Mr_Brightside
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| 09/24/2007 7:29 AM |
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From Craigslist. Note all he wants is his deposit back.
I wonder how many more people are in the same position. There have been a lot of people that have bought in every Bosa project to flip. Could this be the end of the Bosa Trade?
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ELECTRA: RARE PURCHASE OPPORTUNITY IN SOLD OUT COMPLEX (92101) $225000
This is a rare opportunity, wanting to sell title for 2BR + DEN/2 BA 1,389 sq. ft. condo on the 38th floor of the coveted Electra--San Diego's tallest residential building. These units will become available for move-in Dec. 2007 - Jan. 2008, and this will be the number one high rise condo complex in all of downtown. 270 degree views (bay, ocean, city and mountain) with over 2/3 of the walls floor to ceiling windows. Pictures speak a thousand words.
Original purchase price of $1,232,000 is the closing price, of which 15% currently placed in an escrow company. Would like to propose a title transfer.
http://sandiego.craigslist.org/rfs/430476522.html |
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Anonymous
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| 09/24/2007 8:33 AM |
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Yep, I think it's the beginning of the end of the flips Downtown.
We'll see some massive losses in the next few year beginning with 2008. The $1 million uniits have so far been "immune" ; but the virus will be attacking them as well.. They're running out of "defenses".
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Mr_Brightside
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| 09/24/2007 1:52 PM |
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Bosa is pretty savvy, they sold out the building with 15% cash security deposits. That means they can lose every single buyer and still cut the price 15% and still make the same amount of money.
In other words, if a buyer can't close escrow they lose their deposit. Bosa can remarket the unit at a 15% discount and still do as good as they could have done with the original buyer. Nice built in hedge that was provided by their customers.
Contrast that with SmartCorner which I believe had 3% deposits.
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Anonymous
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| 09/24/2007 1:58 PM |
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Good point Mr. B. Sounds like Bosa will come out smelling like a rose :)
Prices have definitely dropped since Bosa sold out. If there were any "built-in equity" Bosa would take the unit back to sell it someone else for more -- quick profit, no work.
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Steve
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| 09/24/2007 2:30 PM |
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| It looks like he is trying to make a small profit since he is asking for $225k and 15% of $1,232,000 = $184,800. Or am I missing something? |
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Anonymous
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| 09/24/2007 3:14 PM |
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| That's the offer price and you need to account for transaction costs so it's basically a deposit saving move. |
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Anonymous
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| 09/24/2007 5:41 PM |
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Why would anyone want to bail him out. If he can't close he might lose his deposit anyway. So he might want to offer a DISCOUNT a potential buyer.
Obviously, he thinks that there's no upside and that's why he's willing to transfer his contract. But what's in it for the tranferree?
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Brad
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| 09/24/2007 6:38 PM |
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| Actually, I don't believe that the developer is entitled to keep whatever the deposit amount is if the buyer walks away. I think that the quantity that they can keep is usually limited to around 3% unless there are certain upgrades and such. |
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Mr_Brightside
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| 09/24/2007 7:19 PM |
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Brad,
That would be interesting if that's the case. If that's the law and it doesn't apply to upgrades then all a developer has to do is do side pricing for upgrades and that would easliy cause the deposit to go up. Not sure or not if that's Bosa's practices. I know they are a good company but I don't think you can honestly expect your money back.
Does anyone out there know the facts on new condo escrows? Seems like a bad deal for developers if it's capped at 3%. |
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Dave
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| 09/24/2007 9:53 PM |
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Posted By n/a on 09/24/2007 2:30 PM
It looks like he is trying to make a small profit since he is asking for $225k and 15% of $1,232,000 = $184,800. Or am I missing something?
Yeah, you got it right I think. This is a "deal" at perhaps $600K. This specuvestor is just trying to get his deposit back and he's added a little bit on top for negotiating room. He's going to get hosed.
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Moneypit
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| 09/24/2007 10:22 PM |
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"270 degree views (bay, ocean, city and mountain) with over 2/3 of the walls floor to ceiling windows. Pictures speak a thousand words. "
Yeah, pictures speak a thousand words. Sit around all day on your fat ass watching the bay, ocean, city, and mountain. And miss experiencing it while you're stuck in your moneypit for 30 years, suckers. |
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buyhighselllow
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| 09/24/2007 11:34 PM |
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| That depost is toast |
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Brad
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| 09/25/2007 8:37 AM |
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Legally speaking, retention of earnest deposits by the seller cannot be used as a "penalty" for failing to perform (purchase) under the purchase agreement, as I understand it. However, I'm sure that many sellers try to use it as a hammer.
In California, generally, the sellers cannot retain more than 3% of the purchase price unless they want to jump through a number of hoops.
California Civil Code section 1675(c) (see link) discusses the 3% liquidated damages limit. However, section 1675(d) allows sellers to potentially retain more than 3% of liquidated damages for failure to perform (aka walking away) if they prove that what they want to keep in excess of the 3% is reasonable. Most likely, they'd use binding arbitration as the venue to try and make their case.
I suspect that most developers are not going to want to go the arbitration route. However, if things get bad enough and/or the dollar amount in question is high enough, some may do that. Mostly, my guess is that the sellers would just retain the 3% and be done with it, but again, this could vary depending on the circumstances.
Usually there is language in the purchase agreement that if the buyer cannot qualify for the mortgage through no fault of his/her own through the seller's preferred lender, then they can receive their deposit back in full. So with regard to these high priced units and the recent tightening of lending standards, a failure to qualify might be a good thing for someone who does not want to take delivery of a unit.
But the bottom line is that I believe it is incorrect to state that just because a seller asks for a 15% deposit, they are smart because they can keep the entire deposit as liquidated damages if the buyer defaults. The seller is going to have to work to retain anything in excess of 3%, as I understand it.
Here's a link to the California Civil Code section that covers this issue:
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=01001-02000&file=1675-1681 |
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Mr_Brightside
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| 09/25/2007 8:48 AM |
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Thanks for the post on that. This is a very interesting and timely topic. It does sound like there is room to keep the depost. Also have that type of cash on hand does make closing a mortgage easier which presumably tightens that loophole.
I am pretty sure I read somewhere that someone lost their depost at The Mark when backing out of the transaction. I am very interested in hearing some anecdotal reports on how this issue has been playing out so if anyone knows of any broken escrow lost deposits please post them. |
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anon
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| 09/30/2007 6:10 PM |
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| I will confess that I am in this industry and simply suggest that purchasers read their agreement for purchase to determine liability with regard to deposits. It will have a timeframe in it within which one can cancel due to inability to finance. The function of this caveat is usually passive- that is if they say you must qualify for financning within 30 days of buyer signed agreement- and you don't cancel within the 30 days, then a buyer is subject to liquidated damages; doing nothing (being passive) may automatically mean that you qualify and are accepting the financial burden of obtaining the property. Cash buyers usually don't have any time. The amount of minimum liquidated damages is usually spelled out in the contract-but that is not the maximum the seller can retain in the event of buyer default. Read your agreement for exact terms. |
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Market Watcher
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| 02/01/2008 1:27 PM |
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Plenty of Electra listings on the MLS.
Will there be enough buyers?
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Brian
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| 02/28/2008 10:25 PM |
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Did you guys see the new Electra listings? They have actual pictures now.
The generic, I'm-too-lazy-to-input-a-proper-listing, is not working anymore.
This building will be fun to watch for floppers. |
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Brian
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Brian
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| 02/28/2008 10:38 PM |
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700- E ST WEST #1305 $614,600
Parcel: 533 - 532 - 10 - 47
Close date: 01/15/2008
#1305 is renting for $2600 before negotiations.
Property Taxes are $615/month
HOA are $730/month
Maintenance, Insurance & Misc are $200/month
Property management are $260/month
That leaves at whopping $795/month to pay the mortgage on $614,600. Wow, what a great investment!!!
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$2600 / 2br - Livie in brand-new Electra at an amazing price!!
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Reply to: montyjames@excite.com
Date: 2008-02-28, 12:42AM PST
Stunning city views? Pool? Giant Jacuzzi? Fitness center? Sauna? Steam-room? Prime parking spot? Extra storage locker? YES, You heard right! This two bedroom two bath condo has a million dollar city view that very few San Diegan’s get to experience daily. You’ll never want to leave your balcony!!
Located in Electra, this condo is in an amazing downtown location with easy access to the 5 freeway.
Spectacular brand-new luxury building in the heart of downtown! Walking distance to everything. This 13th floor upgraded unit features everything you would expect from the newest BOSA development. 1,165 square feet, fireplace, his/hers large closet in Master, and walk-in in 2nd bedroom. Brand-new so no pets or smokers please...
Building has 24 hr. concierge, 24 hr. security, and is close to EVERYTHING! Check out www.electrasandiego.com, and it's a Plan "E". Unit 1305.
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