Builders need to re-evaluate their holdings, perform demand studies and go to their lenders with those revised numbers, says Patrick Duffy, a building industry blogger and consultant with MetroIntelligence Real Estate Advisors , a division of Beacon Economics. It just might be time for a workout with your bank.
"Banks are willing to take 20 to 30 cents on the dollar. In some cases the banks are just looking for the easy way out. ... It's up to the builder to convince the banks that with a little bit of time and mercy, the banks can get twice that return," says Duffy.
Don Todrin, principal of Todrin and Associates , says swiftness is the key. "You have to do a pre-emptive workout. You have to downsize now. My position is this: get in front of the train," he says. Builders who might not have placed as much emphasis on bookkeeping and now must review numbers daily. "If you're going to be in business, then be in business or get out as fast as you can."
Lately, says Todrin, workouts have followed a similar restructuring and consolidating plan. He points to five tips for before and during discussions with banks.
For more on working out your workouts, visit www.housingzone.com