I can't help but to notice that builders have gotten much kinder towards RE agents lately. Wasn't so long ago they did all they could to keep us off their developments, and discouraged buyers from using an independent agent. Now that people aren't flocking out there on weekends for hot-dogs and soda's , and lining up to sign on the dotted line, builders want to be our best buds.
I see listings now that actually say "Agent Friendly", and many offering higher than usual commissions. Last week a client came to me and asked me to find them a new home because the builder they had pre-purchased with, had filed bankruptcy. I was also asked to make sure homes we view are owned by a builder thats financially sound.
When a homebuilder goes bankrupt, the company's creditors aren't the only ones who suffer. Often, so do those who have paid hefty deposits for houses that remain unbuilt and new homeowners living in a development with half-built homes and incomplete amenities.
When these builders file for bankruptcy, subcontractors stop working, unfinished homes in various stages dot the communities, crippling liens are placed on occupied homes, clubhouses are incomplete and swimming pools and parks are never built.
People who have placed deposits on homes either never get their money back or face delays of months or years before it is returned. The houses sit until someone comes in and decides to complete them; buyers can't move in, get their deposit back, or get out of the contract."
As for the houses partly under construction, what most likely happens is that the lenders or another entity steps in and hire the trades to finish those houses, the home buyer will then get the house he or she contracted for. In the meantime, the home buyer is "stuck" and can't get out of the legally binding contract.
In a new twist on the housing crisis, homeowners are being sued by landscapers and contractors after the property builders go bankrupt. If features like fountains and concrete foundations have not been paid for, the contractors are increasingly going after the homeowners for the balance. The landscapers, the people that put in windows, the deck, the doorways, and the concrete guys, are just a few of the workers seeking payment from homeowners.
So for those of you that are waiting on your builder to finish, or even start construction of your new home, do your homework and make sure the company is on solid financial ground. Any potential new construction buyer would be prudent to bring their own Realtor with them to view homes in a new development. This is no time to go it alone, the dollar you think your saving now, may cost you a fortune later.
Great post.
Doing mainly commercial development, It's always been a priority of ours to offer fair compensation to buyer's agents. While in residential the last 9 years, we had many builders simply not compensate at all and did not hide the fact that they "simply didn't need you Mr. Buyer's Agent . . . we have enough people at the door already".)
Now things have changed. I just got a nice e-mail today to distribute to our agents. A builder is now offering 5% of Base on the last phase of their project.
We've always cooperated with buyers agents and we always will. In every market. We realize that we all work together. Sadly, some builders / Developers do not.
I've had many a client tell me that when touring developments they were encouraged not to bring an agent when signing, and often offered paltry bonuses for doing so. I had a friend that came to me after not using me as an agent, and he asked me to help him because he felt the builder was ripping him off at closing. I called the builder and pointed out the fact that my friend had never been given a HUD statement, and they had employed bait & switch tactics on the loan (their preferred in-house lender).
The builder waved all closing cost and made the first three months payments for my friend (about 16 thousand in credits). I the listed and sold the it for him, and he made a clean 90k profit on it. People think we don't know what we're doing, until they need help. Builders think they don't need us, until they do. I still don't care to deal with builders if possible.
I read this today about a builders association being so broke, they have to sell their own building!
http://www6.comcast.net/news/articles/odd/2008/03/22/ODD.Builders.Building.Sale/