New Home - Possible to get back Earnest Deposit?

[vacation]

Quote from jsmith:

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.

Which builder in which area? 50k may be nothing, and may be made up by April 2008.

Or, it may be the beginning of a much larger slide.

In any case, I think "earnest money" is called "earnest money" for a reason. Either you take delivery of the house or you give up the earnest money.

 

[jsmith]

An earnest payment is a deposit towards the purchase of real estate made by a buyer to demonstrate that he/she is serious about wanting to complete the purchase.

If the buyer defaults, the seller keeps this earnest payment for damages because they could've sold the house all this time they were saving it for the buyer.

If I held the home until delivery and backed out there, I wouldn't expect anything back. In this case, It's about 6 months before delivery of the house. I'm not defaulting. I'm just asking to get out of the contract and give them the opportunity to sell this home in the next 6 months. They have NO real damages because they haven't even reached my phase/row yet in the sales office.

If you think this is the same thing as put or call option, then I would say I still have 6 months of Time Value. I'm fine with losing 25k but I would still try my best to get back any part of it.

Quote from Cutten:

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.

 

[jsmith]

Thanks for your thoughts. The most I would lose according to the contract is 3% of the Home value which is $22k. I do think I would be able to get back more if I back out now 6 months before the home is ready. If they don't, I will just pick all standard options and hold it into next April.

Quote from 1Reason:

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.

 

[jsmith]

The real estate downturn has already been going down since 2005. The house prices here in the Bay Area have been VERY resilient and haven't really dropped much the last two years. In Cupertino, people are still bidding over asking prices for the homes recently. I figured when the housing market recovers, the homes around here will be one of the first to move higher.

Quote from blackjack007:

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