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I lived in a region of California that saw an expansive boom, similar to what Raleigh has been experiencing, in the 90s. One of the negative issues I observed was the inability or outright refusal of a few builders to honor their commitments to homeowners in the new developments they established. For example, if a builder experienced a financial downturn, then promised community amenities upon which buyers made their purchases never materialized. Also, post-construction issues were never repaired, or only addressed after litigation. All the building company had to do was reorganize and the buyers got the shaft.
This brings me to Raleigh Metro...As things "slow" (I'm not sure what verb to use without bringing the debate that is raging elsewhere on this board regarding market conditions in the greater Raleigh area to this thread.), have any buyers in new developments seen builders scale back promised community ammenties, disregard or put up a fight about post construction issues, or bail on a development altogether? It might be a little soon in Raleigh's "slowing" to see this yet, but I thought I'd ask.
We haven't bought yet. (We are, thankfully, in the negotiation process in selling our NE home and will move once its a done deal.) Some of my fears in purchasing a new home from a developer, after my observations elsewhere, is that if builders are hurting we could live in a home surrounded by empty lots for a long time, struggling to address post-construction issues ourselves. Amenities might not materialize on the level promised. HOA resources might not match needs for a long time, if ever. And, worst case scenario...some kind of bankruptcy or reorganization might materially impact the type of community we thought we were buying into.
Has anyone heard rumblings of this yet?
Last edited by rockyhillgal; 09-25-2007 at 08:46 AM..
I lived in a region of California that saw an expansive boom, similar to what Raleigh has been experiencing, in the 90s. One of the negative issues I observed was the inability or outright refusal of a few builders to honor their commitments to homeowners in the new developments they established. For example, if a builder experienced a financial downturn, then promised community amenities upon which buyers made their purchases never materialized. Also, post-construction issues were never repaired, or only addressed after litigation. All the building company had to do was reorganize and the buyers got the shaft.
This brings me to Raleigh Metro...As things "slow" (I'm not sure what adjective to use without bringing the debate that is raging elsewhere on this board regarding market conditions in the greater Raleigh area to this thread.), have any buyers in new developments seen builders scale back promised community ammenties, disregard or put up a fight about post construction issues, or bail on a development altogether? It might be a little soon in Raleigh's "slowing" to see this yet, but I thought I'd ask.
We haven't bought yet. (We are, thankfully, in the negotiation process in selling our NE home and will move once its a done deal.) Some of my fears in purchasing a new home from a developer, after my observations elsewhere, is that if builders are hurting we could live in a home surrounded by empty lots for a long time, struggling to address post-construction issues ourselves. Amenities might not materialize on the level promised. HOA resources might not match needs for a long time, if ever. And, worst case scenario...some kind of bankruptcy or reorganization might materially impact the type of community we thought we were buying into.
Has anyone heard rumblings of this yet?
I haven't heard of such issues. I imagine that such issues would get a lot of publicity around here. I'm sure there are cases of builders promising one thing but doing another on a smaller scale, but I have yet to hear a "cut and run" story.
FWIW, I know it is all about personal preference, but I am suprised at how many people on this forum are only interested in "new" construction. There are a plethora of built out communites that are just a few years old that are already built out and already have all of the promised ammenities in place. Reslaes in these neighborhoods can almost always be found.
If your concern is about being left high and dry by a builder is great enouhg, you can alwyas look into resales where this would no longer be an issue.
Best thing is to get the builder to completely resolve the open issues before closing. I've heard many stories of people having a really hard time getting the builder to come back finish the house after closing. But even if the house is perfect when you close, there will be repairs under warranty that may come up if something goes wrong or breaks so good luck on that.
I personally had a GREAT experience with Timberline Builders who completely finished the house before closing and everything looked beautiful. And a couple of things that needed attention during the first year were resolved promply. I'm hoping I'll have the same experience with the builders of my next house I am moving next month.
I agree. It's good to have as many recognized open items addressed before closing as possible!
Some open issues, such as the shops and restaurants planned for a Planned Urban Development, can't be resolved before closing. The number and quality of those things will ultimately depend on the ability of the development to support them. Other issues will only be exposed through time...whether all of the recreational amenities promised will be installed fully, or whether they will be streamlined in some manner. (I'm thinking of jacuzzies that were never installed by a builder that went bankrupt in CA as I write this. Also, I've read on this board of a PUD in Cary that has limited pool hours. The writer hoped that as more people moved into the development, increasing HOA fees, the pool hours would increase. I wasn't clear on the relationship between HOA fees and pool hours, because the pool was built, but the writer lives there and made the correlation.) Other construction issues don't emerge for a while. (I'm thinking of homes in CA that made the buyers "sick," similar I think to the mold issues experienced by buyers of specific townhomes in the Brier Creek CC. Toll Bros. settled after the buyers went to court.) In a robust market, I suspect buyers are more likely to be able to seek remediation. When builders start to near bankruptcy or actually do reorganize, it is possible that buyers will get stuck holding the bag.
I heartily share the opinion that a safer bet is to buy a resale in an existing development. However, my husband isn't as keen on the idea. When we look at resales, invariably we're looking at an almost full-fledged remodel to make the home either up to date or somewhere within our own preferences. I don't mind so much but my husband isn't enthusiastic. It's the Catch 22 of having construction and handyman skills...you can't permit yourself to hire someone because you know how to do the tasks yourself, but you may not have the time or inclination to do it yourself. Sigh. That is another thread entirely!
It sounds like the Triangle is not yet experiencing the issues I described. The pessimists can keep watching for symptoms and the optimists can continue on with confidence. :-)
I'm not sure how things are done in North Carolina, but here in Connecticut I beleive builders may be required to submit funds to be held until certain improvements (roads and common areas) are complete.
My knowledge of the process is pretty high level and sketchy but I live in a subdivision of approximatley 70 homes that was built out in several phases over five years, and I was told that the town or the state (not sure) requires the builder to submit a "completion bond" of over $1,000,000, that is held in "escrow" . Upon completion of a phase the builder is required to have certain inspections and approvals and then the bond monies are released and can be applied to the the bond for the next phase. My understanding is that the money held would be used to complete various infastructure components in the neighborhood should the builder not complete the work.
I have no idea if this type of thing is required in North Carolina and I don't think it would be provide recourse to an individual homeowner if they had a problem with their homes construction.
Ultimatley, I think that when you buy early on in a new neighborhood there is can potentially be an element of risk regarding non completion by the builder, so I guess it is just one more thing to consider and research when making a purchase.
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