Problem builder (Huntsville: transplants, real estate, construction loan)

[quiltkat]

I hope this is okay to post here--if it isn't, please forgive. We are moving with the BRAC next month and my husband just got a message at work that one of his coworkers just lost his $2,500 earnest money on a home he was having built with Ratcliffe Holdings at Nature's Point at the Reserve. The company advised him that they were "financially unable to complete the construction" and the house will now go to the bank.

[Keeper]

You can post a 'warning' such as the one you have posted.. but we don't allow postings that go into a lot of detail, such as 'the walls fell down after we bought, plumbing didn't work' or something along those lines

[ionlife]

Originally Posted by quiltkat

I hope this is okay to post here--if it isn't, please forgive. We are moving with the BRAC next month and my husband just got a message at work that one of his coworkers just lost his $2,500 earnest money on a home he was having built with Ratcliffe Holdings at Nature's Point at the Reserve. The company advised him that they were "financially unable to complete the construction" and the house will now go to the bank.

Who is the builder? Is it a custom home or a builder with several plans?

[TimG]

There has been some of this happening in recent months. I know there was a small builder in Lake Forest who will remain nameless, that had his loans called and the Bank took procession of his inventory and changed realty companies.

There is a high inventory of upper-end homes (>450k) somewhere around 20 months of supply. Seems a bit over built to me. With this kind of inventory I would be hesitant to build from scratch, but if you do I would ensure you have representation and place all earnest monies in third party escrow. If your builder is unwilling to support this kind of structure you may have a problem.

Regards,

Tim

[NicoleC]

I have to agree with TimG here -- given the high levels of spec inventory on the local market, purchasing a home which is not completed or very near to it doesn't seem to make sense. Ironically, builders over-extending themselves building too much spec inventory is why some are having financial trouble.

If you are custom building (and I mean real custom building, not selecting house plan #3 picking the tile color which is often referred to HSV as "custom building"), YOU should hold the construction loan and the purse strings, not the builder. While many builders will offer handing the loan as a service, ultimately you lose control over the quality and process.

QuiltKat, Huntsville also has a lot of high quality newer resale homes on the market (as well as older and historic homes in established neighborhoods.) If you have concerns about constructing or purchasing a brand new home, you have plenty of other good options in Huntsville.

[hsvgirl]

Originally Posted by NicoleC

I have to agree with TimG here -- given the high levels of spec inventory on the local market, purchasing a home which is not completed or very near to it doesn't seem to make sense. Ironically, builders over-extending themselves building too much spec inventory is why some are having financial trouble.

If you are custom building (and I mean real custom building, not selecting house plan #3 picking the tile color which is often referred to HSV as "custom building"), YOU should hold the construction loan and the purse strings, not the builder. While many builders will offer handing the loan as a service, ultimately you lose control over the quality and process.

QuiltKat, Huntsville also has a lot of high quality newer resale homes on the market (as well as older and historic homes in established neighborhoods.) If you have concerns about constructing or purchasing a brand new home, you have plenty of other good options in Huntsville.

There is one down side to YOU holding the construction loan and that is that it is harder to get the builder on the ball when you are the one paying the interest on the construction loan instead of him. If he is also building addt'l homes that he is paying the interest on, those will be his first priority not yours.

[hsvgirl]

Originally Posted by quiltkat

I hope this is okay to post here--if it isn't, please forgive. We are moving with the BRAC next month and my husband just got a message at work that one of his coworkers just lost his $2,500 earnest money on a home he was having built with Ratcliffe Holdings at Nature's Point at the Reserve. The company advised him that they were "financially unable to complete the construction" and the house will now go to the bank.

We heard that Ratcliffe did file bankruptcy. All his homes have been removed out of the MLS. Checking the probate judge's website, he has had a number of liens issued by his suppliers. A builder w/o suppliers (lumber, flooring, etc) will not stay in business. Sorry. There are still a number of reputable builders in this area who have not overextended themselves, especially those who build homes less than $400K or who haven't built entire subdivisions of very expensive homes. If he lost his earnest money, it must be because he gave it directly to the builder. Contrary to thought, you don't always get a better deal by going directly to a builder. If there was a realtor involved, the money would be in escrow with that real estate company and he could get it back.

[NicoleC]

Originally Posted by hsvgirl

There is one down side to YOU holding the construction loan and that is that it is harder to get the builder on the ball when you are the one paying the interest on the construction loan instead of him. If he is also building addt'l homes that he is paying the interest on, those will be his first priority not yours.

True -- but you can also tell him to take a hike and not dole out a penny more until the current draw is done correctly and completely. Subs get paid after a job, not before, so there is no reason to pay anything in advance directly to the builder.

Heaven help anyone who owns the land and the builder has the loan: you can't even walk away from the house if it goes sour.

With a good builder this is not going to be an issue and it will never come down to playing hard ball. Unfortunately you can do your due diligence and still end up with a less than proficient builder. Personally, I'd rather wait for a job to be done correctly than to finish the house and learn later stuff has to be redone because someone got paid for a job they did incorrectly.

But this requires spending time to be intimately involved with the process, something which transplants may not be able to do.

[giateresa]

After watching this market for a year prior to our moving here, and having been here for a year, it is clear to me there is too much hype and HSV madison is going to be in trouble with tons of inventory in this overpriced market.

I think it would be crazy to be a newcomer and build here without really trying out the areas you are interested in. There are severe labor and quality issues to be dealt with; and if you are a newcomer, you cannot overcome that easily.

Dont believe the hype and stop listening to relators. At least we have an honest relator who speaks to us about the low quality developments, the city planning failures, and other good hints.

BRAC is not going to be bringing 5000 new folks to the community. Just ask folks in the know on the arsenal and they will tell you about how many of the positions will be transfers within the city and the surrounding areas.

HSV/madison is going to be hurting in a couple years. get smart and consider living in established areas, or figuring out a living situation, get to know who's who in town before you even think of building....

[ionlife]

Originally Posted by giateresa

After watching this market for a year prior to our moving here, and having been here for a year, it is clear to me there is too much hype and HSV madison is going to be in trouble with tons of inventory in this overpriced market.

I think it would be crazy to be a newcomer and build here without really trying out the areas you are interested in. There are severe labor and quality issues to be dealt with; and if you are a newcomer, you cannot overcome that easily.

Dont believe the hype and stop listening to relators. At least we have an honest relator who speaks to us about the low quality developments, the city planning failures, and other good hints.

BRAC is not going to be bringing 5000 new folks to the community. Just ask folks in the know on the arsenal and they will tell you about how many of the positions will be transfers within the city and the surrounding areas.

HSV/madison is going to be hurting in a couple years. get smart and consider living in established areas, or figuring out a living situation, get to know who's who in town before you even think of building....

And now let the healing begin as we go into an election year with a man who has only 2 years experience and will need a quick lesson in reality should he become president of this country. And yes, the market is iffy in Hville -- I totally agree-- spec houses are a good bet! Bid low and hope that we have a BRAC/MDA to support it in 2008 after the November elections. We will have these things, but not at the level projected if that goes to Demos... and I am an independent, not a party affiliate, but I am a realist too...

ah, and I love the idea of change, but can someone PLEASE TELL ME EXACTLY what that means????

I've been waiting for 12 years