I received an interesting call yesterday from a sales representative for a local builder. He explained that the builder would not be able to close on a home that my client was purchasing by the original closing date. He explained that the seller did not have the money to purchase the needed air conditioning unit and that until they could purchase the air conditioning unit they would not be able to complete the transaction. He said that he thought that the investor behind the company would keep them solvent but he would know more tomorrow.
Well I guess it didn't come as a surprise. I had been watching the company closely and I had put my clients on notice that it might happen. There were nearly $60,000 in mechanics leans on our initial title report. Just about every agent I know in Clark County Washington had been waiting for that to happen to some builder. The home market over $400,000 had been dramatically over built in the last years of the boom market and there are way too many homes sitting vacant. Worse then that, some of the builders still seem to keep churning out these homes even though sales in that price range are completely flat.
The good news for my clients is that the home is basically finished and so there should be no problem for either the builder or the investor to finish off the property and get this thing closed. The not so good news this afternoon is that the title company is no longer issuing title policies for this builder because they have had exposure based upon mechanics leans filed after closing. So as of this point my clients will have to make a decision on whether or not they sign an extension to see if this company can provide clean title after the original closing date. My clients are not in a rush because they have a home they are renting currently so we don't have any real pressures on our side that keep us from waiting. The question becomes how long will we wait, and will we have to sign a new purchase and sales agreement if the investor takes over the property?
So Clark County Washington buyers and agents, you are on notice.... What we as agents thought might happen is beginning to happen, and with the continued slow market you will need to be careful and make sure that your builders are still able ot keep their financial promises. Don't panic yet but dot all your "I"s and cross all your "T"s and if you look at it another way the builders are giving some great concessions. Just consider this one of the places you have to be careful in a buyer's market.
Caveat Emptor!
Erik Wecks
REALTOR, ABR
http://erikwecks.com/
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