Read this story a few days ago, it is a few months old. However, it's still true to this day. The notion that you've got to pay attention to the builder's financial health. That's because builders of all stripes faced with the potential of cash flow gaps.. especially in this market. A few small builders in our area have folded their tents. Drop in the Big Builder's Online occasionally just to check the lineup. It's very unfortunate.
Here is a message that 'really hits home': When builder folds it takes with it not only an 'unfinished home' but also your deposit.
From Washington Post.
Jane Hwang spent $120,000 and devoted five years waiting for her perfect custom home. Then in one brief phone call, she learned she might lose it all. The builder, Seville Homes, couldn't pay its bills, and its bank was seizing Hwang's nearly completed house.
Scared of losing her investment, Hwang pounced into action. She went to the auction on the Fairfax County courthouse steps and outbid a bank for the house.
The poor woman not only had to buy her "own" house at an auction but also had to spend extra money (to fix property related problems) than she'd originally intended! I don't understand how the builder could get away using deposits to fund its business operations instead of using it to build homes. Don't get it. Is it because builder uses its own-customized-sales-contract?
So, protect yourself and have your ammo ready, just in case..