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Friday, September 22, 2006

Are Arizona Home Builders Getting Desperate?

In the last few days, I've received more emails from builders than I usually receive in a month.  Granted, I'm on several builders' mailing lists, but I mean I've received a BUNCH of emails offering everything from 8% co-brokes to no closing costs.  The builders seem to be hurting even more than other sellers right now, and they're trying anything they can think of to get rid of their inventory.

I have a friend who recently bought a new home, but hasn't sold his old home yet.  His new home is almost completely finished, so he's at the point where he might have to cancel the new home contract.  He really likes the house and wants to go through with the purchase.  I'm not sure if he could qualify for both homes, but he doesn't want to be stuck with two mortgages anyway, especially with all the homes for sale right now.  So he went to talk to the builder's Sales Representative and without even trying, the Sales Rep offered to take $30,000 off the price of the new home so that he could lower the price of his old home by $30,000 and hopefully sell it quickly.  And if his home still didn't sell, they even offered to defer his new home payments until his old home sold!  WOW...that's a huge change from the Builder Sales Reps I talked to a year ago!  They didn't even want to talk to Realtors®, wouldn't sell to investors, and many even required buyers to prove they were going to live in the house to write a contract!  Funny how much things can change in just a year!

And things will change again, but they may get a little worse before they get better.  I think we have about 6-8 more months of high inventory and slower than normal sales, resulting in price reductions.  As sellers lower their prices and the inventory is absorbed, things should pick up again.  I expect the market to improve next Spring, just in time for the busy summer months.  So between now and then, buyers should be able to negotiate some pretty good deals, especially on new homes.

One thing I highly recommend to anyone buying a new home is to read the contract well...especially the fine print!  Builders usually use their own contracts instead of using the standard AAR contract that's pretty fair to the buyer.  Builder contracts tend to be more one-sided, giving the builder more rights than the standard contract would.  They throw in all kinds of little clauses that you need to understand fully.  One of these clauses that a few builders throw in restricts your right to hire a Home Inspector (full disclosure - I am part owner of Homewerx Home Inspections!).  Brown Family Communities has a really ridiculous rule that the Inspector has to be on their "approved list".  To be on this list, the Inspector has to have quite a bit of insurance, which isn't a problem for most multi-inspector firms, but some of the one-Home Inspector companies may not have the required Workman's Comp and/or the $1,000,000/$2,000,000 general liability policy.  I don't have a problem with the insurance requirement so much, as the other requirement Brown Family Communities has.  They require the Home Inspector to sign an agreement assuming a ridiculous amount of liability for things which the builder would otherwise be liable.  The agreement also requires the Home Inspector to provide a copy of the report to the Builder, which usually isn't a problem.  However, according to the ASHI® Code of Ethics, a Home Inspector cannot release a copy of the report to anybody other than the Client without the Client's prior consent.  My home inspection company, Homewerx Home Inspections, meets Brown Family Home's insurance requirement, but refuses to sign the agreement, and therefore does not perform inspections on Brown Family Homes.  In addition to having a problem with the agreement itself, I have a problem with any builder or seller that wants the Home Inspector to make agreements with them.  I think some builders only do that 1) to make it a hassle for the buyer to have a home inspection, and 2) to get on the Home Inspector's 'good side' before the inspection by adding them to their 'approved list'.  Several years ago, when my company used to do inspections on Brown Family Homes, we saw their 'approved list' and there were only like 5 or 6 inspectors on it.  Out of the hundreds of Inspectors that work in the Valley, it's truly a shame for any builder to limit their buyers to so few choices, most of whom were not even ASHI® Members.  D.R. Horton (formerly Continental Homes) is another builder that requires the Inspector to sign an agreement, although their agreement is not as ridiculous as Brown Family Homes.

Okay, so I got really off track here!  Sorry, but hassling with builders is a subject near and dear to my heart!  My point is, you should be able to negotiate a really good deal if you're buying a new home, but be sure to know what you're getting into, and what your rights are under the contract!  Also, make sure you check with other mortgage companies before you go with the builder's financing option.

If you are looking for a new home and you can move fairly quickly, be sure to check out the builder's spec home inventory.  Specs are homes that are already built and they need to sell them!  Here are some links to spec homes and other builder information.  I don't necessarily endorse any of these builders, the links are just from the few builder emails I have not yet deleted!

Fulton Homes Spec Home Inventory
Element Homes Spec Home Inventory
Taylor Woodrow Homes - Phoenix area homes
K. Hovnanian Homes in the Phoenix area
Camelot Homes in the Valley
US Home/Lennar "Everything's Included" Home Communities

Visit Shannon Hubbard's Home Page     Written By: Shannon Hubbard
Realtor®-Investor

Great American Realty, Inc.

Cell: (480) 695-6672
Email me

 

Lennar Homes Communities in the Valley

Casa Grande
1. Signatures at Villago

(866) 426-1826

GILBERT
2. Inaugurals at Highland Groves
(480) 503-0165
3. Signatures at Highland Groves
(480) 497-5922

GOODYEAR
4. Calappa Place Signatures
at Palm Valley

(623) 535-7597
5. Coquito Trails Estates
at Palm Valley

(623) 536-0418

LAVEEN
6. Inaugurals and Signatures
at Rogers Ranch

(602) 237-7597
7. Signatures at Trailside Point
(602) 237-0005

MARICOPA
8. Inaugurals at Desert Cedars
(866) 568-5270
9. Inaugurals at Glennwilde
(866) 568-5270
10. Inaugurals at Rancho El Dorado
(520) 568-7524

MARICOPA (Cont.)
11. Signatures at Desert Cedars
(877) 877-7966

PHOENIX
12. Estates at Carefree Crossing
(623) 434-0863
13. Estates at Stetson Valley
(602) 374-9141
14. Signatures at Stetson Valley
(623) 434-0544
15. Legacy at Stetson Valley
(623) 434-0678

QUEEN CREEK
16. Inaugurals at Skyline Ranch
(480) 677-2292

SURPRISE
17. Signatures at Greer Ranch
(623) 544-3450

Tolleson
18. Inaugurals at Farmington Glen
(623) 478-9800
19. Inaugurals at Tres Rios
(623) 932-9455

WADDELL
20. Laureates at Cortessa
(623) 328-9157

Posted by Shannon Hubbard, AZ Realtor & Computer Guru on September 22, 2006 | Permalink

Comments

I bought a home from Brown Family and couldn't find a home inspector that would do an inspection for me. They gave me their list but I didn't want to use an inspector on their list so I called around. but most of the inspectors I called said they do not inspect Brown Family Homes. this was a few years ago, and after living in the house awhile, now I know why they did not want me to get a good inspector.

Posted by: Jason T. | Sep 23, 2006 8:03:08 AM

Shannon, I think many builders realize what's going on, what the market is and that things may get worse before they get better. And they make a business decision to do what needs to be done and to get out with their skin while they can. Not an emotional decision ala, 'the guy down the block sold for xxxx 6 months ago, so I should...'
Homeowners who want to sell might learn something from these builders.
John

Posted by: john schneider | Oct 13, 2006 6:24:14 PM

I absolutely agree with you, John. Sellers should look to the builders to see what it takes to sell a home in today's market. Willingness to negotiate is a must in the current market.

Posted by: Shannon Hubbard | Oct 24, 2006 9:49:02 AM

I bought a home from Brown Family Communities in Prescott Valley, Arizona. Because everything that happened to our house was considered normal according to their employees, we were forced to hire an engineer. Most recently we hired our own Home and Mold inspectors as well. After sharing our engineers report with Brown Family Communities, we went ahead and let them send out one of theirs. The differences in reports were laughable. According to theirs, the problems were possibly because of our landscaping and didn't even mention the hot-water leak that was discovered 6 months too late under the foundation. Fortunately for us, our engineers report was completed prior to the landscaping they referenced. In the next week or two you'll be able to read my complete story at BadFamilyCommunities.com and I'll have both reports posted.

Hire your own inspectors!

Posted by: BadFamilyCommunities | Nov 19, 2006 6:19:37 PM

BadFamilyCommunities.com - I look forward to hearing more of your story. I'll be sure to stop by and check out your site in the next few weeks.

Posted by: Shannon Hubbard | Nov 19, 2006 7:52:06 PM

Hey there BadFamilyCommunities, do you think that you could put something on your website, so that I could get in touch with you. I have questions, because I am getting ready to purchase a home in Pronghorn. Could really use more information. Please e-mail me at fligthrnmedic@msn.com. I really need to talk to you.

Posted by: Paul Gibson | Nov 25, 2006 1:10:57 PM

Because of the great lengths I've taken, Brown Family is going to do the repairs we've requested. Whether they can fix the shifting foundation or not is still a question mark. They have agreed to reimburse us for our out of pocket expenses for the engineer and inspectors. Unfortunately, the severe mold damage (confirmed Toxic by the EPA and Western Technologies) that they were responsible for doesn't warrant any compensation. I'm investigating the damage the mold has done to our equity/home value with the EPA, real estate agents, The City of Prescott Valley, a lawyer, an insurance company, and appraisers. I still have a lot of work to do, but that comes with buying a home from Brown Family Communities.

My website hasn't been completed because of a warning I received from an employee of Brown Family Communities. Apparently they have filed lawsuits against 6 others that created websites, winning 5 of them. It was extremely intimidating, but I'm just being extra cautious because of who I'm dealing with. If my attorney deems it safe to share my story, photos and audio files :-O , you guys are in for a first-hand experience that will leave you speechless.

The repairs are planned for the 11th of December.

Posted by: BadFamilyCommunities.com | Nov 29, 2006 6:57:57 PM

I feel obligated to warn people about the home builder by the name of David Brown. David Brown Community housing. DON'T BUY ONE OF THEIR HOMES!!!!!!!!!!!!!!!!!!!! You will be very sorry. They are built to last maybe 3 years, then I can assure you they will fall apart! The walls have no installation, paper thin, your fist can go through them easily! Floors are not glued down, every step you take is heard throughout house. The outside plaster is done by amatuers. Tile, cheap!!! Crooked, just disgusting workmanship. It appalls me to think that someone would spend their hard earned money or take out a loan to spend on one of these horribly built cheap houses. I wish they would be shut down, and no wonder no appraisers will deal with them. Someone do something to close them down!!!

Posted by: Don French | Mar 22, 2008 4:38:25 PM

Thanks for the warning, Don. I think Brown Family Homes is the same as David Brown Communities, but am not totally sure. As I mentioned in this post, my home inspection company does NOT do inspections of new Brown Family Homes. We will inspect them after the buyer closes escrow and the house is no longer owned by the builder, but that might be too late for the buyer to catch certain problems. Brown Family used to be very difficult with home inspectors, requiring them to be on their "list of approved home inspectors". Although we met their requirements, we were not willing to jump through their hoops because they required us to agree to a ridiculous release and indemnification clause. We have not even attempted to deal with this builder for the past several years so I can't say for sure if they still have the same policies related to home inspectors. But from your comments and others I've read, I'd guess they're still up to the same old tricks! And there's probably a good reason they only want their 'approved' home inspectors to inspect their homes!

Thanks again for stopping by, and best of luck with your home.

Posted by: Shannon Hubbard | Mar 25, 2008 11:44:26 AM

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