The best way we have found to ensure the financial safety of a client is to have the client own their lot outright.  Whether buying in one of our Chicago area subdivisions, a tear down site, or a random vacant lot, it is far more important that the client purchase the home site before engaging a builder.

A “bundle of rights” comes with ownership, and that means that anything placed on the lot becomes the owners’ property as it is affixed to the structure.  That becomes very important should the builder become incapacitated either financially or physically.  In the early 1980’s mortgage interest rates climbed significantly, as high as 21% at one point.  Builders headed for the exits leaving their clients with little more than a receipt for the down payment.  We’ve seen this happen here in the Chicagoland area, as well as many city’s throughout the country, during the recent economic downturn.  If a builder has loans against a property, and the market turns sour, the banks are in the position to foreclose.  The client will be left without recourse and could lose all they have invested.

As a Realtor, I have sat at many kitchen tables listening to husbands and wives recount their losses and placed their homes on the market because their initial investment in their dream home was lost when the builder went out of business.  I vowed that would never happen to my clients when I became a builder, and it hasn’t in over thirty years of building custom homes. It matters not whether you build in Glenview, Lincolnshire, or Hawthorne Woods, on a city lot or twenty acre estate- the principal is still the same:  buy your lot, then build.

Whenever we begin to discuss a new home project with a potential client, we start out by discussing things other than what great builders we are.  We prefer to discuss underlying issues that are mundane, yet critical to a successful project.  The first question we ask is who owns the lot to be built upon?
–Greg Miller