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> The builder ended up stealing our down payment and evicted us from the house. i'm now in my 30s and many of my family and friends own their own property or o

> The builder ended up stealing our down payment and evicted us from the house. i'm now in my 30s and many of my family and friends own their own property or own rental property. having been personally involved in and witness to many, many real estate deals including ones that have gone completely south and/or had extremely tenuous goings, i am wondering how exactly this is possible. the entire system is regulated to prevent this sort of thing from happening unless you just fork over a bunch of cash directly to a seller, in which case - that's your problem. the older i get, the more skeptical i am of these cases in which the protagonist finds himself in financial trouble over and over again. being a victim is incredibly addicting because nothing is ever your fault. sorry if i come off as an asshole but those are my thoughts on this matter. he posted it publicly on a blog and it ended up on HN and i'm offering feedback.

diek 13y ago
This was my first reaction as well. If you're having a house built you have to prove you can get a loan before they start construction. Then you have to go through the closing process on the house before the builder will let you move in. No builder that I'm aware of is going to give you the keys to your new house without going through closing with a title company. Something does not add up in the story.
- kbenson 13y ago
  The impression I got from his statement regarding prior owners is that the "builder" was not building them a house, but build a small development or single home to then be sold. Often a general contractor will get a loan for a plot of land and construction and develop it into 1-4 homes for sale.
eli 13y ago
It could happen with a good faith deposit.
- beachstartup 13y ago
  here's a tip (seriously). if you're ever talking real estate and someone even so much as hints at a "good faith" deposit, walk away. absolutely NO money (zero, zip, nada) should be exchanged directly between the buyer and seller in a legitimate sale. there should be at least two outside parties (generally a bank and a licensed escrow company) involved in proxying the transaction. some people even buy additional protection on top of that. if you decide to throw all these protections out the window, that's nobody's problem but your own.
  - ufmace 13y ago
    Not sure what area you're in, but standard real estate practice in Houston is that the potential buyer pays 1% or so in earnest money, escrowed through the title company, up front, with various contractual conditions for who gets it if anything goes wrong, and an option fee, usually around $200, paid directly to the seller, in exchange for the right to have 10 days or so to inspect the property and walk away from the deal if they find something they don't like. I would regard anything outside of that as very suspicious, though.
    - reboog711 13y ago
      In Connecticut, when I bought my house. We paid some amount into some type of independent escrow account. A copy of the check went along with the offer if memory serves me. The amount was small relative to a house purchase, in the range of $200 I think. My real estate agent told me if the deal went sour, we'd have a hell of our time getting the money back from the escrow folk. I assumed such an approach was common everywhere.
      - beachstartup 13y ago
        > My real estate agent told me if the deal went sour, we'd have a hell of our time getting the money back from the escrow folk i don't mean to sound short, but what is the point of escrow in your state then?
deleted 13y ago
[deleted]
yaakov34 13y ago
Well, yeah, this guy is desperate, and it's because of a series of events and decisions, some of which may have been his own fault. He basically says as much. But the point here is that freelancer.com is taking advantage of desperate people with this ridiculous runaround. Reading it, it's clear that this is not even a situation like you get with Google where you can't find a human being to take a look at your problem. They wrote bunches of emails to him and about him, and there seems to be a deliberate kind of obtuseness running through it all. Hard to believe it's not deliberate - and that's not something that I conclude often. Looking at his larger picture, it's kind of hard to believe that the $1500 wire or even the $5000 from the project will make this night and day difference in his whole life... but that's not a reason to withhold it from him.
ufmace 13y ago
The real estate situation there sounds pretty sketchy to me too. I've bought and sold several properties, and never seen or heard of anything like that. I think a lot of issues are wrapped up in his "dream home" and "save the house" statement. There is no property that is so great that you should ignore basic principles to get it. Trouble getting a clear title sounds like a reason to run away fast. You can generalize it even further to say that you should never allow any business deal of any kind to reach that level of importance. Always find alternatives and keep them available, and if there don't seem to be any alternatives, then there is probably a serious problem with the market that you're in. There are still 2 real take-aways. If you're going to freelance, be prepared for cash flow issues. Have a buffer, charge more, structure deals to get money sooner in the process, and walk away if there are any problems with the money. Also, don't use freelancer.com. Not that I had ever heard of them before today anyways. Actually, I see "but I liked the project and the client" in there too. Does this guy have a history of accepting business deals that any reasonable observer can easily see are bad ideas, and making up reasons why he's doing them anyways? Is there maybe something in there about having a tendency to being taken in by con men? It seems pretty clear that, if you're having cash flow issues, you should look for a full-time W2 job first, or if you have to freelance, find a client who will pay you directly, up front.
cornholio 13y ago
My understanding is as follows: he put in a large down payment but because of problems caused by the builder the bank refused to issue the loan. He also neglected his customers because of stress with wife etc., so he ended up with a cash-flow problem, no loan, no way to get one and a builder asking for the rest of the money. He didn't have them so he's out of the house and loses his down payment. It's totally believable, although for the life of me I would not sign a contract that makes me loose the down-payment if I'm unable to contract the loan - who knows what can happen and what the morons employed by the bank will do ? All in all, a cautionary tale about the effects marriage can have one one's life, rather than being about freelancer.com "Our dreamhouse" part sounds exactly like a wifey's wet dream.

diek 13y ago

This was my first reaction as well. If you're having a house built you have to prove you can get a loan before they start construction. Then you have to go through the closing process on the house before the builder will let you move in. No builder that I'm aware of is going to give you the keys to your new house without going through closing with a title company. Something does not add up in the story.

kbenson 13y ago
The impression I got from his statement regarding prior owners is that the "builder" was not building them a house, but build a small development or single home to then be sold. Often a general contractor will get a loan for a plot of land and construction and develop it into 1-4 homes for sale.

eli 13y ago

It could happen with a good faith deposit.

beachstartup 13y ago
here's a tip (seriously). if you're ever talking real estate and someone even so much as hints at a "good faith" deposit, walk away. absolutely NO money (zero, zip, nada) should be exchanged directly between the buyer and seller in a legitimate sale. there should be at least two outside parties (generally a bank and a licensed escrow company) involved in proxying the transaction. some people even buy additional protection on top of that. if you decide to throw all these protections out the window, that's nobody's problem but your own.
- ufmace 13y ago
  Not sure what area you're in, but standard real estate practice in Houston is that the potential buyer pays 1% or so in earnest money, escrowed through the title company, up front, with various contractual conditions for who gets it if anything goes wrong, and an option fee, usually around $200, paid directly to the seller, in exchange for the right to have 10 days or so to inspect the property and walk away from the deal if they find something they don't like. I would regard anything outside of that as very suspicious, though.
  - reboog711 13y ago
    In Connecticut, when I bought my house. We paid some amount into some type of independent escrow account. A copy of the check went along with the offer if memory serves me. The amount was small relative to a house purchase, in the range of $200 I think. My real estate agent told me if the deal went sour, we'd have a hell of our time getting the money back from the escrow folk. I assumed such an approach was common everywhere.
    - beachstartup 13y ago
      > My real estate agent told me if the deal went sour, we'd have a hell of our time getting the money back from the escrow folk i don't mean to sound short, but what is the point of escrow in your state then?

deleted 13y ago

[deleted]

yaakov34 13y ago

Well, yeah, this guy is desperate, and it's because of a series of events and decisions, some of which may have been his own fault. He basically says as much. But the point here is that freelancer.com is taking advantage of desperate people with this ridiculous runaround. Reading it, it's clear that this is not even a situation like you get with Google where you can't find a human being to take a look at your problem. They wrote bunches of emails to him and about him, and there seems to be a deliberate kind of obtuseness running through it all. Hard to believe it's not deliberate - and that's not something that I conclude often. Looking at his larger picture, it's kind of hard to believe that the $1500 wire or even the $5000 from the project will make this night and day difference in his whole life... but that's not a reason to withhold it from him.

ufmace 13y ago

The real estate situation there sounds pretty sketchy to me too. I've bought and sold several properties, and never seen or heard of anything like that. I think a lot of issues are wrapped up in his "dream home" and "save the house" statement. There is no property that is so great that you should ignore basic principles to get it. Trouble getting a clear title sounds like a reason to run away fast. You can generalize it even further to say that you should never allow any business deal of any kind to reach that level of importance. Always find alternatives and keep them available, and if there don't seem to be any alternatives, then there is probably a serious problem with the market that you're in. There are still 2 real take-aways. If you're going to freelance, be prepared for cash flow issues. Have a buffer, charge more, structure deals to get money sooner in the process, and walk away if there are any problems with the money. Also, don't use freelancer.com. Not that I had ever heard of them before today anyways. Actually, I see "but I liked the project and the client" in there too. Does this guy have a history of accepting business deals that any reasonable observer can easily see are bad ideas, and making up reasons why he's doing them anyways? Is there maybe something in there about having a tendency to being taken in by con men? It seems pretty clear that, if you're having cash flow issues, you should look for a full-time W2 job first, or if you have to freelance, find a client who will pay you directly, up front.

cornholio 13y ago

My understanding is as follows: he put in a large down payment but because of problems caused by the builder the bank refused to issue the loan. He also neglected his customers because of stress with wife etc., so he ended up with a cash-flow problem, no loan, no way to get one and a builder asking for the rest of the money. He didn't have them so he's out of the house and loses his down payment. It's totally believable, although for the life of me I would not sign a contract that makes me loose the down-payment if I'm unable to contract the loan - who knows what can happen and what the morons employed by the bank will do ? All in all, a cautionary tale about the effects marriage can have one one's life, rather than being about freelancer.com "Our dreamhouse" part sounds exactly like a wifey's wet dream.