I canceled the home purchase and need advice for the earnest money refund.

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Nov 17, 2022 910 Answer a Question

I liked the property, and before starting the process, I asked a few times to the sales person about a processing unit next to the property. She told me not to worry and that it was not sewer/wastewater related.

So I started the process and paid the earnest money. At the walk-through, I asked the builder why this property had been on the market for so long. Then I found out that it was a waste/sewage water lift station.

At the same time, my inspector found out that water is standing on both sides and is not draining, which would cause structural damage and may have already caused it. He also found other critical things, such as leakage in a roof.

The builder has lied about the construction date of the property and the above. They may not accept the issues are critical.

So, I canceled the deal before closing. The office said I might be able to transfer the earnest money for another property, but I would lose the inspection fee and the appraisal fee.

I need some advice on how I should proceed and if it is possible to claim the earnest money and maybe other expenses (inspection fee and the appraisal fee)

Asked by
Consumer
Categories:
Home Buying
Penny Clissold
About 2 months ago
This is why it’s so important to always use a realtor… Depending on the contract you normally have 7-10 days to back out. During your option you find out everything and then can back out or not. If that period is past you will need to contact the sales manager. I doubt you will be able to get any expenses back. That’s just part of the home buying experience. Depending on the type of system it’s not necessarily a bad thing. They are normally a lot cheaper and in remote areas it’s your may be your only choice. The items you mentioned you just turn in and those items should be corrected before closing. You also have a warranty so the builder wants to make it right. Just reach out but you probably won’t win trying to back out: if you proceed they have to make all issues right. It’s a new home.
Deanna Essmyer
About 2 months ago
f you are in the market for a new construction home, it is essential to work with a Realtor. The builder’s Sales office represents the builder, not you and they are looking out for their best interest, not yours. An independent real estate agent has a fiduciary role to represent you solely and will help get you the most value for your money as well as make the process easy and frustration free. They will Negotiate on your behalf, guide you through inspections, contracts, and fees. They are your trusted advisor to make sure you come out ahead and are aware of any conflicts of interest such as hidden fees or faulty construction and anything that could impact the value of your property, such as a waste station or proposed new zoning and deed restrictions. Are you thinking of buying new construction? Don’t go it alone - let me be your guide!
Kiera Quinney
About 2 months ago
Unfortunately, I don’t think you will be able to receive a refund for the expenses (appraisal and inspection), as these cost are usually on the buyer. I would contact the sales agent or manager to review the contract stipulations, because depending on what/how the contract is worded, you may or may not be eligible to receive you earnest money. Always check with a real estate professional, when (for the most scenarios) working with new construction the buyer will not pay for the professional’ service, which is very beneficial!
Julie Angilella
About 2 months ago
I am very sorry that this has happened to you. It is always in your best interest to work with a realtor when purchasing a new construction home. The sales agent represents the builder, and the contract is written strongly in the builder's favor. I suggest you reread your contract to see what your options are. Usually, an independent inspection and the appraisal are buyer expenses. It is unlikely you will get a refund. In the future when buying new construction, use a realtor. They will be there to educate you; guide you and they will also keep your best interests in mind.
Shannon Hart
About 2 months ago
Sorry you’re having to go through this. Most likely you will not be able to get back the inspection fee and appraisal fee due to that being a general buyers cost that has to be paid for to move the home buying process along. Same thing for anyone buying a home, whether it be new construction or not. Some lenders will allow the appraisal fee to be discounted if needing another one and some realtors can help repay for a new one and given credit at closing. If you canceled after the option period and too close to closing, you likely won’t get the earnest money back. It’s all in the contract you signed.. hope it all works out for you
Kenneth Myers
About 2 months ago
So sorry that this is happening to you. Normally, you have a specified period of time (option period), to which you can terminate the contract and receive your earnest money back. That is specified in your contract in paragraph 5B. It sounds like you are pretty far along already in the process, so more than likely you have missed that opportunity. The sales agents represent the buyer and are not looking out for your best interest. It is so important to use a realtor so that you have someone to represent you as the buyer. A realtor agent has a fiduciary responsibility to you as the buyer and puts your best interest first. Feel free to reach out if you have any additional questions…(346) 306-2250
Daniel Sirka
About 2 months ago
Welcome to real estate 101. Depending on the builder you may just ask to get the money back. It will be much easier if you have the correspondence in writing. Read thought the contract and see if there is another way to get out and get your money back. You man need to seek a legal advice. As for the inspection and appraisal that would be hard to get reimbursed, even if you purchase another property from the same builder. Unfortunately builders are not regulated, so don't think TREC can do anything.
Lisa Hoogenboom
About 2 months ago
I agree with all the answers given thus far. I might add that if you feel you have been intentionally and egregiously mislead, and have some correspondence to attest to that, (emails, texts, documents), I would advise speaking with an attorney, depending on how much the earnest money at risk is, and the cost of the attorney.
Stephan Kardos
About 2 months ago
I am sorry this has happened to you. My recent Seller had a similar experience with his new home build. We learned that the experience level from the site supervisors down to the laborers are proving to be very low, with regards to workmanship and quality. You may not receive a refund, however, you can definitely take your complaints and wishes to the highest levels of the company.
Janet Chavez
About 2 months ago
Ma, I am very sorry that your Real Estate experience is not going as planned. It is very difficult to go through this alone too. I see you have received great advise on previous answers so I won't repeat but please know some builders are willing to work with you so please seek for an Agent you trust and go over the contract you signed. Most likely, you will need to involve an attorney if there is something you can find in the contract that will support your case but... please know in most cases, you would've lost the earnest money. Remember, going with an Agent as a buyer, most likely, you won't pay the agent a penny, all commissions are paid by the Seller (builder in this case) so please try to hire an Agent you trust. Suggestion: Reconsider the builder's options after reading the contract and hiring an Agent for the next steps. If you have any questions, feel free to call, text or email. Good luck and I promise that Real Estate transactions could be fun and easy, don't give up and find the home you love!
Tamintris Robinson
About 2 months ago
I am so sorry that happened to you as a listing agent for a builder are always asked questions before taking their earnest money as a courtesy I hold the earnest money check for seven days after submitting the contract to my closing coordinator not all builders are the same so you have to be cautious of that and once again it’s always good when you go into a builder have your buyer agent with you have a licensed realtor with you so that you could make sure you understand the builders policy on refunding earnest money I hope this information was helpful
Joe Applewhite
About 2 months ago
When you are buying, a realtor works for you 99% at no cost to you. Sellers and property managers pay commissions most times. Builders are not held to the same laws and standards realtors are. A large majority of builders make the earnest money nonrefundable. It sounds like you may have good cause for small claims court. I would speak with a real estate lawyer asap. Let me know if you have more questions. I'm happy to help.
Richard Luebeck
About 2 months ago
I am sorry this happened to you. This is why you need a realtor, so you understand before you pay any monies. I would recommend speaking with a real estate attorney.
Nelly Perez
About 2 months ago
I am very sorry that this has happened to you. That is why is so important to contact a real estate agent for the new construction homes.
Afzaal Rizvi
About 2 weeks ago
I don't think you will get earnest money refund. You need to work with the builder and if builder offered you transfer to other property. Please look that option too and the ask them to give you credit for inspection money.
Disclaimer: Answers provided are just opinions and should not be accepted as advice.
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