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My wife and I are helping our in-laws look at active adult communities in CA and WA. They have found two that they like, both from the same nationally known, adult community builder. What seemed unusual was the very high down payment (50%) that the builder was requiring to begin construction.
Does that seem odd to anyone? Does anyone have some information on common business practices in active adult housing?
It seems that this whole area of housing is not one that people develop any real expertise in (you retire, you buy one house and that's pretty much it) and the strucure of the purchase seems very different from any subdivision I've ever looked at. And this is active adult, not assisted living or any of those communities designed for older retirees.
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" Charleston South Carolina"
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Location: home...finally, home .
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I am planning to retire in June and will be looking into over 55 places, also. If you do learn more about this strange purchasing deal, please let me know if you can. I do not like the sound of it.
I would be hesitant to buy into anything under construction these days. Too many builders are going bankrupt. Or, corners are getting cut--and the community pool or gardens or other amenities that were promised never et built. There are plenty of great communities that have already been built and have resales. I'd recommend looking into them.
My wife and I are helping our in-laws look at active adult communities in CA and WA. They have found two that they like, both from the same nationally known, adult community builder. What seemed unusual was the very high down payment (50%) that the builder was requiring to begin construction.
Does that seem odd to anyone? Does anyone have some information on common business practices in active adult housing?
It seems that this whole area of housing is not one that people develop any real expertise in (you retire, you buy one house and that's pretty much it) and the strucure of the purchase seems very different from any subdivision I've ever looked at. And this is active adult, not assisted living or any of those communities designed for older retirees.
You need to look into California construction laws. When I built my last home, the contractor could not ask for more than 10% of the job or $1K, whichever was less as a down payment upfront. Also, the reason banks disperse funds to contractors on a "draw" system is that the contractor does not get ahead of the value of completed construction, as well as meeting all the permit requirements. For example, the first draw of 10 to 15% of the money might be given when the framing passes inspection, another 20% when plumbing and/or electrical passes inspection, etc.
The amounts and percentages vary with the funding source and the type of project. However, the concept of protecting the homeowner is the same.
Finally, remember that the majority of expensive items come in the last few weeks. The cabinets, flooring, lighting & plumbing fixtures, and appliances
can cost up to 20% of the total cost. If a builder absconds with the most of the money upfront, you will be stuck with these costs.
Be extremely careful; there are many who want to take advantage of the millions who are currently, or will be retiring within the next 5-10 years, and are in hopes of making huge profits.
I would be hesitant to buy into anything under construction these days. Too many builders are going bankrupt. Or, corners are getting cut--and the community pool or gardens or other amenities that were promised never et built. There are plenty of great communities that have already been built and have resales. I'd recommend looking into them.
Be extremely careful; there are many who want to take advantage of the millions who are currently, or will be retiring within the next 5-10 years, and are in hopes of making huge profits.
Us Boomers do have wealth and everyone wants a part of it. There might be valid reasons for such a large deposit but it is high unusual and suspect. It would be helpful to know the company. Is it Del-Webb by any chance?
No, it's not DelWebb. There aren't many national names who build active adult in both of those states so it should be easy to figure out. Given that builders don't often come here and defend themselves, I am hesitant to call anyone out by name.
Be extremely careful; there are many who want to take advantage of the millions who are currently, or will be retiring within the next 5-10 years, and are in hopes of making huge profits.
I totally agree. The scam artists probably have the dates of future retirement calculated better then we Boomers do.
This is the ONLY other possibility I can think of. A member recently posted in one of the state forums~a state that's a popular retirement state. Anyway, they had made a 2,000 payment in a community and the builders just started building, only to be at a total standstill right now. They are refusing to continue building until the people chip in a lot more $$. Whether it will end up being a scam OR if the company in all honesty wants to do the building, but just doesn't have the funds to do it will be interesting to find out in the future. There's the possibility that people are putting small amounts down for new homes, builders build the home, and then the people back out. But I'd still be very cautious about this unless I learned that it will now be the norm to put down a huge amount before they build.
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Yup
They are refusing to continue building until the people chip in a lot more $$. Whether it will end up being a scam OR if the company in all honesty wants to do the building, but just doesn't have the funds to do it will be interesting to find out in the future. There's the possibility that people are putting small amounts down for new homes, builders build the home, and then the people back out. But I'd still be very cautious about this unless I learned that it will now be the norm to put down a huge amount before they build.
