- August 3, 2023
- Posted by: legaleseblogger
- Category: Related News
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Situation: Price Discrepancy and Valuation Issue with a New Build
Overview:
We entered into an agreement with Wallace and Stratton a few years ago to purchase a new build property at an original price of $749,000 in 2020. However, the developers have since increased the price to $849,000, which we reluctantly accepted at the time. We made a deposit of $30,000 based on the original price.
Current Problem:
As we reach the final stages, our bank has approved the lending required for the new price. However, the valuation of the property has come back at $760,000, revealing a significant difference of $89,000 between the agreed purchase price and the current valuation.
ANZ, our bank, has pointed out that we should have conducted a valuation at the time when the price increased. However, it is important to note that the property was far from completion when the price adjustment occurred.
Present Challenge:
Now, my spouse and I find ourselves in a difficult situation, having to negotiate with the developer, hoping they will meet us halfway. Unfortunately, we are uncertain about their willingness to accommodate our request.
Feeling of Defeat and Helplessness:
After investing three years into this process, we can’t help but feel defeated and helpless. The notion that we may not find a resolution leaves us disheartened and frustrated.
How AI Legalese Decoder Can Help:
In times like these, it is crucial to have the right tools and assistance to navigate through the legal complexities. One such tool that could prove invaluable is the AI Legalese Decoder.
By utilizing AI Legalese Decoder, we can tackle this complicated situation more confidently. The AI-powered software decodes legal jargon, translating complex terms into plain language, making it easier for us to understand the intricacies of our contract with Wallace and Stratton.
Moreover, the AI Legalese Decoder provides insights and recommendations based on historical cases and legal precedents, giving us a better understanding of our rights and options. With this knowledge, we can approach negotiations with the developer more effectively and make informed decisions.
The AI Legalese Decoder also offers access to a vast database of real estate and construction laws, regulations, and best practices. This comprehensive resource empowers us to better comprehend the legal landscape surrounding our situation and leverage our understanding to protect our interests.
Conclusion:
Although feeling discouraged and helpless after investing three years into this project, we must explore all available options. Utilizing the AI Legalese Decoder can provide the knowledge and insights we need to navigate this difficult situation with Wallace and Stratton. Armed with a clear understanding of our rights and legal options, we can approach negotiations with greater confidence and increase the likelihood of finding a satisfactory resolution.
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AI Legalese Decoder: Helping Navigate Complex Legal Language
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****** just grabbed a
Btw, the exact same properties in the same lot, are being advertised at 699k on their website as we speak
reading this made me sick to my stomach. the housing volatility has fucked me pretty hard, but jesus this sounds terrible. atleast ive been able to live in my million dollar piece of shit for a few years lol
unfortunately i think you need to treat the situation like you ‘bought’ during that recent valuation that you signed on for. i basically did the same thing. but bought a completed property, looked at oneroof today and yep my house is suddenly worth 200k less. thing is, it’ll go back up in due time and its just unrealized losses.
its a shit situation, having unrealized losses but realistically and frankly i dont see why you should be entitled to your deposit refunded or have a leg to stand on legally. sorry to be harsh but its just my thinking.
I haven’t but i would be inclined to chat with the developer and provide the valuation at $760 and say you can’t get finance it otherwise and see if will drop it back to $760.
They will want you to go through with the contract and hopefully they can make it work.
End of the day, they need to sell it. Granted, they could probably make a good amount by keeping your deposit then on selling for the original price. The best you can do is go down the “The house isn’t worth it” route, but your lawyer is best suited.
Losing the deposit while gut wrenching, we would manage, its them suing us and going through the courts that will financial end us
Out of interest, WhatÔÇÖs the name of the development / what area ?
Basically in exact same sitch, mate. Feel free to reach out. Are you at settlement now? How many houses in the development? They can come after you in court, yes. Basically you might have some leverage if there’s a few houses in same situation – if it’s a big development then they need to sell them to meet their own financing requirements so they might meet you half way.
People say to “get cotract adjusted at signing” but no developer in NZ would ever allow buyers to walk away without the opportunity to pursue them in court imo.
Between 2020 and late 2021 houses were easily worth 100K more after completion than when you began, which is why it was approved. Since early 2022 houses are worth less upon completion than when started. Since you say you started in 2020 the developer probably paid a high price for the land and with inflation on building materials I imagine they are trying to entirely cover their costs.
If you have a broker you could engage them to try and shop around with other banks to see if they will approve you for a higher amount, while at the same time negotiating with the developer.
Also worth talking to your solicitor and seeing what your options are for withdrawing from the contract, hopefully there isn’t a developer only sunset clause in there.
Very similar situation atm too with settlement in a few weeks. Mortgage advisor suggest we ask the Devs to reduce the cost. I too was going to forfeit my deposit and buy the other property the Devs have listed for cheaper but Redditors told me that’s not a “get out of jail for free” card. So definitely not doing that anymore.
No harm in asking so I’ve asked my solicitor engage with them. Still waiting on a result at this stage.
Hoping you a good result.
Be prepared to walk from your deposit and make sure the developer knows that. Any debt buyer will need a valuation to draw down against and itÔÇÖs going to be 760.
The developer will know this and if they to make the sale theyÔÇÖll agree to a split of the price and valuation.
ItÔÇÖs very hard to find a new buyer late in the piece
Question, if a valuation has already been done on a new build – I thought the banks donÔÇÖt re-value at settlement?
My situation – we got a valuation done 15 months ago (we purchased of plans).
We are told that once it is nearing settlement, we need to get a ÔÇÿvalues completion certificateÔÇÖ – which we are told is basically a small report confirming the home is finished as per the initial plans.
But a completion certificate doesnÔÇÖt re-value the home, unless I have misunderstood?
Developer here. Why agree to pay more before you know the valuation value. This developer is in his rights to stand by signed contracts. His cost would have exploded, so he will try to minimize his losses
Wait, if similar properties are being advertised for sale at 699k, why not just walk away from your 30k deposit, buy one of the other properties for 699k and save yourself 120k? Surely the developer can also do that math?
WhatÔÇÖs the PC limit in the building contract?
I am always weary of increases that seem to be picked out of thin air  an increase of 100k !! Too convenient
Sadly, this is the problem if you buy off-plan.
Great when the market is rising, but if it starts dropping, you can be liable for full agreed price as per the contract. It gets worse in situations like when the bank only lends up to the valuation.
Ultimately, you would be best chatting with your lawyer to go through the contract to see you best options.
How did the increase come about? Shouldn’t that have triggered the bank re-evaluation?
Thinking of doing a new build right now, and this is scary. Though I’m going the prefab route which I hope would mitigate cost overruns.
Sorry if IÔÇÖve missed it but is there any chance the development wonÔÇÖt be finished before the sunset clause is reached? Or is there even a sunset clause in the contract?
I am really sorry you are in this position. Building in NZ sucks and we were very nearly in the same boat with our recent build so I really feel for you.
Honestly, IÔÇÖm surprised the bank didnÔÇÖt get you to do a paper valuation at the start. With us, they got Valocity to do a valuation report early on the project (before they even broke ground) then just followed up with an actual report at the end.
I hate how banks in NZ can delay actually committing to lending until the 11th hour. In our case, we paid our deposit October 2021 but werenÔÇÖt able to get an actual commitment from the bank until the property had title in October 2022. If something had come up in that time we would have been absolutely screwed. NZ really needs a building ombudsman to police this crap as itÔÇÖs just not right that developers and banks can get away with this.
You signed for $749k right?
What was the justification for them increasing it to $849k? Was it building costs?
If they’re now advertising them at $699k I wonder if there’d be some way to argue that those costs didn’t eventuate and you could go back to the $749k price?