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What can I say? I had a late night in Las Vegas, and woke up this morning thinking, "Is it Friday? Shouldn’t I have a post up?" [Honest, I spent most of the day looking at housing!]
The answer is yes and yes, but I’m still a little cross-eyed.
Cover for me, will you while I grab some orange juice? I could especially use your links, stories, comments etc. while I try and wake up.
Not all neighborhoods currently being developed will reach build out. We’ve seen homes from two developments in Pinal County go on the auction block when their developments no longer were feasible for the developer. This is a situation that can create difficulties for buyers, particularly those who are some of the early "pioneers" in a neighborhood: [Hat tip L!]
As home sales fall and builders scale back new construction, buyers risk ending up in a dead-end or delayed development.
Building stoppages can happen in both boom and bust real estate cycles, for different reasons. No matter what the market climate, house-hunters need to be careful.
New York real estate attorney Neil Garfinkel lists ways that a buyer can protect themselves:
Get a handle on how many projects a builder has done in the past, Garfinkel recommends. Also speak to people who already live in a development and find out what kind of experience they have had.
Expect a good builder to have a timeline that schedules when each phase of construction will be completed, Ahluwalia says.
Down payments should be held in escrow, according to Garfinkel. A written agreement puts the money into the care of a third party with payments not to be delivered until certain conditions are met. That way a buyer is protected if the builder goes belly up, Garfinkel says.
There is another problem that has concerned me for sometime. In the Phoenix area, as in other parts of the country, most of our developments have homeowner’s associations that maintain parks, amenities, lighting, etc. Budgets for many neighborhoods run in the hundreds of thousands of dollars.
Question: What happens when a developer abandons a project or goes bankrupt, and there are only a few families in the development? Do they split a $100K landscaping contract between them? Take turns mowing?
