Pre-Construction Buyers ‘Put The Lawyer On Speed-Dial’
The Palm Beach Post has this on pre-construction condos. “Did you buy a condo pre-construction? Remember these words: Buyer beware. Some buyers moving into two new condos in downtown West Palm Beach say things are oh-so different from what they expected. Others are exasperated by what they say is shoddy interior workmanship and unfinished punch lists.”
“New condo owners say promises were made, and they don’t want to hear excuses. ‘I should not have to go into this and worry!’ said Wendy Oats, who lives in a $750,000 penthouse at One City Plaza.”
“It’s gotten to the point where developers such as Kolter and BAP Development are on the defensive with residents. Kolter and BAP need to keep folks happy: Bad reviews could hurt nearby condos they’re building.”
“Experts say the problem with pre-construction is you can’t see what you’re getting. So some owners of One City Plaza who thought ‘European style cabinetry’ meant wood were surprised to learn it really means laminate. ‘There’s nothing redeeming about this building, other than the location,’ said Kevin Landers, who bought a $600,000 condo.”
“Valet parking was promised at first, but along the way was taken out during a redesign. Kolter execs say they disclosed the change, but Kenneth Pincourt, owner of two $750,000 penthouses, disagreed. The missing valet and doorman hurt the building’s image, Pincourt said, and he hates the unfinished entry from the garage. ‘I’ve never seen a building finished this way,’ he said. ‘It’s a damn shame.’”
“Karen Zarif is unhappy her unit is 100 square feet smaller than sales brochures promised. Now she says her dining area isn’t big enough for even a bistro table. ‘I’m so upset, I get sick to my stomach,’ Zarif said. In an e-mail, Bermello wrote that Zarif’s unit type ‘was subject to ‘facade movements… ins and outs to create architectural interest.’ Bermello said Zarif’s final square footage was fully disclosed.”
“Owner Dwain Wall, who owns an $800,000 condo, says he’s realizing ‘decorator ready’ means the building will be in a perpetual state of construction. Nearly half the building’s units are unfinished, and some of those are owned by investors who plan to resell them.”
“Several buyers say they wish city hall would get involved. But Neil Melick, West Palm Beach’s construction services director, said the city only oversees building infrastructure, such as plumbing and electrical. Issues between builders and buyers are ‘contractual,’ Melick said.”
“Put another way: Time to put the lawyer on speed dial. That’s probably where things will end up for some buyers. Others are pondering lessons learned. One buyer says he’s reached this conclusion: ‘I will never buy pre-construction again.’”
what’s really bugin them is it’s worth less than they paid- FL has the best condo laws in the USA- wait till the other states chime in
I hope those greedy bastards lose every penny they have put into those condo garbage. Cause when you buy a $600,000 piece of trash cause you think you will find another bigger fool than you to sell it for $700,000 and ends up YOU being the LAST fool, you desreve a big lesson. I doubt they’d be screaming about anything if the real estate market bottom hadn’t fallen out from under them. Typical hypocritical greedy humans. It’s always someone else’s fault but their own or their own greed. I hope they lose every penny and I hope their story makes the front page news of Times for all to see.
do you think that just maybe someone in the building bought a condo to actually live in or vacation in? I doy think the 7 million people who bought last year are all flippers.
Yeah, like all the ever increasing Las Vegas Condo project cancellations when they figured out that the morons they were trying to sell to they were all flippers trying to sell to a bigger fool. Or like now in Phoenix were whole subdivisions are ghost towns. Sheesh… Those greedy bastards need to all learn a real costly lesson.
I bet it’s more of a case of ‘buyers remorse’. This is at the same level as Hummer buyers complaining about gas mileage.
When I bought a condo years ago, I looked for the best value for the money. I was happy to find one that had barely been updated since the 1970s. I looked at it as a blank canvas. Did a bunch of the work myself, as well using a fantastic contractor. By the time I sold it, it was near perfect - and it sold for a large premium.
If I ever buy a pre-construction unit, I think I would try to find a “four wall” type of deal where I could dictate the interior fixtures once the structure of the building is complete. Why pay a premium for the garbage they pass off as designer fixtures?
Case in point: friend in Chicago bought pre-construction. The building was late by one whole year. Nice unit, but the lighting fixtures were all $20-$50 IKEA specials… C’mon…
Other than the stupid prices this bubble has created, the one thing that really winds me up is that there are no reasonable fixer-uppers anymore. If they aren’t overpriced shacks, they have already been preyed upon by flippers ripping out the old fixtures and replacing them with their idea of class, on the cheap, a la Home Depot.
Rant over.
this is a pretty funny story unless you were an investor.
http://www.lasvegassun.com/sunbin/stories/nevada/2006/apr/19/041910111.html
Terrible for those people. Stanley, are you golfing, grilling or on the tractor? I love that ad.
Wow, it is amazing that the world never runs out of suckers. If interest rates are hovering around 5-6%, why would anyone think they could get 12-14% without alot of risk? And now they are shocked. I have heard this story so many times, over and over again.
I have to admit, every time I try and invest in high dividend investments I usually get burned. There is no free lunch.
“there is gambling going on; I’m shocked, shocked” casablanca fans anyone ?
Play it again, scam.
Why would anyone buy a condo pre-construction given that there are so many post-construction condos on the resale market these days? I guess pre-construction buying was then, and flipper dumps are now…
People who bought these pre-construction condos, at least in Palm Beach, bought them several years ago whne things were going up and before the market was flooded with apartment conversions and stuff people are trying to flip from previously finished projects.
The stuff coming online now is stuff where there were people waiting in lines to get their chance to buy when these things were announced.
These are the people who bought into the “better buy now, things are only going up” because a couple of years ago that’s all they heard from everybody and in the media.
This happens with every preconstruction project. What’s different this time is that they are only getting what they paid for. $750,000? What is wrong with these people? Did that honestly think they would appreciate from that level? Bewteen the agravation, out of pocket finishing expenses hecessity to compete against the builder, closing and resale costs, just insane. What kind of condo rents for the equivalent of $3500 which would let you put the equivalent of 6% appection into the bank instead?
What really gets me is why they closed at all. The builder may indeed make changes but there’s no way dropping 100 sq ft and dropping valet service and laminate cabinets, etc. don’t add up to material breach. They could have just told the builder, “I’ll go away quietly if you refund my money.”
This is just a symptom. People thought they were smart when real estate was appreciating so now they are forced to conclude they must be stupid because it is falling. This is the hardest thing for people to accept and they’ll blame anything and everything except themselves.
IMHO the buyers closed because they would forfit their downpayment. If as many condo developments require 20% down (probably sometime in early ‘05), the buyers would feel stupid walking away from $100,000 - $200,000. Unfortunately they now get to ride the market down.
I find this story hilarious. All these dopes buying, not one, but two or more condos for $750,000+ each. What did these geniuses think? Did they really think that people dumber than them exist to come in and pay more for these glorified apartments? If they’re buying more than one, surely at least one was for “investment” purposes. Apparently, laws to protect these idiots from themselves haven’t been written, yet.
What is happening is typical, I think.
Link to my story from the Cincy paper. That is typical, I think, of desperate sellers. Private sellers are jumping into the “incentive” game. Places like Cincinnati, btw, did not experience the wild housing boom like the coasts, but will still suffer from the fall-out. I think the housing bust will be national in scope…
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People here in south FL dont get it. I met a few people in the Mortgage business who were advising older folks (whose house is paid off) to take out home equity loans and buy condos/townhouses and make lots of money. They were saying that only fools keep equity in their houses….equity is dead money that does nothing for you, etc etc.
The above conversation made me think about where the money, that is pouring into real estate, is coming from. There are hundredes of thousands of people who own their houses or have significant equity who are tapping into that equity and buying more houses/condos. It is ridiculuous. I know a lot of peple in their 60’s who lost all their retirement money in the stock market and now many more are going to lose their money in real estate.
Other observations around south florida:
1. Broward condo market is DEAD. Know a few people trying to sell, and there are no buyers. The asking price has been dropped to same as the price they bougth it at, but still no buyers.
2. South Beach condo market has slowed down to a crawl. Only people buying are wealthy Latin and Europeans who dont know about housign bubble or dont care. Most buildings that I have been following have 30% or more condos for sale. 100K “discounts” are not unheard of for high six figure condos.
3. Gas prices around here are 3.25 (premium) and you can already see smaller crowds on south beach and coconut grove. People have altered their drivign habits like they did last year during/after hurricane katrina-wilma. The big difference this year is that gas prices are at “hurricane level” without a hurricane…just imagine what the prices will be when a cat-5 hurricane is in the gulf of mexico.
4. Heavy consturction activity continues in and around US1-27th (border between the grove and coral gables). I see atleast 10 buildings coming up. These buildings are coming up in areas that are far from the beach, tourist area, cool area, etc.
5. The latest immigration sweeps have scared off the immigrant (legal and illegal) workforce from construction sites. 40-50% of works did not show up to work last week. While most people think illegal immigrants are poor, as a group they have a lot of buying power. I have heard of groups of illegals pooling their money to buy 300-400K houses. This latest political storm over illegal immigration is going to have an impact in communities with large illegal immigrant population such as south Florida, socal, etc.
Anyways, I am hoping that the correction is mild and drawn out so people dont get screwed big time.
These investors are coming from every where. 6 months ago I was at a trade show and I met a vacum cleaner salesman who said he “pulls equity” out of his San Diego townhouse to invest in other properties. The one he was working on was a townhouse for 80K some where in South Carolina. How can this possibly work out? This guy is investing in property 2500 miles away and he has never been there. How will this end people?
Anyways, I am hoping that the correction is mild and drawn out so people dont get screwed big time.
If the correction is drawn out, people who were cautious and who waited will get screwed. If it’s abrupt, everyone gets screwed, though the greedy people will in general get screwed worse. Since I have cash, I’m hoping for an abrupt change, so we get it over with and can begin to move on.
LET EM EAT DOG POOH!!
TIME TO BRING BUCKETS OF CASH TO CLOSING FOR THESE “HOPEFUL” SELLERS. CAN’T WAIT FOR THE ANVIL TO LAND ON THESE CHUCKLEHEADS.
Being from Europe I might add that this is the first time I heard about ‘European style cabinetry’. And laminate is the rule over here not the exception.
You’d think you’d get decent fixtures, cabinetry, flooring in these $800K places but the builder always cuts corners. I know people ripping out new carpets, tiles, lighting fixtures because they are cheap crap. Anyone falling for $10K in “upgrades” ought to ask themselves what the builder paid for them. Better yet, ask for the sales receipts. It won’t add up to $10K.
These buyers forgot the most fundamental rule of buying real estate: until you close, the buyer has the power, after you close, the seller has the power.
No doorman, no valet parking: no one forced them to close
Wood laminate cabinets: no one forced them to close
the unit is 100 square feet smaller than sales brochure: no one forced them to close
They buyers could have walked away then and gotten a refund. Instead they closed.
Exactly. If you are buying any property you are not planning on demolishing, you should at least spend a few hundred dollars on an inspector. If you are buying a resale you can probably get concesions based on the inspection report that surpass the cost of the inspector. If the seller doesn’t allow for an inspection. WARNING. You are either in bubble land or the house has lots of nasty secrets.
Also didn’t anyone do a walk thru before they closed? If the place is 100 sq ft smaller and has shoddy finishings take a walk. Tell the builder you want your deposit back since he failed to meet what was promised. And even if the builder fixes your place, I would think all the other condos in the building are just as bad as yours. Wait. Don’t walk. Run away from the deal.
On a local Vancouver forum, presale purchasers of a near-completion building started a friendly thread, sharing anticipation and excitement about completion. Now that the building is completed, they are sharing frustration and anger about the actual conditions of completion, and the reluctance of the developer to even talk to them. Caveat emptor.
On that note, a different local ‘presale event’ just took place and was a roaring success - fools…er…investors lined up overnight to buy, and the building sold out in a day - even though the prices asked were astronomical, more in line with NY than Vancouver: $375k for a one-bed 582 sq/ft condo. And that’s a cheaper one. (Granite counters, natch.)
Even worse, the building will be built in an absolute slum area, literally ‘heroin central’ with junkies and crack whores on every corner. The building is being marketed as the spearhead of future gentrification, though every indication is that it will more likely be a fortress of solitude in a sea of crime and debauchery. If that’s not enough, completion is 3 years from now, definitely post-crash, but investors must deposit a total of 25% within a year and so are going to invested to walk easily and are going to be screwed for hundred of thousands of dollars.
Experienced RE investors aren’t touching it, but local yokel ‘dumb money’ has decided to finally buy in at the peak. Good luck with that!