Safe to buy in n'hood that builder foreclosed on?

**2Conreys** · 01-08-2009, 08:51 AM

Hello Experts,

We are 1st time home buyers and have fallen in love w/ a home that is in a neighborhood where the builder is potentially going to foreclose on all of his properties. Lots of homes (including ours) have been approx. 75% completed but no further construction has been done. We have a few questions:

1. Is is safe to buy in a neighborhood under these conditions? What are the risks, etc?
2. The builder says this is not a short sell, but he must confer w/ the bank before agreeing to our 'low' offer. since he is dealing w/ a larger financial institution, is there less of a chance for us to negotiate under these conditions?
3. Generally speaking, do neighborhoods that have a lot of foreclosed properties ever bounce back and build up to the original plans? What is the time frame usually?

**jpoey** · 01-09-2009, 11:02 AM

RUN AWAY FAST and wait to see what happens, the builder is an IDIOT!!! and he's LYING right to your face; of course it's a short sale if he has to ask the bank because he owes more than your offer (if he didn't owe more he could just accept your offer and pay off the loan), you must wait because you dont know when or IF these homes will be completed (or if he gets the funding to complete) to code. Use your head not your heart. Just knowing what you say I would advise you to move on. Good Luck!

**P.Mitchell** · 01-12-2009, 10:44 AM

It is going to depend on the situation. Most likely if the builder is in finacial trouble there could be liens on the property from various contractors and other groups. Builders are often the very last people to lower their prices since they based their ability to make money off of the premise that they will get their full asking price for the property. The biggest mistake I hear from you is that you are in love with the property. I know it is hard, but it is important to leave emotion at the front door. Even if you plan to live in the home the rest of your life, it is still the largest investment of your life and the easiest way to ruin your financial future if you make a poor decision. Unless they can provide you with iron clad certanty and insureance, walk. Most likely you will be able to find a relativly new, previously owned home, for substancially less than what you will pay for a new home. Plus, if the builder goes out of business, you may be left with an unfinished home, which you could not live in if you wanted to since there is no TCO (temporary certificate of occupancy).

Good luck.

**clemy** · 01-12-2009, 01:43 PM

You are considering buying a house that is only 75% completed from a builder that is going bankrupt?????

Who will finish your house?
Who will pay the workmen/suppliers so they don't put a lien on your house because the builder didn't pay them?
Who will finish the other houses?

There are scary tales out there about subdivisions not being finished. Empty lots with weeds growing, playgrounds and common spaces not finished. And to top it all off, you and whoever else is unfortunate enough to buy in could be liable to pay special taxes/assessments that the builder agreed would be paid by all the owners. Except there are fewer owners and you would have to pay a lot more since there would be fewer owners.

Oh yeah, I almost forgot your last question. There is absolutely NO GUARANTEE that the rest of the subdivision will be finished to original plans. Again, many people are finding are finding that their large, custom built neighborhoods suddenly have smaller, cheaper houses built and no way to stop it.