Neumann Builders of Warrenville, Illinois will be filing for Chapter 11. They've laid off 110 out of 130 employees in addition to closing all their sales offices and building sites.

Currently they have 135 homes under construction which they hope to complete. All other sales contracts will be voided and earnest money refunded, as it was held in a separate escrow account.

And, what does this mean for you if you're a buyer of one of their homes? Diligence and a good attorney. It's possible that your home may be completed...but not your sub-division. That is, until a new builder can come in and "save" the area. We had this happen in the early 1980's. Several builders were unable to survive the high interest rates. And, many sub-divisions sat and were finally completed by a different builder.

And, if you've closed on a property in one of these sub-divisions? The value may go down and it may take several years to get the sub-division finished. Hopefully, you will not have to sell your home for several years.

I think that this is the start. We can probably expect to see other builders close their doors. It's difficult to pay for land, unsold homes and employees when NO money is coming in. And, some of the newer sub-divisions such as Ashwood Creek and Ashwood Park will take longer to complete, especially as prices there are over $500,000.

Are you having builders close in your areas?