbal, you may not be held to it and may not be required to go forward. However, if you defaulted under the terms of the contract and the penalty for that is forfeiting your deposit then that may be the only way to retain any portion of your $21,000. In my opinion, the market is starting to come back (I am sick of the press) and your house should sell if it is priced correctly and shows well. Those are the two main reasons a house doesn't sell. Your best bet is to have an attorney look at the "fine print" and decide from there. Best, Toni
