DUMPED BY YOUR BUILDER?

Getting dumped, in relationships and real estate, is never easy

Discarded, disposed of, rejected, castoff , sidelined; anyone who has been on this planet long enough to reach adulthood has probably been “dumped” at some point — as in, the relationship is over.

It is rarely a pleasant experience, especially for the dumpee. Honestly, it’s not super being the dumper either. For one, it is heartbreaking, emotionally time consuming and dismal. For the other, it is stressful but then relieving.

Last week, I received a phone call from a client. She was in tears. “Jen, I’ve been dumped.”

Now, while I am flattered that she would consider her Realtor a close enough friend to call in such a crisis, I am, in no way, under the illusion that I am qualified to counsel her in such relationship advice. After having been twice divorced myself, and trying to currently navigate a new marriage, I clearly am not the person from whom to seek such guidance. I can, however, empathize.

“I’m so sorry,” I offered. “What can I do to help?”

Feeling quite pleased with myself for having reacted so quickly with the appropriate response (according to Google), I left a space for her to reply.

“I don’t know what to do now,” she said. “We have been on the wait list now for six months and we just got dumped. It looks like we are going to end up stuck here in this tiny house, bursting at the seams, for the next ... who knows how long.”

Well this was worse than I had initially thought. My clients had just been dumped by a tract builder. Tract builders, or production builders, are generally established builders who have four or five home plans to choose from and build several of those homes in one neighborhood. In Utah, there are over 100 different tract builders. Only a few of these tract builders have been able to negotiate plots of land on which to develop these communities. As such, most, if not all of these builders have long waiting lists for each lot. Most of these lots have not even been released yet.

Some builders have gone to offering a lottery system. Each time a coveted lot opens up (and all lots are considered “coveted” at this point), the builder pulls a name and they get first dibs on the available lot. Others have gone to a “highest and best” option. When a lot becomes available, the highest and best bidder on the list wins the lot. Recently, however, builders have scrapped the lists of waiting people and have opted to only build “spec” homes on each lot that comes available. Spec homes are new, move-in-ready homes.

The builder makes all the choices in the home and then builds the home before offering for sale to the public.

Even people who have a signed contract and made large financial deposits with the builder are literally being kicked out of the relationship. Many builders are doing this legally due to a type of “kick out” clause written into the contract. Most home builders have their own new construction real estate purchase contracts. These are written by their own attorneys, so they are geared more toward protecting the home builder rather than the buyer. As such, many of these contracts have termination rights for both the buyer and seller written into the contract. This seems unconscionable; yet, with the rising cost of lumber and other construction materials, as well as supply shortages and substantial delivery delays, it is almost understandable ... almost. With prices escalating so quickly, by the time a home is built, sometimes nine months to a full year after contract, the price of the home has gone up by tens of thousands of dollars and the builder ends up upside down.

One reason it is so important to use a buyer’s agent when having a home built, whether it is a spec build, a custom build or a production builder, is to help pilot the way through such a contract.

Addenda can be added to a custom new build contract excluding certain built-in clauses in the contract. At the very least, one can get counsel on the interpretation of the contract so that one can be prepared if the clause is suddenly executed, as would be the relationship between builder and buyer at the time as well. Not to worry, however, the “dumper” promises to give the “dumpee” one more chance at the relationship, if they can bring something more to the table than they already have. As for me, once dumped, I’m not one to be cajoled into coming back.

Jen Fischer is an associate broker and Realtor with Ascent Real Estate. She can be reached at 801645-2134 or [email protected].

Jen Fischer

Guest columnist