Homebuilders rip up contracts, re-list homes for thousands more

HOUSTON — The dream to own a new home is getting shattered for some would-be homebuyers in Houston’s hot real estate market.

KHOU 11 Investigates reviewed consumer complaints with the Better Business Bureau detailing how builders canceled their contracts, sometimes just before closing, then relisted the home for a much higher price.

For Valerie Mukoro, it would have been her first home, a newly-build three-bedroom on Houston’s southeast side.

“I was very, very excited,” she said.

She put down earnest money and signed the dotted line, but shortly afterward came delays. Colina Homes emailed her realtor about construction delays, material delays, and bad weather delays.

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Mukoro felt like she was hit with a two-by-four by what came next.

“They wanted to add $9,000 to the cost of the home,” she said. “The contract I had already signed.”

Mukoro said Colina gave her a week to decide, but before that clock ran out, she received an email from the home builder.

“That the deal was off and canceled,” Mukoro said.

Real estate records show Colina put the home back on the market for $17,000 more than the original contract price.

Across town in Katy, Julie and Simon Nockels complained to the BBB that it happened to them by the same builder, Colina Homes.

The pattern was similar, first with delays.

“Excuse after excuse after excuse of why they didn’t start,” Simon Nockels said.

And then they were dealt a blindsided blow.

“They said we had to pay $20,000 dollars more, otherwise they’re going to cancel the contract,” he said. “They’re just trying to make money out of us.”

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Nockels said that call came on a Thursday. On Friday, Colina canceled the contract, and Saturday the company relisted the home.

Records show the new price wasn’t the $20,000 increase Colina was seeking from the Nockels, but rather $43,000 more than their original contract.

“It was devastating,” Julie Nockels said.

“They just held us hostage basically not knowing what to do next,” she said. “And then our dreams of our new house were shattered.”

It’s not just Colina Homes on the receiving end of consumer complaints. The Better Business Bureau has received similar complaints against several other builders. They share a common question— how can builders simply tear up contracts at the last minute and get away with it?

The answer often lies in the fine print.

“They’re going to write that contract, with the way times are right now, to benefit themselves and to cover themselves,” said Dan Parsons, president of the Houston BBB.

“You as a lay consumer, you’re out-gunned going in,” he said.

Colina Homes’ contracts have a clause stating the “seller may terminate” if there are “material shortages”, “price increases” or “any other circumstances out of seller’s control. The company’s attorney told KHOU 11 Investigates the construction industry has confronted “unforeseen and unprecedented” issues, including “meteoric increases” in construction costs and “historic interruptions” in the labor market.

Attorney Anthony Laporte said 90% of Colina customers face a price adjustment and ultimately continue to purchase the home.

“The completion of these contracts is prima facie evidence that the buyer believes they are receiving good value in the purchase and Colina is not terminating the contract simply to sell the home to some new, third party stranger at an artificially increased price,” Laporte said in an email statement.

But some buyers who lost out on their dream don’t see it that way.

“The builder is holding all the cards and there’s nothing we can do about that,” Simon Nockels said.

“Surely it should go better than this,” Valerie Mukoro said.

Houston Better Business Bureau President Parsons recommends hiring an attorney to look over the contract to spot any red flags. Even if it a builder isn’t willing to remove a clause, there may be room to fine-tune language, like capping any last-minute price spikes.