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Looks like Lennar homes is demanding concession from its sub contractors to the tune of 20%. I wonder if these discounts will be passed onto the Buyers?
A quote from the article:
“today. The sixth largest public homebuilder in the nation sent out an interesting letter to its contractors a few months ago offering them two choices:
(A) Reduce your unpaid invoices as of 1-26-07 by a minimum of X [many have reported up to 20%]…or
(B) Not reduce your unpaid invoices and be excluded from bidding future work for a minimum of 6 months. Those companies who choose to participate in this request and/or can exhibit the best price possible will continue to have every opportunity for future business with Lennar. “
Wow so just how is the home building industry going?
Lennar paid over $1 Billion for development rights at the biggest remaining vacant parcel of land (open to building) in Orange County, CA - the former Marine Corps Air Station El Toro. This gives them the rights to build somewhere around 10,000 homes on the former military base land, and obligates them to give away a vast amount of the land for local parks and land preserves. That works out to about $100K per home. On top of that they will have to spend hundreds of millions more to build the infrastructure for this new community, before the first concrete slab is poured or the first nail is hammered. I'm sure they are "banking" on selling these 10,000 new tract homes at an average of $800K to $1M each, which is the going rate for a new tract home around here. But if the bottom drops out of the market they might have a tough time getting those prices. It will be interesting to see what goes on with this massive new project not far from my place.
Location: Sometimes Maryland, sometimes NoVA. Depends on the day of the week
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My husband is a contractor (not for Lennar), and has been going off on this for a couple days. Its basically extortion, and so wrong. The company accepted the bid and picked the contractor, now, they go back and say "we won't pay you what we said we would, cause we are spoiled brats who want more profit." So messed up.
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