4 July 2007

Building Homes in Florida --- a nightmare

Building in Cape Coral a Homebuilders Perspective


Where do I begin with this mess?
We are homebuilders in the cape, and cannot believe what is going on out there. The general public and Florida lawmakers need to be aware of this situation.
If you drive around the cape and see alot of unfinished homes, have you ever wondered how that transpired? Well, let me tell you!
Situation #1 Customer comes into the builders office and wants to sign up for a home. Customer signs on the dotted line, gets there loan.....sometimes the bank is on the NOC/sometimes not! The price of the home is divided into 5 draws. Builder gets a deposit draw does work, then gets another draw.
Builders are having subs do work, getting draws, and then not paying subs.
Subs file liens, title co does not do title updates, builder gets other subs to finish trimouts etc. Builder gets another draw. Now the builder is 75% done with the home. Builder has profited (example 350k home w/out lot price in there)
$280k builder maybe paid for some earlier subs work, say concrete and site work 40k
builder now has $240k in his pocket. Bank isn't aware, homeowner has gotten
a few nto, but builder says its standard proceedure, that bill was paid etc.
Now bank has a title update! Bank says no more draws....there are liens out there. Customer wonders why there is not activity on there home, now that
there interest payments are getting larger based upon amount borrowed.Bank does not relay no draws to builder to homeowner. Homeowner has never built before and isn't sure of building time frame.
Builder then decides to exit. The property has 140k of liens to subs,
some subs didn't file nto/per builder request? and the property is 70k away from being completed. Now a new builder tries to complete it.
plus the liens have to be contested , paid, or neg. The new builder goes out to bid.
New builder checks property and the soffit panels are missing for scrap metal
$500, The a/c copper lines have been cut $500, a couple cabinets are gone
$300 and the pocket sliders have been ripped out taken into a bedroom and the glass broken out and the frames and used for scrap metal. with a rock, (that the vandals just left on the floor, with the broken glass) a bathrom door is missing $50.
Why aren't the police checking for "new metal slider frames: at scrap yards?
There are areas with 200 properties that are going through this right now!
The builder comes in with a price of say 85k to finish.
Bank has 70k draw money left, new builders bill is 85k to handle the mess, and warranty work that has been done by numerous subs he didn't know, and
several subs doing electrical, in some cases three companies completing one house's wiring.
So at the end of the day, the homeowner has a lot he bought for 100k,
had a builder build a 350k home on it. So instead of the homeowner having a 450k dream home, this is what he has........

a lot for 100k
a home 75% complete
a home with 140k liens on title
a new builder who will finish for 85k
draw money left in loan 70k
amount buyer must come up with to finish home 15k
liens contested, some stay,some go away
to leave a balance of 90k

Now builder has helped client get everything on track, homeowner borrowing against his personal credit lines to pay liens and come up with the shortfall
of what is needed to complete construction.
Now bank says"the borrower has gone over the aloted time for construction,
now we have to protect ourselves, and at our discretion, we will need a new appraisal and will requalify borrower for the loan. If the home does not appraise for the loan amount, we will need to put that borrower in default".
That came from a bank that has written loads of loans in cape coral.
The market has taken a nose dive, the homeowners lot has gone down say half of its value,.....mr banker, I can tell you now, that it will not appraise for what it did a year ago!
So what does this homeowner do?
He has a home that he double paid for on some subs work.
Essentially he has a home that has cost him 100k lot
350k const 90k liens 15k to finish over draws left=$555k home and lot
that will appraise in todays market at about $370k
So he is upside down $185k, instead of the 80k in todays market.

So the cape has hundreds of these homes scattered around from other builders doing the same thing, leaving the homeowners in a bad situation.
Where is the previous builder? Well he is still building! By the way, he built
a mini mansion for himself and didn't pay subs on that either......but his home got a CO, where as the (9) homeowners we are working with didn't get their CO, just problems. Plus he has the cash from the draws.
This needs to stop!!!!
This is the atmosphere in the cape-
Hundreds of half finished houses, hundreds of empty new houses just sitting vacant, 19k homes for sale oin lee county. Eight hundred forclosures last month.
When I drive around the cape north of veterans, and see all this, like the lady I saw struggling to put out the last of her belongings , she couldn't take with her.....(she was probably losing her home) it gives you an earie feeling that
I have never experienced in my life before.
Ps, another builder who did this has started a new company in the cape, and a bank just loaned him over a million to build his personal home!
After checking more closely on this one, he changed his first name on his license to the state, but forgot, and put the first name he used on his old license on the NOC of
his new mansion being built.
This builder left his homebuyers in forclosure, didn't finish homes, we could not even help them!
They only had home loans for the under 200k range.
What is this ............people are getting two loans and one closing to avoid the pmi insurance. That insurance is so if the homeowner defauts there is something for the bank to fall back on to resell the property.
Ps, even the million dollar loan has this. Who is allowing this behavior.
I like cape coral, but all of this is wearing on us, and it leaves us wondering
what is coming down the road. What happens when the lenders go under?
Helping these people move forward is somewhat rewarding, with alot of
problems at every turn most loans take 2-3 months each to get on track. My emaillog is the thickness of a phonebook!
It is very frustrating when the lender gives you the title co name, and they are out of business, and then you go through three more to finally get the
one who is still in business, and they are handling the work from 3 out of business locations so it takes weeks to get anywhere.
We called a homeowner last week to give them a heads up about ther home
with liens and that they might want to look into it. We told them they are so far under we cannot help them, they stated that it is under control.
Some builders advertise a cheap price and rob peter to pay paul.
As long as new deals are signed they can go on for a very long time, until
no new deals are signed, then someone is left holding the ball.
We can have a sign telling homeowners that we can build there home for
100k, but after the builder starts nearing the end of the job and the house costs
150k to build, as long as the builder signs new deals and subs are floated
payment it won't catch up until new deals are not signed.
Each deal I have worked, the identical home has ranged in price(construction price only) same areas of town, same options,and time frames 20-30k.
What does this tell you? Someone was building for cash flow only.
Maybe with a home builder in high places, this will all change.
P.S. These homeowner are too distraught with what has happened to them they never file anything against the builders.
Some I have worked with are on their 2nd or 3rd builder on one house!!!

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