May 28, 2006

If you put $10,000 down on a condo in Naples, Phoenix, Tampa, Miami, Vegas, Boston or DC, would you close on it tomorrow or walk away?

30 comments:

Anonymous said...

I'd Run

Osman said...

Also, was it a paper condo you were planning to flip or were you planning on living in the property for the next 5+ years? What was your purchase intention?

Me? If I was flipping, I might take the loss and move on. That's the risk of speculation. But I'm not the speculative type.

If I was planning on living in the property for the next 5 or more years, I'd probably close.

Anonymous said...

No I would disconnect all of my phones and change my address so that they company never heard from me again and had a hard time finding me to sue me for anything.

FUNNOMINAL said...

Of course it would depend on when I put it down and what was the price of the unit.
But I'd mostly likely leave it on the table and walk. There's still too much 'positiveness' in general out there.
How this thing ends is no longer a function of just lowering prices a little here and a little there...way too late for that.
The key question is how low the marginal/incremental seller has to adjust his price in order to move the house. This b.s. from the 'realtors' is now 'if you don't have to sell now, don't'. This is pure garbage.
When that marginal seller is forced to liquidate immediately (as well as his neighbors) then we will see even further price erosion as those who have tremendous 'negative equity',insufficient cash-flow, job-loss, etc also have to push down the price to market.
As a former stock broker we had to 'mark to market', get a few 'indications of interest' at various price levels. Only then might we arrive at a starting point for sellers to sanely realize what their actual houses are worth. Right now there's just too much wishful thinking, hoping, etc.
Anyone have any idea what percentage decline (from either the top or from today's offered prices) might be necessary in order to generate a decent level of home sale transactions?

foobeca said...

A lot of these condos are being sold at lower prices to new buyers than your contract price. Whether you entered the contract with the intent to flip or not, it'd make sense to walk. You could eat the $10,000 and go to another builder and get a 50-100k discount.

Esquire said...

I would have my Attorney demand my $10,000 back under threat of lawsuit for deceptive sales practices.

When the builder balked; I ask him if he'd rather pay me $10K now, or $10K + punitive damages + my attorney fees + court costs when the Jury made up mainly of folks who the builders ripped off award me $500,000 in compensory damages!

Yes, In a previous life I was an excellent collections-attorney.

Trust me a letter from an attorney to the builder will get your $10K back at this point in the cycle.

Anonymous said...

What Esquire said. Two can play this bullshit game

Anonymous said...

Yeah right "esquire", as if these sharks are afraid of a letter from some dime-store lawyer. The deposit money is gone, so the only choice is to close on that palace or walk. Given the RE price trends in these markets, even I think even the Three Stooges could make that decision, in about ten seconds.

Chris G said...

I would let the builder have that $10K, no questions asked. Better that than to be underwater 30-40K or more in a year's time, both from equity loss and making mortgage payments.

Those who admit they made a mistake and walk away will live another day. Those who cannot admit they f'd up, who have this ridiculous notion that the market will bounce back, will never be the same.

Esquire said...

Yeah right "esquire", as if these sharks are afraid of a letter from some dime-store lawyer. The deposit money is gone, so the only choice is to close on that palace or walk. Given the RE price trends in these markets, even I think even the Three Stooges could make that decision, in about ten seconds.

No such thing as a dime-store lawer.

Besides trial lawers are already talking about how to milk this thing as it breaks.

A trial lawer working on contingeny for a client can earn 33% of collected jury award or out-of-court settlement. He/she only needs to invest less than $500 in client up front court filing fees to file a complaint plus a few hours preparing for court and a few hours in court.

The builder is a corporaton and therefore has to by law pay an attorney to represent them at trial. It costs companies more than $10K in attorney fees and court cost to defend an action.

Few companies would risk the downside potential to save a measly $10K. That's why you would get your money back. Less a few hours or few hundred in Attorney fees.

Anonymous said...

A letter from an attorney won't work in 6 months.

Anonymous said...

It will work now though

Anonymous said...

Well, Esquire, in Florida if you sue someone and lose, you have to pay their attorney's fees. So if you sue the builder and they win, you're outta luck.And if you signed a contract to buy a property, and put down $10,000, why would you be entitled to get it back when you broke the contract that you signed? There may be something here that I'm missing, but unless there was something faulty in the contract, I would think the buyer would be out his or her deposit. -
That said, if all the other condos in the building of this fictional scenario had suddenly plunged $100,000 plus in value, I would walk away from my deposit, even if I were looking for a home and not an investment. There's no sense paying more than you have to.
-Florida girl

uknowwhoiyam said...

I would have my Attorney demand my $10,000 back under threat of lawsuit for deceptive sales practices.

What deceptive practices?

Anonymous said...

In other words (see my previous post) - what Foobeca said.
FloridaGirl

Anonymous said...

I would walk away from the money and honor my contract the same way I would expect that builder to honor its contract had the property gone up in value.

uknowwhoiyam said...

Walk away or close?

Well, that would depend on the details of PSA, obviously. A third option is to renegotiate.

Dave Barnes said...

I would close.

Of course, my $10K would be in a 3rd-party-controlled escrow account so if the whole project went tits up, I would get my money back.

Of course, I would have offered 50% of the asking price for the unit.

,dave

Anonymous said...


"No such thing as a dime-store lawer."

"Besides trial lawers are already talking about how to milk this thing as it breaks.
"

Esquire, if you are going to claim to be a former lawyer, please learn how to spell it first.

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