Is it a bad idea to purchase in a new home community where the builder is in chapter 11?

Asked by Jen, Portland, OR Mon Jun 22, 2009

I'm interested in Taralon.....great builder, beautiful surroundings, but about only 15 homes sold.

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Lori Winterhalter’s answer
Lori Winterh…, Agent, Happy Valley, OR
Tue Jan 5, 2010
Hi Jen I am REMAX Realtor & work with many buyers & sellers in the Happy Valley & Clackamas areas. I have a lot of information on the Taralon subdivision & know an executive that works at Legend Homes that lives in Taralon & selected to have his own home built in there. He is very up to date on what is happening in the subdivision. Let me know if you have had your questions answered or if you have any other questions & can see about knowing the most current information with the Chapter 11 on Legend Homes & how Taralon is coming along. I did just here thru word of mouth recently that the townhomes that were planned to be built on the front side of the subdivision across from the model homes are possibly going to begin breaking ground this spring. Warm Regards, Lori Winterhalter, REMAX Equity Group, 9200 SE Sunnybrook, Suite 100 Clackamas, OR 97015 503-504-6173
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Debra (Debbi…, Agent, Livingston, NJ
Mon Jun 22, 2009
Jen HI!

Personally, I would be extremely wary of buying when the builder is in chapter 11 - what if he doesn't emerge successfully?
On second thought, I probably wouldn't touch it with a ten foot pole - not in this unstable economy. There are too many scary pitfalls you could be facing in the future. Financing will probably be a problem , too, under those circumstances. I can't imagine a bank loaning you money with the builder in chapter 11.

Why not keep an eye on it, and see what develops. I am sure there will be plenty homes avaialble if the builder works out his financial issues. You can decide then what you want to do. Don't take the risk now!
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Tom Inglesby, Agent, Portland, OR
Mon Jun 22, 2009
Jen great question and it is coming up more often. The thing to worry about is how long will you have empty lots round you? The upkeep of mowed long grass blowing weeds into your yard? Wonder if the builder sells the lots off at a real discount and the price of the new homes are way below the value of yours? Most land has dropped 30% or more. Are the streets all completed along the neighborhood or does there still need to be a final paving? Who is going to pay into the HOA for the upkeep of the area? You might get a real deal now but I would not buy until the chapter 11 is settled. Talk to an attorney to see how you can be protected. I would bet next year the prices will be much lower after we have a raise in interest rates this fall.
Good Luck

Tom Inglesby, Broker
RE/MAX Equity Group Inc.
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Dorene Slavi…, Agent, Torrance, CA
Mon Jun 22, 2009
I would be a little worried because it might be difficult to correct any defects that might be found in the constructon of the project. Speak to your Agent and It would not be a bad idea to consult a lawyer as well.

Best of Luck to you!
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