Warren County Ohio Real Estate News and Observations: Can A Builder Fire A Buyer?

Can A Builder Fire A Buyer?

Greater Cincinnati new construction homesCan a builder fire a buyer?

After all, isn't the saying "The customer is always right!!"??

So if the customer wants something shouldn't the builder work to take care of the buyer's desires?

Or can a builder decide the buyer just isn't worth the hassle?

Well, I'm obviously NOT an attorney, but if you consult one who has access to the typical Cincinnati area builder's contract the attorney will probably tell you a few things after reviewing the contract:

1.  The contract is DEFINITELY written in the builder's favor

2.  There are clauses to protect the builder (e.g. delivery time can be MUCH later than the usual 5-7 months)

3.  If you violate the contract you're at risk of losing your sizable down payment

For the most part, builders DO want to maintain favorable relationships with every buyer.  After all, you know the saying that a disgruntled customer will tell MANY more people about their experience than a happy client, so happy buyers are good for the builder's business.

But if you've ever heard the stories about the Bridezillas, then it's not a far leap to imaging some Buyerzillas out there too.  Demanding changes the builder can't easily make.  Wanting things for free that normally carry a charge.  Bucking the schedule and delaying the process.

A builder MAY choose to tolerate some of what they consider "misbehavior", especially if demand is down.

But if the market is strong and a builder knows they could sell the same lot and a comparable home next week, why would they add the stress to their lives? 

So the short answer?  Yes, a builder CAN fire a buyer.

Last year we had a buyer contact us and prior to contacting us she'd had a local builder's legal department send her a "don't contact us, our reps, etc." letter.  They'd had enough.

And we know of buyers that have gotten termination letters from builders because the buyer's demands had gotten out of hand.  They'd had enough.  Get with the program, follow the contract you agreed to, or you can go somewhere else to build a home.

Two different builders, same response. 

Thinking about Cincinnati new construction?  Hire me to help you.  The major Cincinnati builders all factor agent commissions into the price of ALL their homes and they don't provide a discount for NOT using the services you're already paying for.  So with that in mind, why wouldn't you call 513-520-5305 and put me (Bill) to work for you?  And please make that call BEFORE you walk into the builder's model or both of us will be out of luck!  Let me make the introduction, that's just one of the first steps in what I'm being paid to do for you!

 

Again, just give Bill a call at 513-520-5305 or email Liz@LizSpear.com and we can discuss how we can help you with your new construction home search! 

Serving Greater Cincinnati home buyers and sellers,

Bill of Liz and Bill aka BLiz

 

Serving Warren County Ohio & Adjacent Areas

 

The Liz Spear Team of RE/MAX Elite
Elizabeth Spear, ABR, CRS, Ohio License SAL.2002007747

William (Bill) Spear, CRS, Ohio License SAL.2004011109  Kentucky 77938
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Comment balloon 40 commentsLiz and Bill Spear • January 12 2019 11:13PM

Comments

Read the contract. You may be surprised what clauses are in there

Posted by William Feela, Realtor, Whispering Pines Realty 651-674-5999 No. (WHISPERING PINES REALTY) 2 months ago

Oh yes they can, and they can also keep certain deposits if you cancel as a buyer. It's imperative to get your own representation when you work with builders. The misconception that you can get a deal without your own agent is baloney.  

Posted by Debb Janes EcoBroker and Bernie Stea JD, REALTORS® in Clark County, WA (ViewHomes of Clark County - Nature As Neighbors) 2 months ago

All valid points! I have never had a buyer that obnoxious but I have heard that they are out there.  Thank you for sharing.

Posted by Karen Feltman, Relocation Specialist in Cedar Rapids, Iowa (Cedar Rapids/Iowa City, IA KW Legacy Group) 2 months ago

Oh boy, Bill,  It generally takes a lot for a builder to kick a buyer to the curb. Hiring you to represent a buyer is a wise choice for so many reasons ... not the least of which is true buyer representation and informing the buyers of how the process works and doesn't work.

Posted by Kathleen Daniels, San Jose Homes for Sale-Probate & Trust Specialist (KD Realty - 408.972.1822) 2 months ago

Bill, here in Los Angeles there are very few developments i.e.: subdivisions like you describe...so individual developers build new construction homes and I always advise them finish the project do not let the buyer come in at 70% completion, because "you will be buying into a nightmare"... so to prevent that build it for spec and then sell it. Now in the outer perimeters of Los Angeles where there are subdivisions I always suggest "representation" before dealing with the builder, because as you stated the Purchase Agreement favors the Builder....Endre

Posted by Endre Barath, Jr., Realtor - Los Angeles Home Sales 310.486.1002 (Berkshire Hathaway HomeServices) 2 months ago

I use a state sanctioned contract for new construction that gives buyers wide latitude. That being said there are some buyers best left to their own devices.

Posted by Joe Pryor, REALTOR® - Oklahoma Investment Properties (The Virtual Real Estate Team) 2 months ago

YES Liz and Bill Spear and it was great. The buyer despite signing a contract, despite beong told not to enter the home when under contruction, would show up every day and boss the workers around asking and demanding changes on site.  

Posted by Scott Godzyk, One of Manchester NH's Leading Agents (Godzyk Real Estate Services) 2 months ago

Hi BLiz- Larry is a retired builder and he has fired his Buyers.

Posted by Kathy Streib, Home Stager - Palm Beach County,FL -561-914-6224 (Room Service Home Staging) 2 months ago

Good morning, Liz and Bill Spear (Bill).... yes, a builder can and will cut a buyer loose.... but when I was listing new construction, I knew after many meetings with buyers, before the builder met the buyer) if the buyers were going to be high maintenance.... I would not take the deal.... I'd make sure the buyer did not want the deal.... we never had an issue with any buyer...and the builder held and used the deposit...always... another reason for the buyer to behave and play nicely on the construction site!!

Posted by Barbara Todaro, Marketing Agent for The Todaro Team (RE/MAX Executive Realty ) 2 months ago

Absolutely! They don't have to put up with tough buyers just like we do!

We know of buyers that have gotten termination letters from builders because the buyer's demands had gotten out of hand.  They'd had enough.  Get with the program, follow the contract you agreed to, or you can go somewhere else to build a home.

Posted by Sham Reddy, CRS (H E R Realty, Dayton, OH) 2 months ago

New construction is its own specialty. It's not just builders who fire buyers. I know an agent who, in his buyer representation presentation, informs potential clients that he does not do new home construction buyer representation. It's a bit extreme, but shows that it's best to inform buyers of the nuances that make new construction different than traditional purchases.

Posted by Chuck Willman UtahHomes.me, Utah Homes (Utah Homes) 2 months ago

Let this be a lesson the "buyerzillas" out there! I understand that buying a home is stressful and building a home has a new set of stresses, but when did it become ok to become a complete A**hole to another human being.

I recently had a couple from California want to buy into a new community here. The contract was certainly written in the builder's favor.  I was afraid when all the hoopla died down they would have some buyer's remorse.  I advised them to take a moment and read the contract and take it to an attorney if necessary.  They did that and while I lost that sale, I know how a buyer that trusts me.  It costs nothing to work with an agent who is trained to look at the big picture.

Posted by Chris Lima, Local or Global-Allow me to open doors for you. (Atlantic Shores Realty Expertise) 2 months ago

Hello Liz and Bill - I imagine that there are tales of "Buyer-zilla" . Occupational hazard?  Your post establishes some good basics.

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 2 months ago

The customer isn't always right but they are never wrong...has served me well. When I was doing development, we would do anything to sell our product and it worked too! Why? For every unit we sold, the bank got paid back on the construction loan and we were one unit closer to our profit. The big picture works well with the little picture if we let it. Think: Scarcity & abundance. A developers mission? To get in and then get-out effectively & efficiently

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) 2 months ago

Great post!  In today's world, people often think the consumer is always right.  However, overly demanding people usually know they are pushing the line.   They have often gotten away with bad behavior.   

Posted by Shirley Coomer, Realtor, Keller Williams Realty, Phoenix Az (Keller Williams Realty Sonoran Living) 2 months ago

Good morning Bill,

So glad to see this post featured. In Austin most all builders court the Real Estate agents because we sell 80-85% of their homes. If inventory is tight (which it is here) and a new section is opening up and their is a wait list of buyers the ones with agents move up the list! The buyers need to remember we bring many buyers if they have no representation its only that one deal and it could be a headache for the builder without an agent representing the buyer.

Posted by Dorie Dillard CRS GRI ABR, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.750.6899) 2 months ago

My husband used to build custom homes, and some of those buyers were the makings of nightmares.  I should have learned to write tougher contracts.

Posted by Marte Cliff, Your real estate writer (Marte Cliff Copywriting) 2 months ago

Great article and all true. I've worked for Builders for 22+ years. The agreements are written by builder's attorneys and favor them. sometimes today's buyers don't have clear expectations (another reason to have a buyers agent) and their outlandish requests can turn a builder off. Especial since you figure builders have to work with the buyers for 6-8 months of construction and then another 1-2 years afterward for warranty! That's a long time to be stuck with a buyer from hell!

Posted by Stephen Turner, The BIG Guy of NEW HOME SALES (TriCorner Homes (TriCorner Realty)) 2 months ago

Great article and great points.  Thank GOD, that I only have encountered one buyer in my life time and that buyer wanted the seller's car in the garage and wanted me to write it up as part of the offer. I just told her I write offers for homes not cars and that she would have to get with seller after closing. 

Posted by Graziella Bruner, Associate Broker - Serving Wayne & Oakland County (NCS Premier Real Estate) 2 months ago

i have been in mortgage financing for 35 yrs and this the first i have heard of this..

Posted by Karen L Roberts 2 months ago

Bill

There is some great education for would-be new home buyers.

Buyers interested in new builds in your area would be wise to contact you early on to understand all the ins and outs of buying in a new home community, AND understanding the contract!

Jeff

Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) 2 months ago

Yes, a builder can fire a difficult buyer and will again Bliz. The 4-corners of the contract needs to be respected by all parties. Building a home is a very tedious venture and people can get carried away with emotion.

Posted by Wanda Kubat-Nerdin - Wanda Can!, So Utah Residential, Referral & Relocation REALTOR (Prado Real Estate South) 2 months ago

Being the wife of a builder, I know so well what your saying! Buyers can become so difficult to handle, and make life difficult for the builder. For instance if they insist on certain tiles or things and they are backordered throwing the builder off schedule it doesn’t help him. My husband prefers to finish it, you buy it approach, and save a few headaches!

Posted by Ellen Caruso (Daniel Gale Sotheby's International Realty) 2 months ago

Bliz, this paragraph from your blog post is fantastic. . may I use it with modifications of course. 

"Hire me to help you.  The major Cincinnati builders all factor agent commissions into the price of ALL their homes and they don't provide a discount for NOT using the services you're already paying for.  So with that in mind, why wouldn't you call 513-520-5305 and put me (Bill) to work for you?  And please make that call BEFORE you walk into the builder's model or both of us will be out of luck!  Let me make the introduction, that's just one of the first steps in what I'm being paid to do for you!"  So many buyers think they will get a deal going to the builder without representation. 

Posted by Dana Basiliere, Making deals "Happen" (Rossi & Riina Real Estate) 2 months ago

Great Post !!! Thanks for sharing!!
Have a great Real Estate Week !!!!

Posted by Barbara Flannery, "Homes for Everyone In London Kentucky" (USA Realty,Inc.) 2 months ago

Some buyers are just a pain to work with when buying new construction. Forever changing th plans.

On the other hand I have a builder to change the plans on the buyers more than once.  His attitude is take it or leave it.

Posted by Rose Mary Justice, Synergy Realty Pros (Synergy Realty Pros) 2 months ago

Interesting thoughts.  It's a very smart idea to hire you for advice about Cincinnati new homes.  I've never seen a builder do that but then again I'm not in every corner of the city either.  Sometimes it's impossible to make everyone happy! 

Posted by Jan Green, HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN (Value Added Service, 602-620-2699) 2 months ago

You cannot fire an non-employee. You can sue them for breach of contract. You can breach the contract yourself when the conditions are intollerable. Ask an attorney. 

Posted by Jim Broline, Chicago Suburban Property (RE/MAX Enterprises) 2 months ago

I think that a builder should be able to fire a buyer.  Some clients don't understand the legalities of certain things in real estate and some just don't want to understand but to protect my organization, if that means firing a buyer that's the way it will go..

Posted by Dr. Karen Lewis, Broker 305-3231556, Residential for Sellers and Buyers in S. Broward (K1 Realty Group) 2 months ago

New Construction is niche area and requires more education time with the client. Having said that I've had to fire a handful of clients in my day. Clients that challenge every step of the process, don't respect our time or just have unreal expectations. 

Posted by Jerry Thomas-Construction Loans, Construction Loans Jumbo/Conventional/FHA/VA (Cranbrook Loans) 2 months ago

As a former contractor salesman for over 30 years, I've seen both sides. I had to "fire" a couple contractors in my day. They were asking for the moon, slow to pay, and complained with far too many oddball requests that were just not what any other builders were asking for, or getting. Best thing for us was to let them go drive our competition crazy. 

Posted by Scott Seaton Jr. Bourbonnais Kankakee IL Home Inspector, The Home Inspector With a Heart! (SLS Home Inspections-Bradley Bourbonnais Kankakee Manteno) 2 months ago

Interesting post, Liz and Bill Spear. While there are no doubt "buyer-zillas" out there when it comes to new home construction (and pre-existing for that matter!), there are also some "Homebuilder-zillas" as well. We had a recent new build sale where the developer made all sorts of changes they didn't have to and did them at no cost to the buyer. Their goal is happy customers and great reviews.  On the same token, I worked with a buyer who had nothing but excuses and roadblocks from the builder but was thankfully able to extricate himself from the contract. It cuts both ways in that sector of the market.

Posted by Greg Mona, Real Estate in the 21st Century! (Faira Homes Corp) 2 months ago

Three of my neighbors did not use an agent when buying from the developer of our neighborhood...they had all kinds of problems throughout the process and especially during the warranty process.  I also did not use an agent and represented my wife and myself.  I had zero problems with issues with the builder....especially when my driveway had to be replaced in the warranty year and other minor issues.  But I knew what I was doing...they did not.  The value of having a knowledgeable agent represent you far outweighs any disadvantage of having someone else involved on your behalf. 

Posted by Mike McCann - Nebraska Farm Land Broker, Farm Land For Sale 308-627-3700 or 800-241-3940 (Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska) 2 months ago

The key to a solid transaction, traditional or new construction alike, is in setting expectation in your client. We know builders are crazy, and have the power in their contract to wield that power. Short of a good attorney that can challenge a contract of adhesion, what a builders preset terms are, buyers have little if any power.

As agents, it is our job to make sure we tell them that up front. I have had a number of buyers that wanted new construction, after being educated about the risks, that changed their minds and dealt with the problems of resale, just to keep a reasonable level of control. 

The key is to educate all clients of all pros and cons, and let them move forward with knowledge.

BTW, never forget, because of federal laws, something builders cannot contract around, builders lose a ton of their power with VA and FHA buyers.  A good reason to move struggling buyers to new construction!

Posted by Richard Foster, Broker Owner, BS, ABR/M, CREN, CRS, GRI, RRG, SFR (Nevada Perfect Homes) 2 months ago

Track home builders typically will not...atleast not in our area. I have seen custom home builders vet buyers for weeks before agreeing to build them a full custom home. Builder's contracts are always written on the builder's behalf. 

Posted by Steven Beam, Parker Colorado Real Estate (RE/MAX Alliance - Parker Colorado Real Estate.) 2 months ago

Liz and Bill,

Many years ago, when I sold only residential real estate (not waterfront lake property) I worked with a building contractor who built any number, of what I would define, as "tract homes". He built a good quality home, as such, we never had to address problems commonly associated with poor workmanship or inferior materials. 

In any case, as construction was nearing completion, I would begin to "show" his home to perspective buyers. Needless to say, there would always be that buyer who wanted the many extras and would make his desires known. Joe, my contractor business associate, as I would often reference him, had a very simple solution to buyers who "demanded the moon" but were as "tight as a tick" when it came to paying for the "extra's". 

I remember on numerous occasions when Joe, the perspective buyer, and myself, would be on location discussing final details of a potential sale. Items like....paint and trim colors, cabinet door handles or light fixture designs were being discussed, when out of nowhere, the potential buyer would begin to demand such items as gutters and downspouts, bath/shower glass enclosures or granite counter tops in the bathrooms, to be included in the quoted price of the completed home.

Joe's response was always the same. After listening intently as the perspective buyer continued to ramp up his level of adrenalin along with his demands, Joe would politely interrupt, making the following comment, "I have described, in detail for you, those features I am including with this construction. Based on my built out delivered price and what you have just specified, I don't think I will be able to satisfy your needs."

The meeting would usually abruptly come to a close. The buyer would have to consider whether he wanted to purchase Joe's newly constructed home as is, or agree to "pay for the extras". If neither option was acceptable, I would suggest the buyer move on.

Joe was accommodating when he considered the playing field to be level, try and entice him to throw in the freebee's at his cost......."sorry, don't think I can help you!"

Posted by Sharon Miller (RE/MAX Platinum) 2 months ago

Here in Boise, Idaho; the market is so strong that our largest volume builder, CBH Homes, just announced they are no longer doing presold homes!  They are going 100% spec homes so they don't have to deal with a buyer during the construction process.  When the market slows down, they will become more accomodating again.

To me it is all about setting expectations up front.  Some builders are much better about change orders.

I love new home construction so a buyer can get the home of their dreams!

Posted by Jim Paulson, Owner,Broker (Progressive Realty (Boise Idaho) www.Progressive-Realty.info) 2 months ago

Important blog for new build buyers to read.  They often think the new home will be perfect, easy to make changes--and it's not.  Buyers do not have the leverage they do in a resale purchase.  And, the new builds are rarely finished on time!

Posted by Mary Hutchison, SRES, ABR, Experienced Agent in Kansas City Metro area (Better Homes and Gardens Real Estate-Kansas City Homes) 2 months ago

Very thought provoking post.

You point out well that a builders contract is written in their favor.

As to "firing" a buyer, that would be determined by the terms of the contract.

I encourage all buyers who are looking at new construction to have their own, Knowledgeable and Professional real estate agent to help them through the process. I also remind they can have an attorney look at the contract before signing to help them navigate the tricky parts.

Posted by John Wiley, Lee County, FL Real Estate GRI, SRES,GREEN,PSA (Right Move Real Estate Group- EXP Realty) 2 months ago

Many years ago one of my buyers turned into a "buyerzilla" and in the end, the builder and buyer agreed to part ways. As you can imagine, it was not a pleasant situation and turned out to be very stressful for everyone involved.  

Posted by Joyce Marsh, Million Dollar Guild, Luxury, CLHMS, CNE, SRES (JOYCE MARSH REAL ESTATE COMPANY ) about 2 months ago

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