3 Responses to “Developers should be pissing their pants.”

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  1. Anonymous

    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. DC Jeff

    Let’s name names! I did. I am in a better position to name names. Get em tiger. :)

  3. Madrigal Blogs

    [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