Local Builder Article.....Newmark (San Antonio, Austin: sales, houses, neighborhoods)

[martinez4]

Saw this on another thread,.... thanks antonian, and wanted to post it here as this is a local builder:

Newmark parent considers Ch. 11 bankruptcy - Austin Business Journal:

[Steel Man]

They currently have 16 San Antonio area locations (9 active, 3 closing out, and 4 coming soon).

[kevcrawford]

This has been rumored for a while. Lots of builders are feeling a pinch right now.

[Drzy]

I posted most of this in the Austin thread on the same subject, but it's worth repeating here. I'm having a home built with them.

My sales guy at Newmark said it's almost a certainty that TOUSA will file for Chapter 11, and his guess was that if TOUSA continues to experience problems, Newmark would likely be spun off as a separate entity. According to him, the source of TOUSA's problems are other states and subsidiaries, particularly Florida, but Newmark itself is very successful. He also said that if Newmark does experience problems, the customers will be the first to know.

Obviously someone from Newmark probably isn't the most unbiased source of info, but I feel content that we in Texas are safe. For all San Antonio neighborhoods (and elsewhere?), everything is business as usual. They're still opening a new phase in my neighborhood in January, and construction will continue. Whenever I drive by my home I still see a dozen workers buzzing around the house. I don't want to jump to any conclusions, but at the moment it looks like things will be fine.

Also, as martinez4's link says, it's "only" Chapter 11, i.e. the good kind (if there is such a thing) in which they simply restructure their debts. In Chapter 11 business continue to operate as normal. We the consumers should be okay... it's TOUSA and their investors who will take the brunt of the impact. Check out their stock price for the past three months... ouch.

TOUS.PK: Basic Chart for TOUSA INC - Yahoo! Finance

[banker]

Originally Posted by kevcrawford

This has been rumored for a while. Lots of builders are feeling a pinch right now.

Maybe - but when I went and asked to negotiate the construction of a $325,000 home the builder wouldn't budge and then said when I was ready to pay full price the earnest money would be $10,000. With that kind of attitude there is no wonder the builders are hurting.

[kevcrawford]

Builders are feeling a pinch on spec homes. Not dirt builds. When you go to have a home built, they'll basically tell you what it'll cost. There's not a lot of price negotiation on those. Just negotiating amenities, terms, etc.

Just because builders are hurting doesn't mean they'll be able to build houses for a lot cheaper. There's a certain percentage they need to make on a build to make it financially beneficial for them. They know the what it'll cost them to build the home and then they out their percentage on top of it. Builders don't make as much as a lot of people think they do per home.

It's not an attitude thing. It's just a business decision.

[banker]

Originally Posted by kevcrawford

Builders are feeling a pinch on spec homes. Not dirt builds. When you go to have a home built, they'll basically tell you what it'll cost. There's not a lot of price negotiation on those. Just negotiating amenities, terms, etc.

Just because builders are hurting doesn't mean they'll be able to build houses for a lot cheaper. There's a certain percentage they need to make on a build to make it financially beneficial for them. They know the what it'll cost them to build the home and then they out their percentage on top of it. Builders don't make as much as a lot of people think they do per home.

It's not an attitude thing. It's just a business decision.

I understand - but it all passes through to the individual. If they aren't willing to negotiate the sale of a built to order home then it leaves less room for the buyer to negotiate on the sale of his/her home which results in more cancelled contracts.

In the Quarry at Iron Mountain KB has averaged nearly 10% in price cuts on inventory homes...so asking for 3-5% seems reasonable. The fact that they wouldn't even counter or enter a discussion on the purchase price seemed absolutely ridiculous. Had they countered and acted the least bit willing to budge on the price - my wife and I would have been in to sign a contract that day. We are willing to pay - I just want something - even a token amount of negotiation as a show of good faith - especially since they are asking for $10,000 in earnest money from me. I show them the earnest money - they show me a desire to have my business and we would have had a sale no questions asked.

[kevcrawford]

With inventory homes they're being taxed on the home that's sitting there, so it costs them more money to hold it. Their outlook is that if you want to pay less, get a different floor plan that's smaller. It's just how builders work. Builders don't usually make 15% on a dirt build. They make around 5-7%. If they were to discount you 4% just because you asked, it wouldn't be worth it for them. Especially when they'll sell to someone else. There's a perception that production builders make a lot more than they do on houses.

[antonian]

I am building in Alamo Ranch. I feel that they will probably just reorganize and be bought or become a private entity. That tousa stock did drop a bit. They are trading at .12 cents when the 52 week high is 10.80.

on a side note we are currently trying to resolve a mistake they made on our sales agreement. They have admitted to the mistake but don't want to keep to the agreement since the the error is in our favor. This has held up the building process.