It's the ultimate American Dream. Build a house from the ground up and create a home that is uniquely yours. Pick out the model, the trim, the paint colors, the carpet. As if there weren't enough to think about - now there's another wrench in the works. Builders are going bankrupt.
Big or Small - no builder is immune from the crunch of our current economic crisis. But not all builders are created equal. Just like homeowners -some are fine and some have overextended themselves. They have too many homes built, too much money out on materials, too many loans. Last year one of Illinois Biggest Builders "Newuman Homes" went bankrupt. Reading the headlines is like watching a soap opera. What happens to the earnest money? What about the the warranty? The Parks? The Roads? Yes - who will finish building the roads.
So what can you do protect yourself as a prospective home buyer? Now more than ever - it's time to do your homework - or let your REALTOR do it for you ;) - here are a few tips:
- Cruise the public notice section in the local paper and see if any foreclosure listings or liens are listed against any local builders.
- Ask the builder if he will put your deposit in an escrow. One prospective buyer I spoke to asked for this - and the builder said no. Check out this blog from Phil Hutson in Austin Texas who gives some great tips on what you can expect when you put down that deposit.
- Work with a Realtor who knows the area. Sure, sounds like a blatant REALTOR plug - but that's part of what we do. We tour new homes, read the real estate section - and gossip! So we know what's happening - and what might be happening.
- Read the blogs. Whether it's fact-or-fiction you can bet someone is writing about it on the web. Search the builders name and see what comes up.
- Check Builder-implode.com and BuilderOnline.com which have been regularly reporting on the financial status of builders.
- Read the contract before signing it. THE ENTIRE CONTRACT! That's right - no skipping over the fine print. Read every detail and know what you're getting yourself into.
- Get legal advice. Many homeowners never think to use an attorney for a new construction purchase. Now more than ever it makes sense to talk to an attorney and discuss the "what ifs" before you take the leap.
- Last, but not least - check out this builder punch list from Trey Langford in Boise, Idaho. After finding this blog on the web - I decided I couldn't say it any better than he did!
Bo Buchanan, Kettley Realtors 58 Chicago Rd, Oswego IL. 60543 (630) 846-4663