I have closed homes with over 50 separate builders in the Treasure Valley, so I have learned a few things on how to get them to finish what they started.
The Idaho Statesman had an article today about the "Arrested development in Star". It talks about some of the unfinished homes and subdivisions in Star making it sound like a blighted ghost town. Could this possibly be the same paper that just a few years ago bragged how Star was the best place to buy a home since their homes were selling a few years ago at an average of 107% of list price?
Back when they made that statement it was statistically true; however, it was based on 90+ percent of the sales were brand new homes which were offered for sale on a "base" price and then buyers added in sod, sprinkler, fencing, fireplaces, RV pads, extended patios, closing costs, etc. Obviously, that runs the price over list price. It is not like looking at resale statistics where you buy what is existsing already and typically negotiate down due to wear and tear on carpet, need for paint, etc.
Anyhow, the article today in the paper makes it seem as if Star is unique in the fact there are unfinished homes, unsold lots, and homes going into forclosure. If there is a community in the US that isn't facing some of these issues, that would be unique!
The article mentioned problems but no solutions. So here is my reply on their blog talking about builders and developers not finishing their projects. Since I try to offer solutions, not just lip service.
The only way to correct the issue is to have stiffer penalties for people not doing what they say they are going to do. If the costs to walk away is cheaper than then penalty, of course that is the course of action people will take!
Bonding for future improvements is one way, but the bonding must be based on true bids for the work. If the developer doesn't do it, the bonding company would have to; yet the developer should be penalized to make up for the time and effort it takes to enforce it plus punative damages.
For example, when I sell a home this time of year and the builder can't put in the landscaping, many lenders will have two bids done for the landscaping and have the builder put 2 times the bid price in escrow with a fixed end date to make sure it happens. All costs of the escrow are paid up front. Since the builder has extra profit withheld, they have an incentive to come back and finish the work!
In my 15 years of selling real estate here in the Boise area which includes closing brand new homes with over 50 separate builders, I have never had a builder not come back and finish before the required dates so they could get the rest of their money. Unfortunately, when they have no extra money to receive to come back and finish something, they are much harder (if not impossible sometimes) to get back to finish the job!
Jim Paulson, CRS, GRI - RE/MAX Capital City