field report: financing thaw in seattle
A builder friend in Seattle emailed me this week with an experience
he thought worth sharing. A major remodeling job he had bid on and lost
to a competitor just bounced back his way, he wrote. It seems that no
bank had enough confidence in the winning bidder to finance the project.
That's good news for my friend and bad news for the other builder, but
as my friend explains, it may also be a sign of better days to come for
the industry as a whole. Here's what he has to say:
What amazes and impresses me is that 1) this
project is going out for bank financing, the first in almost two years;
2) several banks are willing to lend money for the project; and 3)
finally, finally, finally, banks are starting to closely examine the
financial strength of the builders, as they used to do with every
project years ago, to make sure that the owner (and the bank!) are
We will, of course, have to
undergo the same financial analysis as the other builder. But I have no
doubt that, with our cash on hand, standing line of credit, and history
of no aged accounts receivable, we will clear that hurdle easily. When I
got wind of this coming down, I even had our company's banker contact
the mortgage broker and assure them of our financial bona fides, so
those skids are well greased.
bottom line is, it's opening back up out here, and it's opening up in
the way it should have always been, with banks lending as if it were
their own money and as if they had a vested interest in protecting their
customers and themselves.
Over the past
couple of years we've seen lenders go from shoveling money out the door
to all but barring the door, even to well qualified borrowers. If the
story above is any indicator, they may have learned their lesson.