The Housing Chronicles Blog: Steps to ensure your builder isn't going bust

Tuesday, August 12, 2008

Steps to ensure your builder isn't going bust

Syndicated writer Lew Sichelman's latest article is on the steps buyers can take to ensure they're not buying homes from a builder about to end up in BK. While some blog commentators have claimed that some builders deserve to go bankrupt due to past bets that went bad, that opinion doesn't really consider the impact on buyers with customer service issues:

It's always wise for would-be home buyers to make sure that the builders they choose are on solid footing. But at a time when many companies are teetering on the brink of financial ruin, it's necessary to be as picky about the builder as the floor plans and options he offers.

There already have been 35 "major" implosions and 27 "tiny" ones among the building community, according to the Home Builder Implode-o-Meter. And the website has 15 builders on its "ailing" watch list, including some of the biggest names in the business.

The website's roll call of fallen firms is somewhat subjective because the companies on it may not have shut down operations altogether. Some have filed for bankruptcy protection, while others may still be running but have gone through some sort of adverse change.

Whatever the case, when a builder becomes crippled, his buyers usually go down with him. Current customers often lose their deposit money or end up with a partially completed house. Recent buyers who have already moved in could be left with no one to come back to fix the numerous items that invariably require attention.

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