Developer Offers Discounts To Buyers Of Failed Condos
Written by Miami Today on April 13, 2006
A Brickell condo developer this week offered discounts of up to $21,000 to buyers in projects that have failed – a step observers say mirrors a wave of offers as condo-mania cools.
Buyers of units at Skyline at Mary Brickell Village may forgo payment of closing costs – equivalent to 1.75% of purchase price – if their contracts or reservations were cancelled at another development. The saving covers title and document stamp fees.
About 75% of the 369 units at Skyline, 900 SW First Ave., are sold, leaving about 90 priced from $400,000 to $1.2 million. That means savings of $7,000 to $21,000 for buyers in the 35-story project.
To qualify for the discount, buyers must show proof of cancelled contracts or of reservation with another development.
Completion of the project is anticipated in mid-2008.
"I believe this is a wonderful opportunity for these individuals to still own a piece of real estate," said Skyline Equities Realty general partner Evangeline Gouletas.
Experts say this is one of many techniques developers are using to find a market among buyers disappointed in other projects.
"The purchaser pays at closing a pro-rata share toward the creation of a condo association," said Michael Cannon, managing director of Integra Realty-Resources South Florida. "Several developers are saying to their clients that if their contracts were cancelled, they will pay the 1.5% or 1.75% fee."
Incentives also take other forms, he said.
"This is a foretaste of the marketing efforts that will be utilized to induce a sale," Mr. Cannon said. "Some developers have moved to pay higher commission to brokers, which isn’t always advisable in a market that’s squeezed. Some will provide decorating allowances. Others pay closing costs up to a set sum, such as $3,000. This is all part of the process as the markets stabilize and start to show more normal signs. There are 20,000 units announced, planned or under construction in this area."
The initiative isn’t limited to buyers with cancelled contracts, said another key industry player.
"It’s not just for contracts that are cancelled or stopped," said Ron Shuffield, president of Esslinger Wooten Maxwell. "Developers are keen to waive the fees required to set up a homeowners association, and it’s probably wise to attract buyers from other closed projects. Most of them are legitimate buyers who need to live somwhere."
He said EWM has acquired purchasers for developments it represents from failed projects.
"We are picking up business from some of the contracts that are cancelled," said Mr. Shuffield, who said he found units for purchasers of Mets 1, 2 and 3, Toscano and Downtown Dadeland. Others who were ready to move chose to buy at Marquesa in Broward County, he said.
Developers will use any conceivable method to avoid re-pricing, Mr. Cannon said.
"Prices will only drop when there is cancellation of contracts on a wide scale," he said. "They’ll do anything rather than reduce prices."