WEATHERFORD (CBSDFW.COM) – For the past ten months, Tim and Karen Dicken have seen their dream home go from plans, to reality, to a harsh reality as a result of the booming North Texas housing market and the fine print in builder’s contracts.
Last August, the Dickens signed a contract with a local builder to build a home on the outskirts of Weatherford for $525,000.READ MORE: Child Tax Credit Update: Here’s How You Opt Out Of Advance Monthly Payments
“It was going to be our last home, our dream home, so we were all in on it,” Tim Dicken said.
However, in June, with the home nearly complete, the builder told the Dickens his costs to build the home had dramatically gone up.
Builder Kim Paschal said the unprecedented increase in material costs along with changes to the home’s original plan drove up the price.
”This house I sold for $525,000 is now going to cost me $750,000 to build. What am I going to do? The only thing you can do is go to the customer and say, ‘we got a problem,’” Paschal said.
Paschal said he offered to sell the home to Dickens at cost with no markup but the price was still more than $200,000 more than the original price.
“I thought we signed a builder’s agreement to help me build the house of my dreams for that price on the contract,” Dicken said. “I never expected costs to come in at the last minute and go $200,000 above what that price tag was – never.”
“I feel bad for them. I really do,” Paschal said. “But it’s not my fault. It’s not their fault. That’s the tragedy. It just happened.”
The two sides disagree on who ultimately called off the deal but because of a ‘no cause termination’ clause in the builder’s contract, Paschal could walk away from the deal.
Real estate experts say what happened to the Dickens has become more common with North Texas’s booming housing market.
Real estate attorney Rachel Khirallah said in nearly every new home contract the builder has the ability to change the price or simply back out of the deal.READ MORE: Child Tax Credit Update: Do You Qualify For A Monthly Check?
“They can be called cancellation clauses or convenience clauses. They take on various names but the most important thing to look for is just that language that says a seller can terminate this contract for any cause for any reason or without a reason,” she explained.
These clauses in builder contracts are not new. Builders are just exercising them more now than ever before.
Khirallah said the clauses protect builders from the fluctuating price of materials as well as allows them to cash in on a hot housing market.
“They are using these clauses because they’re realizing that they can get a better deal out there,” Khirallah said.
Khirallah recommends new home buyers to have a lawyer look over a contract but adds, especially with the currently housing demand, most builders will not enter a contract without a cancellation clause.
Before signing the contract to build a new home last summer, the Dickens sold their own home.
The North Texas couple recently put offers in on existing homes but have been outbid by buyers offering tens of thousands above the listed price.
The Dickens said they may wait until the housing market cools before trying again at finding a new home to buy.
“We just want to warn other people,” Dicken said. “We’ve decided we are not going to let this devastate us. We feel like God does things for a reason and, for some reason, this house has been taken away from us.”
Extended Interview With Real Estate Attorney Rachel KhirallahMORE NEWS: Child Tax Credit: Manage Your Monthly Checks With These IRS Tools