Real Estate Blog - Buyers Beware! Some Arizona Builders Experiencing Financial Difficulties!

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Buyers Beware! Some Arizona Builders Experiencing Financial Difficulties!

The Official Website of the Arizona Department of Real Estate has placed on its website a list of builders experiencing financial difficulties. I've provided a link of the pdf file provided by the Department of Real Estate for those purchasing new homes and for their Realtors! - Builders Experiencing Financial Difficulties. As Realtors, it's our duty to be "informed." This list would be useful for your buyers, or to place on your website or personal blog. Checking the website of the Arizona Department of Real Estate regularly will help us stay aware of what is going on in our State.

This is not just happening in Maricopa County, but throughout our state. Yet another good reason for buyers to use the services of a Realtor instead of going out on their own.

Mesa, Arizona Real Estate. Call me at: 480.216-3334 for information on purchasing or selling a home in Mesa, Arizona or surrounding towns. OR email me: Teri@TeriEllis.com. Feel free to visit one of my websites: HomesAzRE.com, MoveToMesaAz.com or MoveToSunnyAz.com. Or stop by my blogs at: Active Rain; or Phoenix Valley Real Estate Blog.

Posted by **Mesa, Arizona Real Estate** Teri Ellis, Broker on 08/18/2008 09:56 PM

Comments (23)

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23 Comments on Buyers Beware! Some Arizona Builders Experiencing Financial Difficulties!

AUG

2008

Even in my area- one of the strongest in the country- we've seen a couple of builders stop building and even pack up and close the projects w/out amenities, etc...Very scary!!

Teri,

Yes it is everywhere. I have run into two homes lately that are foreclosures that were the builders personal homes.

Teri, This should be mandatory in every state. I looked at the list, it's shocking!

Tracy, yep, it's happening with everyone. It is just something about which we need to be aware. ;-) Communities are closing, and the tricky part is the mechanic's liens that can be left behind...;-)

Larry, this doesn't surprise me either. It doesn't matter whether your a builder, lender, or Realtor... it includes everyone....;-)

Debbie, I was shocked as well. There are some that I know of that weren't even on the list. Of course we have about 50-60 builders, but we never, never know. ;-)

Good to know Teri, thank you for sharing. Wow, some surprising names on there too.

Robyn Guinn

StageAZ

Robyn, you're right....and you're welcome. It'll go on my website and my personal blog....;-)

Teri, a Realtor is more aware of this situation with the solvency of builders than the consumer. Great to bring this topic up.

Teri, good info. Watch out even for the small builders. One item that comes to mind are HOAs. Small projects may have HOAs fees based on phases. The first phase being pretty high but as the project gets built out they will be reduced. If this is marketed to the original buyers but the latter phases are never built, then they will be stuck with the higher HOAs. AJ

Gary, a Realtor for sure "needs" to be aware of this builder issue - at least as much as that information is available to us. ;-)

AJ, you're so right. There have been those types of issues already...it's a shame! Hopefully another builder can come in and rescue the community, but not always.

Teri, it was sad to see the names on the list. I wonder if all states have such a reporting system.

AUG

2008

Teri: Ahhh... the Lady in Red writes a post about Builders in the Red. How appropriate. Seriously, it is of critical importance that our buyers be aware of any builders out there in the marketplace who are close to going under. Buying a home from one of those builders, and then having that builder go under can have some disastrous effects. Thanks for sharing... take care...

Teri: I just clicked on the list link, and do not recognize any of the builders listed. Now, I am not very familiar with the Mesa market, so that is not surprising, but what hit me is that there are not any "nationally known" builders on the list. This underscores the importance of making sure... even without the builder being on this list... that the builder your buyers are considering has a long-standing history of being solidly-backed... and able to withstand the current tough market. A long and stable national history is very important. Again, thanks for sharing.

Hi Teri,
I can't imagine that any builder is not having financial difficulties. Building costs, fees imposed by local government, fuel and interest rates continue to rise and the builders are very hard hit.

Teri--It is to be expected that the slower sales would affect smaller builders. There are many foreclosure/short sale homes in MN that are new construction homes from builders that are going under. Good information to put out there as builders need to be questioned on their financial stability before a buyer puts down that lot hold.

Leolinda, it is a shame. I would suspect that Arizona isn't the only state having this challenge. ;-)

Karen, very clever play on words! That list didn't include some builders that I know have or are having financial difficulties. Some have even filed for bankruptcy.....;-) usually, though, they are of the chapter 11 type...just reorganizing....;-)

Lots of smaller builders like to jump into the Arizona market, which is typically a great place since more people move here than leave.

Cynthia, I think many of them are struggling...and when the loan assistance programs go away at the end of September, they will be having even more of a challenge....;-)

Teri, I think buyers need to be aware of these problems, and we, as Realtors need to try and keep track for them. Unfortunately when the builder walks away, then the homeowners are stuck with half-finished homes.

AUG

2008

Teri a great link for those considering building a new home to have. The last thing you want to have happen is to be stuck with an insolvent builder!

Bill, I was amazed about how many builders were struggling. I want to be able to protect my buyers as much as I can. This is information that really helps. ;-)

AUG

2008

Wow - Not surprised a bit but it is crazy that they are all in trouble. Good information to know when talking with customers. Thanks for the information.

Eric, I'm a little surprised, but this many? Even more so. You're welcome. ;-)

AUG

2008

If you buy a new build and the builder files for bankruptcy, what typically happens to your warranty coverage?

Patrick, unless the builder has provided for problems that will occur, or another builder picks up the community, there's not much that CAN be done. That's one of the worries of a brand new community that hasn't been built out yet. The builders walk away (which a few have already done) from a community, and the people with unfinished homes have a huge problem on their hands. They end up filing complaints with the Department of Real Estate, but?????

A few years ago, a builder walked away, owing some of the contractors that had built the homes. Guess who ended up being responsible for the liens? Very tough....Most of the national builders are a good choice, and even many of the smaller ones. In Arizona, we have so many builders, that the list is just a drop in the bucket. It is just something the buyers going out alone without a Realtor need to know. ;-)

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