is it good to buy a house from a builder that is not financially stable?

Answer 1

Here is my worst case scenario: You agree to build with a builder. You get a construction loan. You give them money from the loan to build. They don't get started, or they do start with subcontractors. Now they go bankrupt. They haven't paid the subcontractors. The subcontractors want to be paid and put liens in on the house. You owe the bank money for something that is basically unsellable and not liveable. You end up in court for years trying to get it sorted out while paying a mortgage for a house you don't live in.

Slightly better case... The house is done. You buy it from the builder. He goes out of business. The warantee is essentially junk, but the house is still there.

How do you know that builder is not financially stable? The least risk for you is to purchase something already complete and not to close unless it really is complete.

Good luck!

Answer 2

No. If the builder is not stable, they could go out of business and if you have paid them anything up front, you have a very good chance of losing your money.

These days, all builders are having a hard time, but the larger ones that are more established are going to be a bit more stable than the small independent builders - but that can vary on a case by case basis.

Check the builder's credentials and financials with your state's Secretary of State's Office.

Answer 3

Depending on the state you live in, all of the subcontractors that worked on the house could have lien rights if the builder has not paid them for the work they performed. Request to see the list of subcontractors that performed work on the house and request copies of the lien waivers from all of the subcontractors before you write an offer to purchase. Also, ask the builder what his warranty period is. If they are not financially stable, the first thing they will do is eliminate warranty items, and not tell you. Good Luck!

Answer 4

From what I understand, not many are.
What I hear you saying is, "an already built house," correct?
If the home is already built, just have YOUR lawyer look over the paperwork (or be present at the signing and you shd be okay.) Make sure you have a certified home inspection.

If the home is NOT built yet, you might ask for references from prior home buyers. This is an important question. When we bought our first home, some of the neighbors had completion issues. Our issues were time-related, but the builder compensated by finishing out our bonus room which was unfinished in the proposal.

Answer 5

What are you calling unstable?

Many smaller firms simply start the build, sell off plan and use the money to complete the build.

If you are buying something, then they will then have the money to finish the job.

Check out if they are fully insured, and you can always put an end date on the build. I had a landlord having development work going on, and there was a clause in the contract where he would recieve £300 every day that it over-run!

He ended up getting a couple of grand back!!

Answer 6

A definite no no. Chances of the developer getting into financial problem would leave u high and dry. Akk ur money(downpayment and progress payment) will be stuck in the project. Do some legwork and inquire around for reputable develepor. cheers.