Unbuying Condos

There's this condo under construction a little ways from my house. One afternoon, I stopped by the sales office curious as to what the units were selling for. Long story short: More than they were worth. But they finagled my email address out of me in exchange for some refreshments. So now I get this ALL-CAPS EMAIL from them yesterday:

SAVE THE DATE -- THURSDAY, DECEMBER 13 -- 5:00-8:00 PM -- REFRESHMENTS WILL BE SERVED

FINAL RELEASE YEAR-END SALES EVENT -- AND YOU'RE INVITED!

GREAT UNITS WITH BALCONIES AND VIEWS THAT ROCK HAVE BEEN RELEASED! IF YOU VISITED OUR SALES CENTER IN THE PAST AND THE UNIT YOU WANTED WAS SOLD, THEN THIS IS YOUR CHANCE!

WE'VE TARGETED 10 MORE SALES BY YEAR END FOR THIS EXCITING PROPERTY -- AND HAVE FIVE TO GO -- TO REACH OUR GOAL, WE'RE OFFERING SPECIAL INCENTIVES THROUGH 12.31

TALK ABOUT A WIN-WIN -- WE HIT OUR SALES TARGET OF 10 NEW CONTRACTS BY YEAR END -- AND YOU GET A GREAT DEAL ON A SPECTACULAR CONDO!

This all kind of smacks of desperation, eh? Meanwhile, I hadn't realized you could unbuy a condo you'd already bought from a developer, but the only sense I can make out of the claim that "if you visited our sales center in the past and the unit you wanted was sold, then this is your chance" is that people have done just that. My understanding of the data is that central city areas have been weathering the shitpile's collapse much better than have the fringes (basically, when prices fall, the demand pattern collapses inward toward the center and its people who owned in the rim who are really left holding the bag) but it's hard for new developments everywhere, especially ones like this one that are too far along to convert into rentals.

Either way, there's no call for this much capitalization.

Comments

It smacks of a declining market, but I wouldn't call it "desperation"--not just yet. When the emails say "absolute auction," that means desperation.

Posted by y81 | December 6, 2007 8:45 AM

could be that those condos were in the process of being sold and then the deals fell through before closing. . .

Posted by southpaw | December 6, 2007 8:48 AM

Either that, or oftentimes the condos will say "Sold" in the sales office, but they're just being held with a deposit check for $5,000 or so. Many people in my condo complex put the money down early, to reserve a unit, and then attempted to gauge demand and whether or not they wanted to try to flip it. I imagine with the market headed south, a lot of these potential flippers have taken their deposits back...

Posted by TheF79 | December 6, 2007 8:56 AM

I don't know if this is what happened here, but often these things are sold in parts - you pay a small amount (10% or 20%) when you sign the contract, then additional amounts as construction milestones are reached. Maybe the buyers got cold feet or ran out of money after the initial payment.

Posted by Ginger Yellow | December 6, 2007 8:57 AM

A sales contract is only an agreement to do a sale at some future date (the 'closing' date)-- the (potential) buyer can back out, normally at some cost. The big constraint is on the seller-- once there's a contract, the seller can't agree to sell the property to anyone else.

Posted by MattF | December 6, 2007 8:59 AM

TheF79 is probably right - the "sold" condos were just units on which somebody had put a deposit, not completed a purchase. But I doubt they get their deposits back. I think they probably forfeit them.

Posted by Richard Riley | December 6, 2007 9:02 AM

Either way, there's no call for this much capitalization.

It's an occupational disease of real estate; people who routinely draft seven-figure contracts in 8-point fonts have to put the really important clauses in all-caps.

Posted by Eric Scharf | December 6, 2007 9:48 AM

What, you couldn't come up with a plausible fake e-mail address? Or give them Jonah Goldberg's or something?

Posted by Devin McCullen | December 6, 2007 9:49 AM

Yeah, that "sold, then we got it again" smacks of me of a lot of fallen-through financing as the banks suddenly tightened up on their lending criteria. You're usually given 30 days to come up with the $$ after you put down the nominal $1K or whatever to hold it.

In fact, this is how I got my present condo--it wasn't even on the market when I started looking, then a week later, when I had decided to go for a 1-bedroom rather than a 2-bedroom, they showed it to me because the financing had fallen through.

Posted by grumpy realist | December 6, 2007 10:34 AM

"they finagled my email address out of me in exchange for some refreshments"

"THURSDAY, DECEMBER 13 -- 5:00-8:00 PM -- REFRESHMENTS WILL BE SERVED"

"smacks of desperation, eh?"

No, snacks of desperation!

Posted by rea | December 6, 2007 10:52 AM

You mock the "VIEWS THAT ROCK"?

Posted by SoCalJustice | December 6, 2007 11:15 AM

Nope, in most places, when buyers back out, they get the deposit back. The only place where the sellers regularly keep the deposit is New York City. About 30% of the initial purchasers of the building I worked on as a developer (the SF Watermark) backed out before actually buying. We "sold" one unit three times.

This sounds like a pretty normal sales spiel from real estate brokers. They're always over the top and sound a little bit crazy. Except for the all caps. Yes, providing snacks does actually work in convincing people to buy, unbelievably. $6 sandwiches help people decide to spend $1.5 million on a condo. (don't ask me, it works. we got sales spikes every time we handed out munchies).

Posted by burritoboy | December 6, 2007 12:40 PM

Even if you lose the deposit, in a lot of markets that is probably better than going through with the purchase, losign $5K or so is a lot better than paying $50K more than the place is worth.

Posted by Eric K | December 6, 2007 1:39 PM

Here in Portland we are seeing something similar. Many of the new condo towers have been under construcion for 2 - 3 years. At that time, units were selling out fast, so people put down deposits when there was little more than a hole in the ground. A lot of situations have changed in betewen - from the houses these people owned not having the equity the owners expected to the credit tightening mentioned above.

So now, the Title compny that was holding the earnest money in escrow is suing the buyers and developers to determine who should get the money. From my own experience I thought this money was non-refundable, so I don't see what leg the buyers have to stand on.

More details: http://www.oregonlive.com/oregonian/stories/index.ssf?/base/business/1196043915236090.xml&coll=7

Posted by tiparillo | December 6, 2007 2:01 PM

"Either way, there's no call for this much capitalization."

Har, har. I hadn't realized MY did puns.

Posted by Jeremy | December 6, 2007 7:09 PM

$6 sandwiches help people decide to spend $1.5 million on a condo. (don't ask me, it works. we got sales spikes every time we handed out munchies).

Probably because all the blood goes to the stomach, leaving the brain to fend on its own.

Posted by daveNYC | December 7, 2007 12:53 PM

It's not a pun, it's a double entendre.

Posted by Gerontion | December 7, 2007 9:39 PM