Robbie and Lou,

I was curious as to how your siutaitons have changed. Any updates?

I appreciate your questions. This is a very delicate situation. Let me first start by saying no one will be able to provide you the 100% guaranteed answer you are looking for. If

Allow me to address some of the questions that I would be asking myself. Keep in mind that my “crystal ball” is not working today.

What is the worst case that could happen with Prospect Homes owning most of the lots in that community, what happens to the HOA?
- the banks sells to another developer that decides he wants to change everything and increase the fees (currently ~$180 per month).
- How can they do that?
- The developer gets a seat on the board
-If you own a one lot you have one vote
-The developer would own X lots and would get X votes
-They would be in a position to “call the shots” so to speak

The more important questions is why?
- If they were to do this people would be unhappy and new buyers would certainly steer clear
- Thus, this is not a huge incentive, however you asked for worst case

Does the value of the properties go down if no one buys and builds on the vacant lots?
- The market has already decided that homes are too high,
- You mentioned that not one as sold in over a year
- This could have the opposite effect since fewer homes equals less traffic and people (but I doubt it)
- The market will have final say.
My guess, if a developer like Ryan Homes were to make a play they could take over and bring their name and reputation, thus turning things around.

Is Prospect Homes going to hold on to Tinsley Charter LLC or will it be sold off to someone else and who that might be.
- That is a question for the bank, lawyers, and Bankruptcy court
- I would guess sold to pay off the bank / outstanding debt
- But who is in a position to buy???
- I suspect they will continue reorganize


All in all, it should not impact the homeowners association however no one would point this into writing. No wants to be in a situation that the fees go up and no one wants to buy however that can not be guaranteed.
If you want my recommendation, just call me.

I hope this answers your questions.

If you are considering purchasing a property I would like the opportunity to represent you through the buying process.

If you are still interesting in buying and/or selling, I highly recommend you partner with a Realtor and create a selling that will net you the most for your home and a buying strategy that will quickly narrow your search which will save you time and money.

You can use my “Virtual Market Analysis” to determine how much your current home may be worth. Additionally, with “My Home Finding” system you can new listings emailed directly to you. You can view these tools on my website at http://www.chriscapps.com

If you have any questions, please do not hesitate to contact me.


Sincerely,

Chris Capps, Realtor
Residential Real Estate Specialist

cell 804.896.6945
office 804.740.1644 ext. 103
fax 804.545.7224
email chriscapps@oakstoneproperties.com
web http://www.chriscapps.com

I am seriously considering the purchase of a Prospect townhouse in Short Pump. Construction has not even begun on the unit we are interested in. What are the chances that Prospect can bounce back from this? Even if they do will they have quality vendors and contractors? The sales associate is still say "business has usual" like Robbie stated, but how can I be certain?

I would contact a real estate lawyer to review your contract in depth. If it is not an ironclad contract, I would politly ask Prospect Homes for a refund of your ernest money deposit. If they refuse, have the lawyer send a letter with the threat of a lawsuit. I might also contact some news media outlets such as "12 on your side" and the adverse publicity may get you the results you are looking for.

I do not know if Propect can come out of this in a healthy way. Just my opinion.

Builders DID see this coming, or at least some did and the smarter ones pulled in thier horns and reduced inventory. Those in trouble made some different decisions that put them ( and their clients) at risk. Some had thier own mortgage sources that they induced the buyers to use with low mortgage rates. They seem to be weathering the credit storm much better than those companies who had main name banks as thier lending source. Ryan Homes is one example.

I do believe lenders in general have over corrected the sins of the past that brought us to this condition. Now they are being way too conservative in loan underwriting, making the home buyers of today jump through rediculous hoops.

In your situation, I would act as quickly as you can to get back your deposit and look for a better deal.

Attached is an article about getting out of a deal from a builder from the Wall Street Journal. I think the lesson learned here is that going to a builder without any representation is a bad idea. Any transaction in real estate has two sides, and both sides should have someone knowledgable to represent thier interests. If you signed a contract without having a real estate agent's help or a lawyer's help, you entered into a deal with the chips all in favor of the contractor. It costs you NOTHING to have an agent at your side to give you guidence. It will cost you some money to have a lawyer review a contract and suggest changes that give you more freedom.

All builders sales staff are paid by the builder to look out for his interests. They are trained to give you the impression that they are there to help you in getting a great deal. I know, because I used to pose as a buyer for a consulting firm and write a report on how well the sales staff acted to make me believe I was getting a great home at a fair price. Training was then adjusted to give the staff the upper hand.

Good luck, and if you are able to get out of the contract, get someone to represent you in your next purchase.

You have to understand the times that we are all facing, The answers if you noticed all come with realtors who are looking to add you as their clients. More builders will be facing this situation shortly. In the last 10 months we have seen everything around us fail apart.

I am sure the builders did not see this horror coming. They make money buy building homes and I am sure they are not wanting to be in this situation either.

Work with the builder. The main concern should be the finish the home that you selected. I own a Prospect Home and it is well built and they were great to work with back then.

Suggest you contact a "good" attorney to help you evaluate prevailing laws regarding Chapter 11 filing and your options under the contractual terms and conditions.