At one time, the factors driving the home-building decision were location,
construction quality and bottom-line value. The financial health of the company
building the house was a comparatively minor concern. But as headlines from
2008 and 2009 attest, the recession forced many home builders to close. These
days, the builder’s financial stability is a major issue for prospective buyers.
While not foolproof, here are a few tips on how to determine the financial
stability of a home-building company.
First, visit several of the builder’s projects — not just the one you are
considering — and note building activity. Several homes in various stages of
construction are a sign the builder has the financial capacity to complete your
home.
Check that entrance monuments and common areas are well maintained. Are
undeveloped building sites neat and tidy?
Then ask about sales and numbers of building permits issued and observe how
many homes are being built. Talk to homeowners served by the builder. Are
warranty issues attended to promptly?
Check third-party resources, such as the Better Business Bureau, which may have
a rating on the builder, and Dun & Bradstreet, which may have information on a
builder’s credit history. And there’s no harm in asking if the builder has a
forward-looking view by investing in more land and more floor plans.
In summary, approach the builder-selection process by observing and asking a
lot of questions. You’ll sleep better at night.
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