I'd drop him like a hot potato and RUN! Why do you think he'll be completely honest with you later if he's witholding this info from you now?

The inability to finance anything is a recent phenomenon entirely out of the control of any small business person. Your contractor did not know that he could not go forward until he was turned down by the bank which took some time.

If this problem has not hit you yet, it will. Personally, I would not build, or finance anything at this time unless I had at least two years of emergency funds available in case the American automobile industry collapses in the next two weeks.

If by March things are more stable consider acting as your own contractor and paying the contractors on a weekly basis in cash. You could probably save quite a bit of money and keep some people out of financial trouble.

If you get impatient you could really get hurt IMHO.

I wouldn't even consider getting any further into the project with him, and I certainly wouldn't allow my funds to be used first.

Bad, bad, bad idea to move forward with him!!!

Sounds like the builder of the home we live in currently. Our builder went completely under right after he finished our house. The good news was that he finished our house and for the most part did a great job. The bad news was that since he went under, he never got around to do any of our punchlist, and he kind of disappeared off the face of the earth after that bc he had so many other problems to deal with. Since he had such a collape, none of his subcontractors felt any loyalty to him, and even when I tracked some of them down (if they ever returned our calls), they were very slow and reluctant to address any issues with our house. We ended up doing many things on our own. Fortunately though, most of our issues were very minor. Like you though, I really really liked our builder and he did excellent work. This time around though, bc this is our dream house, we're going to make sure that our builder is financially sound.

I would steer clear of him. He is never going to have the money needed to get this thing started. If you realy like him offer to pay him flat fee per month to manage the subs and you can pay the subs/material directly. If you do move forward make sure to get a release of leins with each payment or contact all subs and suppliers and ask if they want two party checks. Don't be scared to be honest about your concerns with him.

I'd be very afraid. What if he goes under financially half way through your build? It's happening all over the country right now.

Definately do not give him access to any of your funds . He may just like a lot of people just be going through hard times because of the economy . That does not mean he's not a good builder or capable of building your home . I would call and leave a message that you understand there are some problems but you'd like to sit down and talk it over . Do you think you can get a construction loan and have him act as GC with you controlling contracts and payouts ?
Perhaps you can pay him on a weekly basis to work on the house and be
listed as GC for the loan . This way you know all subs and materials are paid
for and you don't have to risk him running off with your $$ . He will also
have a steady paycheck to get him through till his spec houses sell. I have
been GC'ing my own home currently and have saved a huge amount of $$ .
In the end it could be a good thing for both of you . Good Luck

It would be another sad story if he was going through bad times because of the economy. The bigger problem is that he has ignored her since Thanksgiving when they were scheduled to begin the build on 11/3. He has not returned phone calls or emails, and she learned of his business problems through another source.

He absolutely had a responsbility to shoot straight with the OP - which he didn't. Regardless of his ability to manage a build, he shouldn't be anywhere around someone else's money under the circumstances. I don't get how the OP says that he is great to work with...he doesn't return calls, he pushed off their job to work on someone else's (perhaps a blessing in disguise), etc...those are not things that would make me think he is great to work with, even if the financial situation wasn't in question.

"We also have about $150K that we will put toward the house, should we let him know that and use it to get started?"
NO- NO -NO- NO.Why would you want to lay all your cards on the table when he isn't even enough of a professional to return your phone calls? As you describe the scenario, he absolutely will NOT have your house built by 1 July, I promise you.
" Because the economy sucks he and his wife both had to take jobs to support their family." WAAAHH. Welcome to the real world. If you give him your checkbook, you and your DH will be the ones working two jobs.
Sorry to rant - I'm just baffled that you would even consider moving forward with this builder

We are experiencing something similar.

My husband retired from the military 18 months ago. We had enough equity from the sale of our last home to finance this build. The builder appeared to be very professional and claimed to be in good financial shape.

The house was started last March, and still not completed. Due to the economy the builder started borrowing from Peter to pay Paul.

He has a couple of unsold, unfinished spec houses as no one is buying at this time. (We suspect he used our first 3 draws to finance these 2 houses).

Since July we've had to take over the payments to the subs, after we'd already paid him $140k plus!

The subs show up only when they feel like it. The builder has not shown up since August, does not return phone calls or emails.

The building supervisor, DH and myself are trying to get our house finished.

It has been a painful, expensive experience.

If your builder is avoiding you now, and hasn't been upfront with you, what will it be like once you start building?

Your husband may like this builder but this is not the military where personal accountability is front and foremost!

Have a good think about things, interview a couple of other builders, ask friends and acquaintances for references and take it from there.

As nice as it would be to have a new home ready by July, I'd try hoping for the end of the year!

The inability to finance anything is a recent phenomenon entirely out of the control of any small business person. Your contractor did not know that he could not go forward until he was turned down by the bank which took some time.

If this problem has not hit you yet, it will. Personally, I would not build, or finance anything at this time unless I had at least two years of emergency funds available in case the American automobile industry collapses in the next two weeks.

If by March things are more stable consider acting as your own contractor and paying the contractors on a weekly basis in cash. You could probably save quite a bit of money and keep some people out of financial trouble.

If you get impatient you could really get hurt IMHO.

I agree w/the others to NOT build w/this guy. He hasn't been upfront with you, and I've read of builders folding their companies (especially lately) and you can't get your money back or your house completed. While builders are squawking that they can't get loans right now, from the bank's point of view they are a poor risk because so many of them, even big national builders, have been defaulting on loan terms or on whole developments.

This is good time to buy a house rather than build one.

I would never deal with someone who was not honest and upfront right from the start. And getting things done in a timely manner or when he says they will get done seem to be lost on him. That is one of the most important aspects of building a house. I would really recommend getting another builder.

That being said, if time is not important to you, is there any way you could manage the money aspect of the build? Our builder offered us two options. Either he would set up a sub account for our build and write the cheques or he would forward us all of the invoices and we could write them. If I did not know the person personally I would insist on managing it myself. He also only builds custom homes so that makes a difference. Building a house has enough headaches without worrying about whether your money will be lost. I know where your husband is coming from but the possible headaches in his future are hardly worth sticking with this guy.

It is easy to say the prospective builder should have contacted you -- and I say it too. BUT, as mightyanvil stated the current financial situation is topsy-turvy and your builder may be in a situation where he is completely overwhelmed and fighting to survive (watash comes first). I don't know if I would completely drop him if his reputation is so good but be very cautious and no money up front. As for advertising your funding, any good builder will want proof you can afford to build (be it a loan or secured funds).

Also, listen to emily with regards to your husband's desire to stick with this builder. I've been retired for 13 yrs and I still have trouble with the overall lack of loyalty and professionalism as compared to the military. In mine and some fellow retirees experiences, the loyalty issue is one of the hardest for career military folks to deal with (that includes employment). This may offend the civilians on this site but you will find the likes of brickeye, jasonmi, mightanvil, worthy, and a few other pros on this site far more common in the military than in civilian life.

I'm sure I've really upset the apple cart now...

Terry
USMC (Ret)