Someone wrote to me the other day and asked, “how many folks do you know of that are walking away from closing?” My answer continues to be that unfortunately, I have no idea. While of course I have heard from some people who say they are not closing, I also hear from others who are working towards doing so. It’s a mix. So all any of us can do is make inferences and talk to as many people as we can, and then see what happens from there.
If I ask where the next wave of buyers has to come from, in general, it is going to have to be the cash buyers. The reason I say that is because from a Preferred Lender standpoint, there is virtually no activity. It’s not zero, but it’s not 50 buyers either. This is based on conversations I have had and others have shared with me over the past couple of months.
So if people are working on financing, they have to be trying to do so with their own banks. Why they would be doing that versus using the Preferred Lenders makes me think there can’t be many of these situations out there.
Cash buyers, then, would be from what little I know the best option for upcoming closings since there are usually no appraisals involved and the transaction is straightforward. And both the Vue Charlotte and the pre-sales buyers might benefit from cash buyers closing first, because maybe this would help future units appraise better. I have stated my opinion that these type of sales shouldn’t factor in (unless they are non-pre-sales cash buyers) but that doesn’t mean they won’t.
Now, one would think if there are a decent number of cash buyers, we would see these closings happen fairly quickly. We’re obviously not seeing much. I think the next 5 weeks will be telling. While I am sure some closing dates can legitimately be negotiated out until early next year, I would think most would probably be given December/January deadlines. Time to sell a house, for example, as long as it was on the market in good faith, would be one that if I were the Vue Charlotte I would allow some time for.
In a best case scenario, folks on the edge will tip towards closing; sales momentum will pick up; economic good news will appear, and a wave of closings will follow. Maybe a new company will announce Charlotte as its headquarters or something like that.
But in what I think is a more likely scenario, the percentage of pre-sales buyers that actually closes will be intolerably small, and MCL will have no choice but to do something. I don’t think any of us, were we in the position of MCL, would not be reviewing all our options: with our investors and with our lawyers. What decisions and next steps that come out of those meetings will keep us all following this for some time more.
I had one person write to me and say that they have moved on and that the Vue investment is behind him; he is now looking forward. Hmmm, I don’t think it is going to be quite as simple as that. He might have written the investment off, but MCL very well may not have. Time will tell.
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