KB Home has a corporate philosophy that places profits over ethics and morality.  They are experts at withholding and not disclosing critical information that would be valuable to a potential homebuyer making an informed decision.  The values and beliefs of the company equate to a practice that KB Home chooses not to disclose critical information to insure a home sale, rather than informing the buyer and allowing them an opportunity at an informed decision.  They have a reliable history to over promise and under deliver to home buyers, creating a distrust that has deep roots in the San Antonio market.    KB Home has recently conducted a bait and switch in four of their San Antonio neighborhoods including Quarry at Iron Mountain, Saddle Mountain, Trails at Herff Ranch, and Sundance Trails. 

If you are buying a home to be built from a builder such as KB Home, it is a two step process for the sale to be finalized.  You first sign your purchase contract that confirms your sales price, lot selection, and upgrades.  During the time the home is being built and under construction, KB Home will typically place a “sold” sign in front of the house.  It is technically not a “sold” house until you go to the title company and pay for the house with your down payment and financing from your lender.  At this time, title is then transferred into the buyer’s name.  However, homes that are under contract during the construction process are “pending sale”, and the seller is obligated to complete the transaction with the buyer.  If the “pending buyer” changes their mind and cancels the purchase before the closing date, they might lose their earnest money depending on the circumstances.  

For the remainder of this section, “Pending Buyers” will be referred to those buyers under contract, but have the ability to change their mind before the closing date.  Homeowners will be referred to those that completed the transaction and have title to the house, and do not have the option to walk away. 

The KB Home sales staff is typically given half of their commission at the time construction begins, and the balance is awarded after the buyer closes on the purchase.  Therefore, KB Home has the commission structure set in such a way that is a disincentive to provide a pending buyer new information about the community that might influence their decision.  Consequently, in many circumstances, KB Home is stealing the opportunity for the buyer to make a choice.  

As mentioned previously, KB Home added the Liberty Series in the second quarter of 2007, and began their deceptive pattern of behavior of not disclosing this decision to pending buyers about to finalize their home purchase.  The first individuals notified of this change did not occur because of KB Home’s efforts.  The news leaked to homebuyers through a former KB Home employee from the design center on March 7, 2007.  If a homebuyer already had their home under contract and was waiting for the construction to complete, KB Home did not make an effort to disclose this critical information to these “pending” homebuyers.  Actually, some that found out about the addition of the Liberty series from the former employee chose to cancel their purchase.  Shortly after the information leaked about the Liberty series, KB Home began to offer this product to new homebuyers in early April, and did so with no Liberty model onsite.  In lieu of a model, KB Home decided to build a spec home to launch this product line in this neighborhood, and the first construction permit on a Liberty home was issued on May 17, 2007.  Therefore, if you were a pending buyer of the initial Estate series, you could be blind of the Liberty addition into Quarry at Iron Mountain until mid summer.

The following list represents sixteen homeowners of Estate homes that had closing dates between March 7, 2007 to August 31, 2007.  These dates were chosen because these homeowners were “pending” buyers during the time their home was being built, and the time KB Home knew of the changes that were about to impact the community.  Some of these homeowners did find out from the leaked information, and chose to continue with their purchase.  However, many were deprived of an informed decision and a choice because KB Home does not disclose information that might affect the sale of the home. 

The next change degraded the community and increased the disparity of homes built in the Quarry at Iron Mountain was the simultaneous discontinuation of the Estate and Liberty series, and the introduction of the downgraded less expensive Empire and Trials series.  Unfortunately, this time there was not any current or former KB Home employee that leaked this information prior to the opening of the model on February 2, 2008.  The Trails model started construction on November 21, 2007, and was led to believe by the KB representatives that this was going to be a Liberty series model home for Quarry at Iron Mountain.   

Carlos Contreras of KB Home has mentioned that the decision to discontinue the Estate and Liberty series was made five to six months prior to the February 2, 2008 grand opening of the Trails model home in Quarry at iron Mountain.  This also corresponds with the November 21, 2007 construction start date for the Trails model.  It is deceptive and unethical for KB Home to withhold this information from pending home buyers to enhance corporate profits at the expense of homeowners’ equity. 

The following list represents sixteen homeowners of Estate homes that had closing dates between September 1, 2007 to January 31, 2008.  These dates were chosen because these homeowners were “pending” buyers during the time their home was being built or under contract, and the time KB Home knew of the changes that were about to impact the community.  With the exception of one homeowner, none of the buyers were disclosed the information KB Home had about the changes forthcoming in the community.  These homeowners were deprived of an informed decision and a choice because KB Home does not disclose information that might affect the sale of the home.  Many of these homebuyers would have chosen to cancel their purchase if they were disclosed the information KB Home had about the neighborhood.  Consequently, these homeowners have suffered excessive depreciation in their homes due to deceptive practices, corporate greed, and unethical behavior.

***1210 Bluemist Bay denotes the home purchased by a KB Home employee.  1210 Bluemist was an inventory home because the first buyer cancelled their contract prior to closing.  This home contained almost every upgrade available through the design center, making it more of a showroom than inventory home.    During this time the home had an ask price of $494,638, and was negotiated by the KB Home employee to a purchase price of approximately $409,000 (see “MLS Deception” for calculation).   This sale will be discussed in further detail under “MLS Activities”.