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My review of MBK Medallion Homes in Beaumont, CA - Shady at best.


This weekend my wife and I were getting ready to buy a beautiful new home in the Medallion neighborhood from MBK homes in Beaumont, CA. We were excited, everything seemed great, it’s a buyer’s market so we were offered great incentives by the builder.

But, something just wasn’t right when we were negotiating. The sales rep Jim (James Zures) was really insistent about us using their lender. I understand that it’s far more convenient for them if we do. They’re familiar with their lender’s practices and they have had good experiences with them being able to close the deals on time. Also, if they have several homes being sold at the same time, it’s far more convenient for them to get status updates from one lender instead of several different ones.

They repeatedly told us that they have no financial relationship with the lender (because if they did that’s illegal). Yet, they funny thing is that they were only willing to cover closing costs if we used their lender. In this case, they were going to cover up to the legal maximum of 6% or $12,000. If we didn’t use their lender, we’d get nothing. Obviously, that’s a HUGE incentive. So, they were telling us, we have the option… but in reality you’re way better off if you use our lender.

To me, that’s starting to sound a lot like a financial relationship. Sure, they’re not paying the lender directly but they sure are steering business toward them with a heavy hand. Essentially, they are paying them through the customer. It’s the builder’s money, going into escrow (in our name) and then being directly applied to cover the loan fees. Now, this makes you wonder if there’s no financial relationship, why would they care so much which lender we choose?

It gets more interesting, they wanted us to sign the purchase contract yesterday but we were not supposed to close on the house until the end of June because it wasn’t built yet. But, we wouldn’t get final loan terms until sometime at the end of May. That means, that as soon as we sign the purchase contract, our only options would be to use their lender and pay whatever rates and fees that they decide to charge, forfeit $12,000 in closing costs by using our lender, or forfeit our $5000 deposit! Not much of a choice if you ask me.

I told them over and over again: “I don’t mind using your lender… I just want the option to go with another lender if I’m not happy with the terms I’m given.” But, the more I said that, the more it sounded like it wasn’t even an option.

Because I believe in doing due diligence, I told Jim that I wanted to read over the contract. He was going to call his manager and check on something anyway so went out of his office for a while and brought the contract to look it over. I found the section about “Choice of Lender.” Turns out, the contract states that we can use our own lender. There were a few little hoops we had to jump through and a couple of forms to submit, but they legally have to give us the choice of using our own lender. When we went back to talk to Jim I pointed that out to him. He got all weird on us and then he was going to talk to his manager again.

GET THIS. We come back in and now he’s saying that the list price has jumped from $212,990 to about $340,000 and the only reason he quoted us $212,990 is because it supposedly included a $128,000 incentive for us to use their lender!!!! So now we went from a $12,000 incentive to over $120,000 incentive for using their lender. It became clear that we really did not have the choice of using our own lender. Ostensibly, we did, in reality they were not about to let us have that choice.

I looked at Jim and said… “What?!?! Now you’re telling me the house price is $340,000 unless we use your lender?!?”

Jim: “yes, we just hadn’t gotten to that part yet. That’s why we’re going over the contract so we can answer all your questions.”

Me: “You’re telling me that if I walked in here with cash, you would tell me the house price was $340,000?!?! (easily more than $100,000 above current home prices in the neighborhood)”

Jim: …silence…

Me: “Jim, we’re not doing that. Call your manager, whatever you need to do, but that’s not happening!”

Then Holly and I left to get some lunch and talk it over. We couldn’t believe what just happened. They were dead set on us using their lender and now they were saying that the price was $100,000 more if we didn’t. WHAT A JOKE!!!

After talking for a bit, Holly and I decided that since we no longer trusted them, we were even more set on making sure we had the option. So I called him, here’s how the conversation went:

Me: “Jim, what you did just now really damaged your credibility with us.”

Jim: “…ok”

Me: “We decided that unless you give us the same incentive with our lender, we’re going home”

Jim: “I can tell you right now, that’s not happening, you may as well come and pick up your check”

Me: “Ok, we will…bye”

Wow! We feel like we dodged a bullet. Imagine being committed to buying the house without knowing what the loan terms are going to be. At that point, what’s stopping them from adding fees, giving you a higher interest rate or making up bogus fees before closing. They know you’re stuck. The only way out is to lose your deposit. Ridiculous! We saw the price jump from $212,990 to well over $300,000 as soon as they realized we may not use their lender. That’s dishonest (and probably illegal).

I hope somebody from the California Department of Real Estate reads this. In fact, I thinking about reporting the incident and filing a formal complaint.

My recommendation, don’t work with them. This is not the kind of market where you let a seller push you into a corner. They talk about trust and integrity, but actions speak louder than words.

UPDATE 3/17/2009: I just found the following disclaimer in small print at the bottom of their website:

“Builder incentives have been used to lower the purchase price and is based on buyer closing with MBK Homes preferred lender. ”

So apparently what they did to me was not anything unusual, it is STANDARD PRACTICE FOR THEM! That also means that the entire time I was asking Jim questions about using our lender and their incentives he knew that the price was completely different if didn’t use their lender. Every time he mentioned the price he should have included that disclaimer but… it never even came up until we were nearly ready to sign the contract!

Now I’m really upset, I will be filing a complaint. James David Zures license number: 00609535 and MBK Southern California Residential Inc license number: 01304983 will soon have complaints on their records with the department of real estate.