If you recall, one of our readers shared this with me in an earlier post and after reflecting this weekend on last week’s 3 bedroom sale I feel the need to share it again:
Why do you say in your first paragraph that “I hope this “heard on the street” rumor is correct! ” about the $1 million closing? And in your last paragraph “I hope it happens, I really do. And if this high-end unit does close at contract, the Vue Sales team and the Vue Charlotte project would get a huge boost.”
We know for a fact these condos are way overpriced. To root for people to close on them, and for the Vue to get more closings, is bad for the remainder of the owners and for that matter for the people who closed on their units.
My “vue” is that you shouldn’t be encouraging this….you should be more neutral…
After cheering the sale last week, I am going to provide a more neutral if not a bit skeptical view of the sale this morning. This is based on my own thinking and views that have been shared with me by others.
We know that last week a presumably new buyer, from out-of-town, paid cash for a unit that if he had it appraised, would most likely have come in at a value $150,000 – $300,000 less than he paid for it. We are left to sheer speculation from there until we can talk with the buyer or with folks that were close to the transaction as to why this buyer closed on a unit and literally set on fire so much money with the stroke of a pen.
It is important here that I make the distinction between pre-sales buyers and new buyers. If pre-sales buyers like myself follow through and close on our units, it is because we have signed contracts that say we will do so and we wish not to face the possible legal consequences of a default. The blog will hopefully never question pre-sales buyers if they do close, and is not in the business of encouraging them to do anything otherwise. It is simply to inform. And if this buyer turns out to have been a pre-sales buyer, then all bets are off.
This sale, though, is different. This sale, I believe, was transacted by a non-presales buyer. It is under the assumption that this is a new buyer that I am giving it closer scrutiny. If a pre-sales buyer closes on their 3 bedroom unit, they too will have been in the same boat: paying 150K-300K more than the current appraised values. But since they could be sued at some point to close anyway; or because they may feel that in several years the value will return and they are in for the long haul; or for any number of other good reasons it may make sense for them to close, we can do nothing more but say congratulations and wish them luck.
I am having difficulty though, doing so with this recent buyer, until I know more. This recent sale, if indeed it was a new buyer, has possible consequences for the other buyers that have similar units. This sale could show up in their comps, which could be good or bad depending upon what you are planning to do with your unit. But one thing is for sure, it is not reflective of the current market. It provides no useful information in terms of what to expect of future sales. It should not be considered a sign that the market has turned, or that appraisals will now begin to trend upward. The sale is at best puzzling, and perhaps over time once the person moves in we’ll understand what was going on in the buyer’s mind and what homework was done prior to buying the unit.
So here I will summarize my feeling on this sale. First off, these 3 bedroom units are, by several accounts, absolutely spectacular. I think if any of us saw this unit we would fall in love with it and buy it if we could afford to. In mid-2000, their prices were justifiable, and as the list of 178 pre-sales buyers submitted by Churchill Marketing showed, a decent number of sales were the 3 bedrooms. I remember the sales person saying that the big surprise at the time was the number of folks buying the 3 bedroom units. I am very jealous of this sale in one respect–this buyer is going to own one of city’s most desirable living spaces.
Having said that, these units probably will not appraise / probably are not appraising anywhere near 1MM today. Therefore, this buyer, if he wasn’t a pre-sales buyer, may have just reduced his assets by a signficant sum. My hope is that if he did so, he did so knowingly. My hope is that he knew all the risks; that he had good help prior to conducting the transaction, and was made aware of all the unusual circumstances surrounding the Vue Charlotte; and with all relevant information, still went ahead a bought his unit. If that happened, I send him my congratulations and good luck just as I will do with any pre-sales buyer that closes. Whether this is actually what took place, we will learn over time.
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