Caught by the inflation demon

[ultrarunner]

Sometimes the best thing to do is just walk. Stop the entire project for now. I’ve missed out on a house, cars, trucks and felt bad at the time but later realized it was for the better.

Sometimes second chances don’t come around… unless maybe winning the lottery?

Back in 2012 I found the property that ticked all boxes… I made full price offer non contingent and the owner was a customer of mine though I had never been to the place he built… the wife was selling saying it was her husbands dream property… the day my offer came in they had just accepted an offer for 100k less with contingencies…

Ten years later there is no way I could touch a place like that plus the property taxes would bankrupt.

300% plus appreciation sure puts a smile on the assessors face.

Another home hitting the market now appraised at 900k in 2011 and listing will be 3.5m… if it sells for 3.5 the property tax would be about 45k

Current owners pay $3,100 and built in 1950’s

 

[s219]

Normally, a builder will have terms/language in the contract about holding a price quote for a certain time period, and in this economy, I would expect that to be in full force. I am not siding with the builder, but it would be abnormal for a building contract to have open-ended timeframes when it came to costs (labor or materials). Builders would not stay in business long in this economy if they had to honor pricing more than about a week in the past!

Were there plans for a construction loan and mortgage? Normally, having a bank involved for a construction loan will help formalize things -- may also allow the builder to lock in pricing for materials, window packages, etc earlier in the process. Some items take a lot longer to get nowadays, so smart builders are locking that stuff in early and ordering it as soon as the bank is on board and the builder is able to make draws.

Why did it take so long for the permit to be issued? 6 months seems like a long time to me.

 

[ultrarunner]

6 months would be a miracle here... 2 to 3 years for a single family with proper zoning, setbacks under Oakland's Design Review.

I've known some to go 4 years with many changes... and then changes are changed.

Don't forget tree inventory and endangered species compliance.

Issued Permit is good for one year and no disturbing soil in rainy season.

I look out my window and see a home that is weather tight but unfinished...

The owner passed away under construction and now its12 years from start.

Last I heard it requires a new permit since so much time lapsed with new code requirements and fees are 150k.

If construction takes longer than a year but continuous they simply charge renewal fees ever 12 months.

 

[TheMan419]

You wont make a cent in court. .. hes offering you the return of your deposit.

its not his fault prices have gone nuts. But it is his fault for not placing a clause in contract to cover price increases due to inflation.

as long as he returns all funds less permit fee, i dont see why you would try to force a job completion that will have to be done half assed to prevent his bankruptcy. I know my state will refund permit fees if not used within 6 months. Not sure about yours.

You don't know they won't get a cent in court. You have not read the contract.

I agree I would not want to force the job on the guy as you will get shoddy work I bet. However the measure of damages is not just the refund of the deposit. The guy signed a contract to build the home at $265K. The measure of the damages is what it would cost him to get the house built today. If that is $365K his damages are $100K.

Now that said I have not read the contract either. There may be clauses in there that allow the builder to do exactly what he is doing and OP is faced with the choice of paying the increase or finding a new builder..... who will probably charge the same new higher cost.

That all said the first thing to do is always sit down and talk to the builder. Find out what has increased so much. As several folks have said in this thread some supplies have gone up, others have not.

See if you can cut back on some of the stuff and do it yourself. Maybe have the builder frame and do the exterior and the "kids" do the drywall? Or cut back on the "upgrades" somewhere.

Just some thoughts.

 

[Snobdds]

It's not going to get any cheaper...

Lumber might be down, but PVC, wire, appliances are all still high.

Lock in a price and bite the bullet.

 

[Jchonline]

Inflation is getting everyone. No silver bullet to manage that. Good luck!

 

[cjoffutt]

As an electrician i can say prices have gone nuts over last 6 months. On one recient project the price of underground wire went up 50% over the 2 weeks we worked on the job. Heck, a piece od 2” rigid conduit went from $48 last year to $197.00 last week.

i picked a good time to retire.

Gotta ask...where are you seeing $197.00 for a 10' stick of 2" rigid at?

Local Menards & Home Depot aren't even above $30 a stick for it around here.

 

[East30]

I found this interesting today... Guardian does sell glass to residential window fabricators.

"Wow. Well on a day that it was announced U.S. Inflation was at its highest rate in 40 years, another bombshell was dropped. The news, in case you missed it, was a 40 percent price increase on glass from Guardian Glass, and that is not a typo. Forty percent."

The Friday Stunner

 

[dodge man]

I add one more thing. In my experience as an expert witness in court, even the winner in a civil court case is a loser usually when you factor in the time, expense and the stress.

 

[beowulf]

I all one more thing. In my experience as an expert witness in court, even the winner in a civil court case is a loser usually when you factor in the time, expense and the stress.

I agree - totally agree. Litigation is a terrible way to settle issues (but sometimes the only option). I told my daughter and SIL that we had grounds to sue but that we did not want to live with that (stress- expense - distracted from building the home) for 2-3 years and so we would move on with our lives.