Frustrated Homebuilders Asked To Pay More, Contracts Broken Mid-Build

The pandemic has hit a lot of industries hard, including the construction industry.

The Home Builders Association of Greater Tulsa told News On 6, because of increase in the price of materials, a worker shortage, and supply chain issues, many homebuilders have had to raise the cost of homes.

One of those builders is Shaw Homes in Broken Arrow.

Over the past three months, dozens of complaints have come into our newsroom about Shaw Homes regarding contracts.

The majority of the complaints are about transparency.

Those who reached out to us, signed a contract for one price but were told several months later they would need to pay between $20,000 to $50,000 more or their contract wouldn’t be honored.

Amber Nguyen, her husband and two little girls signed on with Shaw Homes to build their dream home in February 2021.

They signed a contract for this home for $273,000.

"I had envisioned myself being there, but things have changed and I'm trying to envision a different scenario,” said Nguyen.

In September 2021, as their home was being built, Amber said Shaw reached out to her and said the house would now cost $40,000 more, but the company would make them a deal.

"They asked us to pay $28,000 more if we wanted to continue with that house," said Nguyen. "They mentioned the clauses that could indicate that they could get out of the contract for any reason, but it doesn't explicitly state in the contract anything about raising the prices."

Amanda McIntrye, her husband and their two young daughters found themselves in the same situation.

They signed on with Shaw in October, 2020 for an agreed upon price of $388,000.

The price increase was $100,000 but Shaw offered to meet them in the middle.

The McIntryes would need to pay $58,000 more, making their home now $446,000 dollars.

"We wanted to know where they were getting their number,” said McIntyre. “Why the $56,000? Because that was a lot, which they said $100,000, but they were going to meet us in the middle. But we just wanted to know how they got that number and it was based off what houses are selling for right now, not what their costs went up."

Kristen Holland said eight months after her slab was poured, she was asked to pay about $60,000 more.

Kara Highfield, a first-time homebuyer, told News On 6 after 10 months, she was asked for $35,000 more and that she would lose the free kitchen upgrade incentives.

Cassandra Jones wrote into our newsroom and said after six months, she was asked to pay $39,000 more. When she offered $20,000 more, she said the company told her no.

The families were under the impression that up-front pricing, as advertised on Shaw’s website, meant the price they agreed upon was the price they would pay.

"It felt like somebody had kicked me in the gut,” said Nguyen.

“I hated to do do that. I’ve never, ever done it,” said Glenn Shaw, owner of Shaw Homes. “I’ve built houses and I’ve lost money on them. I did not want to change the price of contracts, but I really had no choice but to do that.”

With a hot housing market in 2020, Shaw was hoping for his best year ever. On average, Shaw Homes builds up to 250 homes a year.

In 2020, the company was on track to build 460, but ran into trouble when the cost of material and labor started going up.

“We went to 85 of 85 customers and of those, 41 said, ‘we understand, we expected it and we’ll stick with you,’” said Shaw. “The others we refunded every dollar that they gave us and again, I knew it was going to be a difficult thing for us from a marketing perspective, but frankly I had no choice.”

Shaw said he absorbed as much as he could, losing hundreds of thousands of dollars before making the tough decision to increase contracts.

"I just think it was a general response,” said Nguyen. “I still would like to know the facts and the information like how did they decided $28,000, I don't know. I would like to see the breakdown of the costs and that would just make me feel better. I understand they're a business and they have to protect themselves, but seeing the breakdown to show the honesty in it, because they're stating they're losing money on these contracts. I would just like to see that.”

"They said they don't have an itemized list, that they wouldn't provide one, that this was what they're offering and we had two options. So, and we asked about it a second time at our sit down meeting and nothing, they just said ‘no,’” said McIntrye."I mean if they can prove that prices are that then we would consider, but I don't think prices went up $100,000."

Shaw told News On 6, he is not able to share an itemized breakdown of cost of homebuilding.

“I wouldn't share our cost information with anybody, customer or other builders or vendors,” said Shaw. “I could understand somebody wanting to know, I would want to know myself, but it was just not a practical exercise for us to be able to do that.“

Shaw also said, “If I was sitting in their seat, I would be upset with me because I've really made their lives inconvenient at the least,” Shaw admitted. “I would have a hard time going through what we asked people to go through.”

Jeff Smith, with the Home Builders Association of Greater Tulsa, said the challenges facing Shaw Homes are being felt across Green Country.

"The accounts and concerns you've received I think are all valid concerns,” said Smith. “I think unfortunately they're common concerns in our industry over the last 18 months and there's not one builder in our community, or I would say nationally, that hasn't dealt with the same issues."

Smith added, “I would certainly hope they would offer a detailed explanation of where that price is coming from. It's not required in the contract that they do give you that information but it's good customer service. And the general rule that they're going to let you know exactly where those funds are going to. And that way you can make the decision on your own. Is this something I want to stick with, a contract with an increased price, or do I want to get my earnest money back and go find a different home."

Finally, Smith told News On 6, "The repercussions from a builder going out of business, far outweigh the repercussions of having customers under contract that you have to increase the price of their home."

Those explanations are not enough for home buyers like Amber Nguyen.

"I think if they are going to have the possibility of this happening to someone else, they need to have trust in their contract and they need to do that by explicitly stating that there could be an increase in price due to unforeseen reasons," Nguyen said.

McIntrye and Nguyen are both in new homes and stress they would never go through the homebuilding process again, without hiring a lawyer from the beginning.

Shaw told News On 6, after a painful few months, he hasn’t had to increase prices and hopes he won't have to again. Although, he admits he doesn't know what the future holds.

It's important to know you can always file a complaint with the Home Builders Association of Greater Tulsa or the Better Business Bureau.