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According to a report from Redfin, in August of this year, more than 15% of home purchase agreements fell through. Since that time, federal interest rate hikes have put further pressure on would-be home buyers, with mortgage rates skyrocketing to nearly 7%.

The Kelly Legal Group has seen these economic conditions put a significant financial strain on the average homebuyer, with many buyers seeking to break their contract without losing the earnest money put down.

This quarter, The Kelly Legal Group discusses the challenges homebuyers face in this market, and how to navigate the termination of a builder contract without forfeiting their earnest money.

Economic Conditions are Putting Residential Homebuyers at Risk

Higher interest rates and looming rate hikes are softening the US housing market. Home buyers across the nation are backing out of purchase contracts in droves; a stark contrast to the booming real estate market of the last few years.

The perfect storm of increased interest rates, a softening economy, increased housing costs, and inflation, are all taking a toll on Americans’ bank accounts, leading to an increased inability to financially manage taking on a new home.

Unscrupulous Business Practices: builders taking advantage at the Homebuyer’s Expense

Adding insult to injury is the fact that some builders throughout the pandemic employed what could be construed as unfair business practices, tapping into the fear of uncertainty, logistical and supply chain rhetoric, and supply/demand curves to justify costlier contracts for new builds.

Similarly, many builders cited the aforementioned as a means to push completion dates for projects well beyond that stated in the initial contract, instead focusing their efforts on taking on new business rather than completing existing contracts on time.

The Challenge: contracts designed to protect builders, not buyers

According to The Kelly Legal Group, builders and contractors typically stack the deck in their favor, drafting contracts that grant them significant protection when executing these deals. When it comes to contract law, the devil truly is in the details, and it is in these details where many homebuyers fall prey to terms and conditions that put them at risk. Further, many homebuyers struggle to understand the dense legalese used in these agreements, not fully understanding the rights they have or the rights they need to assert during the negotiation stage of the deal.

Getting Out of a Contract Without Losing Earnest Money

An Ounce of Prevention Could be Worth Tens of Thousands of Dollars

Once a contract is signed, it can be significantly more challenging to wiggle out of a deal without taking some sort of a loss. Although situationally dependent from one contract to the next, once a client has agreed to the outlined terms, it can be difficult to terminate that contract without the potential for losing all or a portion of earnest money put down.

For this reason, it is imperative to have a licensed and skilled attorney review all contracts and agreements before signing on the dotted line. An experienced real estate attorney, such as those from The Kelly Law Group, acts as an advocate for clients, asserting their rights, helping them avoid costly mistakes, and negotiating terms to shift the balance of protection in a more favorable way.

Retaining a Skilled Real Estate Attorney to Navigate Contract Termination

Getting out of a builder’s contract might be easy, but getting out without losing earnest money and/or a deposit can be considerably more difficult. However, hiring an experienced real estate attorney can tips the odds in the favor of the buyer.

An experienced attorney will be able to navigate the termination of a contract while looking out for their client’s best interests and protecting their investment. In some cases, certain terms or obligations within a contract may be unlawful, or questionable (such as unfair business practices). In other cases, ambiguity in phrasing may leave room to wiggle out of obligations.

About Kelly Legal Group

Headquartered in Austin, Texas, Kelly Legal Group was founded by Jeff Kelly as a boutique real estate and corporate law firm. Since its inception, the firm has added several focuses of practice, including aviation, personal injury, entertainment, and business law.

Those interested in learning more about KLG, or in scheduling a consultation regarding a real estate transaction, listing, sale, or representation are encouraged to reach out via the official website or by calling 512-505-0053. 

Media Contact
Company Name: Kelly Legal Group, PLLC
Contact Person: Pam Parma
Email: Send Email
Phone: (512) 505-0053
Address:4934 W. Highway 290
City: Sunset Valley
State: Texas
Country: United States
Website: https://www.kellylegalgroup.com/