I have run into many situations recently where buyers of mine have requested getting out of their contracts on new construction purchases. Basically, they purchased during the “pre-sale” phase of New Construction. In the past, it was often advantageous for a buyer to do this because it allowed them to make money (appreciation) during the construction of the project. Typically, the “buzz” of the project led to more sales at a higher price. Thus creating an advantage for those that purchased early or in “pre-sale”.
A depreciating market has changed the game. Honestly; whats the value in a Pre-Sale today? I would suggest nothing. In fact, most projects currently under construction now are struggling to make sales. They don’t have a sure thing anymore. A buyer will wait until completion to decide if they like the unit. Showrooms are quiet, and the guaranteed appreciation doesn’t exist. In face, the reason why my clients are asking to rescind their offers is because most pre-sales are priced higher then what the value of the units could realize in todays market.
As an example, a client of mine in Bellevue wanted to explore the possibility of buying a 2 bedroom instead of the 1 bedroom that he was currently in contract for. After exploring our options, we were able to find a 2 bedroom with 400sf of additional space at a price that was $125,000 less! It was a building that was 8 years old, but how can anyone justify the “pre-sale” pricing when a unit can be had for a much better price and plenty more to offer.
This topic will be discussed quite a bit more until the remaining new construction or “pre-sale” inventory is purchased or converted in apartment buildings. Until then, every one of our readers that are under contract on a pre-sale unit, PLEASE review your contract with a professional. It just may save you thousands of dollars and help you secure a better unit in a unprecedented time.