Buyer Beware

Folks you have a golden opportunity!

Buyers have lower interest rates, lower prices, and an average of about 6 month inventory which affords a buyer CHOICE. But statistics showing the inventory to be shrinking are an indication that a buyer does not have an infinite amount of time to buy. Thus, my suggestion that there is a window of opportunity.   I see choices really opening up in the 500k-800k range of condo prices. (Examples: Adams Row, Beekman Place, Bishops Gate)  And I see the 1 bedroom/den condos in Mt Vernon square that 2 years ago were selling for  over 500k and up now battling it out in the mid 400′s. (Examples: Several new fabulous listings in the much sought after Whitman, the less luxurious, more sterile City Vista, and the oddly designed spaces of Madrigal Lofts)  Special note between the Madrigal /City Vista and Whitman: The Whitman (2006) has already gone through its initial adjustment stage, has a strong board, sound policies and tested, tried and adjusted budget.  The condos are well-priced (you are saving the initial  extra cost of brand new–but getting a great product without the intial premium builders demand for “brand-new.” Whereas, with the Madrigal/City Vista you have builders desperate to get their buildings sold out, now trying to get rid of their ugly ducklings. (Question: why hasn’t City Vista sold out yet, while Whitman has in about the same time frame?)  Then there is the other new condo developement, 1010Mass, whose prices blow the top off Mt Vernon Square. With a product from the same builder as the Whitman, this place still has not sold out.  And their units SIT.

Let the Buyer Beware

In desperation, the developers of new condos have been trying to lure buyers in  by offering discounts “if you don’t work with a Realtor” supposedly to “pass on” the savings to their unrepresented–and unwitting–buyers.  (But why don’t they want a buyer to be properly represented? Do they have something to hide?)  When the condo is already 40-50k over market, a 3%  brokerage/agent commission “savings” would be $14,000. Still leaving 26-36k left to take them down to the market level. Hardly a significant bargaining tool. But that is BESIDE the point. It doesn’t make sense that listing broker for the developer will “throw in” their agents hard-earned commissions (sitting around a sales office) nor their early-on contractually arranged percentages just so their seller/developer can sell cheaper.  IT IS A PLOY!

The developers want to lock-in buyers who will bear all the risk in such contracts.  (Have you read one lately?) Let the buyer beware: for re-sale homes and condos there is a GCAAR-approved Regional Contract that protects buyers.  (ask your Realtor) Whereas with these new condo projects the seller/developer has lawyers draw up a contract that they insist is the only one you can use to purchase. Who does this contract protect?  The developer. I have recently read several of these builder’s contracts (I was lucky to see one. They don’t want these contracts out in the public. In fact, they want you to sit down and read it in the office while they fill it out for you!) You have an absolute right to get a copy, read it, study it, take it to a trusted real estate agent etc.  You could even demand the use of a GCAAR regional contract with special new condominium addendums. (Remember who is in the drivers seat in this market! ) In one of these “builders contracts” I read a paragraph that FLOORED me:  It read something to the effect that (and in bold print) BUYER UNDER NO CIRCUMSTANCES WILL BE ENTITLED TO USE ACQUISITION OF FINANCING AS A CONTINGENCY FOR THE PURCHASE OF THIS PROPERTY. So, the developer expects you to either A) pay cash or B) Use a lender but carry ALL the risk if the lender could not get the loan through–in which case you could lose your $10,000 earnest money deposit.  Another did the same thing but the contract would not allow a home inspection.

Final word: ENJOY YOUR NEW HOME!