Why do units fall out of contract - finding clues?
Started by bugelrex
about 14 years ago
Posts: 499
Member since: Apr 2007
Discussion about
I've seen several seemingly decent non-over priced properties fall out of contract. Are there any clues to look for to find the "real reason".. I suppose nothing is public and the agent is not legally obligated to tell you and board minutes would reveal nothing. What to look for and questions to ask for clues... Take this unit for example (a combination of 2 studios in midtown east) ... [more]
I've seen several seemingly decent non-over priced properties fall out of contract. Are there any clues to look for to find the "real reason".. I suppose nothing is public and the agent is not legally obligated to tell you and board minutes would reveal nothing.
What to look for and questions to ask for clues...
Take this unit for example (a combination of 2 studios in midtown east)
http://streeteasy.com/nyc/sale/569351-coop-313-east-56th-street-sutton-place-new-york
Was in contract for 5 months, price is cheap enough for combined. I can only guess the building financials are a mess or the cost analysis for combining 2 studios hit reality (although this would not allow a buyer to legally back out)
The unit above is already combined and asking only 50k more..
[less]
Response by Squid
about 14 years ago
Posts: 1399
Member since: Sep 2008
It's possible the buyers could not get financing. If they had a mortgage contingency they would have the right to walk away.
No buyer in his right mind would wait til after entering contract to do due diligence on building financials and cost analysis of combining units.
Ignored comment.
Unhide
Response by Bill7284
about 14 years ago
Posts: 631
Member since: Feb 2009
"No buyer in his right mind would wait til after entering contract to do due diligence on building financials and cost analysis of combining units."
One would think, but then again that word "bubble" keeps coming to mind.
Ignored comment.
Unhide
Response by ProInNyc
about 14 years ago
Posts: 28
Member since: May 2011
Most likely financing. I was told by a realtor recent how an apt opened up after 1 year due to buyer's inability to get financing. I'm talking about ONE WHOLE YEAR of being in contract.
Ignored comment.
Unhide
Response by REMom
about 14 years ago
Posts: 307
Member since: Apr 2009
The deals that I know personally fell through because:
1. Buyer got caught in a bidding war, got cold feet, tried to renegotiate, and walked away.
2. Property didn't appraise at offer price and buyer couldn't get enough financing.
3. Co-op board turned down buyer.
4. Sale was contingent on another sale or purchase that didn't happen.
Ignored comment.
Unhide
Response by Isle_of_Lucy
about 14 years ago
Posts: 342
Member since: Apr 2011
"I can only guess the building financials are a mess...."
It's much more likely that the buyer's financials are a mess.
Ignored comment.
Unhide
Response by nycsux
about 14 years ago
Posts: 1
Member since: Dec 2011
I may know why this deal fell out of contract. email me if ur looking into it
pamchenko2@hotmail
Ignored comment.
Unhide
Response by truthskr10
about 14 years ago
Posts: 4088
Member since: Jul 2009
Though not on this specific case but I'd bet #1 reason is financing falling through.
Borrowing, particularly on equity is a different world today. People are in the market expecting to be financed as they remember the process pre Lehman and come hard paperwork time the banks start jerking their chain.
I was financing less than 50% of my purchase and they gave me a hard time. It wasnt until I told them forget it,I'm purchasing without the loan that they said OK. I have to say, it felt good to tell the bank FU and have them come back. But not everyone is in a position to proceed without them.
Have a second friend with far more than me and was told by bank "no problem" on everything (As they wanted his corporate biz) and I warned him, the mortgage dept still has to sign off and don't count on it.
Sure enough, they are jerking him around.
Banks are looking for amount of, and stability of, income.... period.
On the other end of the spectrum, sometimes "in contract" is a bluff. Negotiation tact to garner bidding war gone wrong, puts it "in contract" to take the stink off for a month or 2.
My very unscientific in contract failure rate Id guess to be about 10% pre Lehman, 20% post Lehman.
Ignored comment.
Unhide
Response by truthskr10
about 14 years ago
Posts: 4088
Member since: Jul 2009
In this specific case, it doesnt hurt to ask the realtor.
I doubt she would lie (much :) ).
If there is problem with the board on the combo, why would she waste more time finding another same situation buyer to be turned down again. The wasted time for this relatively small sale(manhattan at least) is not worth it.
Ignored comment.
Unhide
Response by Brooks2
about 14 years ago
Posts: 2970
Member since: Aug 2011
On the other end of the spectrum, sometimes "in contract" is a bluff. Negotiation tact to garner bidding war gone wrong, puts it "in contract" to take the stink off for a month or 2.
I have seen this... but not sure if it happens that often... but you know brokers, it may happen more than you think
'/%3e%3c/g%3e%3c/svg%3e)
It's possible the buyers could not get financing. If they had a mortgage contingency they would have the right to walk away.
No buyer in his right mind would wait til after entering contract to do due diligence on building financials and cost analysis of combining units.
"No buyer in his right mind would wait til after entering contract to do due diligence on building financials and cost analysis of combining units."
One would think, but then again that word "bubble" keeps coming to mind.
Most likely financing. I was told by a realtor recent how an apt opened up after 1 year due to buyer's inability to get financing. I'm talking about ONE WHOLE YEAR of being in contract.
The deals that I know personally fell through because:
1. Buyer got caught in a bidding war, got cold feet, tried to renegotiate, and walked away.
2. Property didn't appraise at offer price and buyer couldn't get enough financing.
3. Co-op board turned down buyer.
4. Sale was contingent on another sale or purchase that didn't happen.
"I can only guess the building financials are a mess...."
It's much more likely that the buyer's financials are a mess.
I may know why this deal fell out of contract. email me if ur looking into it
pamchenko2@hotmail
Though not on this specific case but I'd bet #1 reason is financing falling through.
Borrowing, particularly on equity is a different world today. People are in the market expecting to be financed as they remember the process pre Lehman and come hard paperwork time the banks start jerking their chain.
I was financing less than 50% of my purchase and they gave me a hard time. It wasnt until I told them forget it,I'm purchasing without the loan that they said OK. I have to say, it felt good to tell the bank FU and have them come back. But not everyone is in a position to proceed without them.
Have a second friend with far more than me and was told by bank "no problem" on everything (As they wanted his corporate biz) and I warned him, the mortgage dept still has to sign off and don't count on it.
Sure enough, they are jerking him around.
Banks are looking for amount of, and stability of, income.... period.
On the other end of the spectrum, sometimes "in contract" is a bluff. Negotiation tact to garner bidding war gone wrong, puts it "in contract" to take the stink off for a month or 2.
My very unscientific in contract failure rate Id guess to be about 10% pre Lehman, 20% post Lehman.
In this specific case, it doesnt hurt to ask the realtor.
I doubt she would lie (much :) ).
If there is problem with the board on the combo, why would she waste more time finding another same situation buyer to be turned down again. The wasted time for this relatively small sale(manhattan at least) is not worth it.
On the other end of the spectrum, sometimes "in contract" is a bluff. Negotiation tact to garner bidding war gone wrong, puts it "in contract" to take the stink off for a month or 2.
I have seen this... but not sure if it happens that often... but you know brokers, it may happen more than you think