Developers should be pissing their pants.

This post is about me venting, so please take it with a grain of salt.

OK. So I don’t care what anyone says (specifically real estate agents representing developers) the market is NOT doing well. SO why do I feel like when it comes to developers in this city is it that they refuse to go above and beyond their duties as soon as you sign on the dotted line. In case these overly optimistic people haven’t noticed, interest rates are going up, people still don’t want to dive in and make these big purchases; especially when you refuse to budge on your price of 540 p/sq ft. And even when I agreed to pay that you refuse to do me even the simplest of favors?! I still can’t be too specific about the situation as I am still trying to work through it but you bet that once i’ve followed through there will be a pretty sizeable story about the incompetence of these people that work for marketing firms representing developers.

Well I have news for you Mr Condo Sales Person, I have no qualms about walking away without my deposit and when me and 10% of the 40% of condos you sold thus far do the same you are in a real big pickle.

Here are some links for our readers to take in everything in the same negative light that I am viewing the situation:

The City Paper: These Prices are INSANE!

DC Housing Prices: DC sales December 2007

Bubble Meter: More Condo Projects Going Rental

Fortune: Real Estate, Buy Sell or Hold?

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Comments

  1. 1

    Anonymous says

    I hear you… it’s amazing the delusions of our local marketing firms. Really, no negotiations and only $2500 incentives? The firm down the street negotiates and gives $10K.

    Ah well… get it all in writing as they say. Document, document, document!

  2. 3

    Madrigal Blogs says

    [This comment is perhaps more inspired by, then responsive to, your post... I've heard enough people thinking about trying to reworking their contracts shortly before settlement dates that this comment is really more targetted to them than to you.]

    While I am generally sympathetic to your concerns, MBG, I think that some counterpoint can be useful.

    First off, let me say that I know nothing about how things are going along in your building… my perspective is limited to the Madrigal Lofts, and to a lesser extent to the Sonata.

    I know that additional incentives have been being added for these buildings–and there was a big President’s day promotion with extra incentives last week. Every weekend there are at least a half dozen people who take a tour of the building–and this week probably just that many today alone. So even if people aren’t buying, they are in the market.

    So, I think that the builders are probably not subject to too much criticism in terms of how they’re working to get new contracts. I fully expect that they’re doing something wrongly, probably many of which they are doing just stupidly. But I’m sure that I would be making just as many mistakes if I were in their position, trying to sell units in new buildings in an uncertain market.

    But none of this really applies to your situation, where you’ve already signed the contract. In that case, there’s almost no way that the biulder is, or really can, throw additional incentives or substantial favors your way after the fact. The only way that I could expect that to happen if if you could show them that your circumstances have changed (that is, the change has nothing to do with the market decline), that under the current terms you have to default on the contract, but that you would rather not walk away.

    There are a number of reasons for this, but I’ll only mention two. First, if they’re willing to do it for you without some super-extenuating circumstances, they’d probably willing to do it for others–and that’s a poor business move. This is especially the case given that it is not at all clear how great this market downturn will be, and more importantly how long it will last. Yes, they might risk losing a large number of contracts–but the deposits that they keep could well more than compensate them for maintaining the empty units for a year or two. Frankly, I wouldn’t be surprised if some builders hope that people panik and walk away. If they expect that the market will rebound in two years, if might make business sense to take the deposit and hold the units.

    Second, and perhaps more important, if they do work with people under contract in ways that could lower the market value of the units that have already been settled, they might be sued by those people who have already settled. (I’m not saying that this would be a sucessful suit–and this is not legal advice–but we’re seeing a lot a “creative” lawsuits nationwide right now, and the courts are more receptive to them than I would have hoped. I’d not be too surprised to see a court impose a fiduciary duty on the builder to enforce existing contracts if a failure to do so could adversely affect settled contracts.)

    That all said, I don’t know the specifics of your situation. Perhaps your “simplest of favors” is really trivial (ie, opening the sales office 20 minutes early one day so that you could stop by before work). If that’s the case, then nothing that I’ve said above really applies to you and it’s in pretty poor form for them to act that way.

    In any event, I hope things get squared away for you.

    –MLB