The Edge

It's beginning to sound like auction time for the Edge...

tanker, my bad. the first part should have been directed to jim

Geez, There has to be a limit to stupidity. If any asset is currently selling at x price (assuming a significant number of units selling), which is more or less similar to the deposit amount, as in within the percent or so that the deposit represents, it is not logical to walk away from the deposit. It is a ridiculous distraction to even debate this. The market view of one person that the market may fall in the future is irrelevant. Now, the bar on re-selling within one year might,,,,just might,,impact this issue but probably not. SE glibness interferes with a logical discussion too often.

jim, are you directing your statement to me? because if you are, i wish you would read my comment more carefully.

i wrote "if a 10% discount led to the market clearing, i would agree that walking away wouldn't make much sense." i don't really see how that differs from what you are saying.

as you say "(assuming a significant number of units selling)" which is similar to my "market clearing" conditional. currently we don't know whether your assumption is true.

when surveying the available information, i don't believe it's just one person's view of the market that 10% off edge's asking price is the market clearing. well respected sources, e.g. Miller, has came out and said manhattan has fallen at least 20% off of peak. if i were a betting man, i would not wager that WB has fallen significantly less than manhattan, especially considering factors like its excess supply.

given that the edge's prices are priced near WB's peak with many units north of $900 psf, i would think that a rational person could think that 10% off of the edge's asks are not near market. in that case, it might make sense to walk away.

here, we are not discussing whether it makes sense to walk away when market has fallen 10% or less, which i think everyone can agree. but we are discussing whether the market has fallen 10% or less.

we need more time to figure this one out, but given that the edge is now willing to negotiate 10% down (according to people on SE), we'll see if the market clears at this price level. my suspicion is that it will not, and the market will require more than 10% of edge's peak asks. if my suspicions are correct, then it may be perfectly rational for people to walk away from their deposits.

I wouldnt even think abt the edge unles we're talking about 20% off current ask.

Milkman as you put it I guess I agree. If the edge sells significant units at the current minus 10% range then I guess as some point we will have to accept that that is the market, however overpriced it may seem to many on here, BUT unless they sell out (unlikely), there will be a debate about whether sales are brisk enough to reflect reasonable market clearing levels.

"bjw, i am not sure i totally understand the point you are trying to get across. in the real estate market, there is usually a middle man (except for cash purchases, which i believe represent a relatively small percentage of purchases). so are you saying that supply and demand is generally inappropriate or only inappropriate in these circumstances?"

milkman, I'm not saying ignore supply-and-demand; I'm saying because of the restricted lending environment, there will undoubtedly be a lag between "correct" pricing and clearing of inventory, which makes it difficult for those of us surveying the market to know when that mark's been attained. It's not as simple as saying: "Ok, nothing's selling now, so it must be overpriced." I happen to think it is overpriced still, but it's just my opinion in the end, and the market speaks for itself of course. As has been said before, we'll know a bit more when closings start.

bjw, is your thought that the current lending environment will become less restrictive in the near future? if not and tight lending remains the norm, that factor becomes part of market pricing.

i guess it's possible that lending will loosen up again, but with upcoming losses in commercial RE and the possible winding down of the govt's mortgage purchase program, i have my doubts. so i think that we can draw some conclusions based on current sales rates

closings will definitely provide useful information, but they are a while away. and most of them will be based on old prices (unless sales really pick up), so people will have to factor in deposits when trying to ascertain what those closings say about market value.

milkman, I do think it'll be less restrictive, but I don't think anyone knows when exactly. Maybe after the '10 elections? But you make an excellent point that until then, this environment does impact pricing. I'm not convinced it's impacting the Edge's pricing right now though, for a few reasons: no underlying mortgage, and no closings scheduled anytime soon. They must recognize that no one buys off floorplans anymore, and even though they've just opened the model unit, that's not enough to really entice buyers who want to see the finished product they'll be buying. But I think all your points are valid and really underscore how little information we have about what's going on here, unfortunately. That's why I think interested buyers (ie: jimstreeteasy) would do well to sit tight until the picture comes into focus a bit more, but be ready to act accordingly (ie: offer or pass) when it does.

This relates more to NSP and Toll, but surprising preliminary Q4 numbers there:
http://www.sec.gov/Archives/edgar/data/794170/000095012309060842/c92381exv99w1.htm

I popped into the sales office over the weekend. the person i spoke with was super nice and upfront. she said the developer will "consider" offers of 20 percent below ask and is covering closing costs. She also reaffirmed that they are 30 percent sold (not counting anyone who might back out of course).

I wonder if this is semantics with them. When I asked -- two weeks ago -- "what if I offer 25% discount, or some very large discount, am I going to get a discussion going?" They answered: "Yes, we will consider offers." BUT...then she said, you should be realistic and be "nearer" to the level we are currently giving, which she seemed to hint was like 10% plus closing costs.I had the strong impression 25% was no go, and basically it was 10 percent plus closing costs.

They also told me quite emphatically that it was irrelevant to them if you pay cash or not

any recent news on this?

somebody should ask what % sold as of now?...they were claiming 30% a month ago, and supposed things have been "heating up"....

i currently live in greenwich village and was looking to purchase here. i am very happy with the decision to move to williamsburg. initially the edge told me that we'd have to use mortgage express, but in the midst of our negotiations they sold enough units for us to use BofA, who we are now using. Therefore, they have definitely sold at least 33% of the units.

They were easy to work with and we are happy with our price.
We are concerned that the building won't close in June '10.

gonna go check it out this weekend

the office told me today that sales are "30%" which is what they said about six weeks ago, adding that "with 500 units, 5 units only means 1%", so I guess sales are ongoing but they aren't near 50% by a long shot

how come we dont see any recored sales on here? is there anyone out there who has actually negotiated with them?

uh...it ain't complete...sales in this context means contracts/deposits

what kind of deposit would you have to leave to maybe move in come June?

I heard they started to reduce prices.

The Edge. I still haven't found what I'm looking for... and neither will you until they lower prices.

well, they are willing to negotiate... i still think this the best development in the area, in regard to both location and quality of the product. also, 2 brs can be had in the (high) 600s; this is not necessarily the case at a lot of the other developments, where 2brs normally start in the 700s (square footage at the edge may be a bit less, though)

marco, the deposit would be 10% of purchase price; also, first closings might happen a couple of months before june

Can any buyers step forward?

I actually wrote to them (email) and have called but didn't get any response. what's going on with this building?

When the sales people say that they are 30% sold they are not talking about 30% of 500 apartments. What they are saying is that they have sold 30% of what they have made available for sale. They probably have contracts on about 50 apartments. 10% of the total. Next time ask them how many have sold not what percentage. Brokers use this crap all the time. It will be years from now before they sell 250 apartments in this building.

and by that time, price will be 30% less than current listing...

If they don't drop the prices 50% in this building now it will be bankrupt or a rental by September.

sounds good

nyc2009, what's your source? They were quoted several times about a year ago as having about 100 signed contracts, which contradicts what you're saying. It's possible a whole bunch of people broke their contracts since then, but that would be an anomaly based on what's happened in other developments. Let's try to avoid pure speculation unless there are concrete data points or solid evidence to back up these kinds of statements.

my source is a broker that works for The Developers Group. Ask how many of their own people or friends are buying into this building. I can tell you zero so you don't waste your time. That should tell you something. We will see how many contracts they have when they make the offering plan effective and they are required to send a list of everyone that signed a contract to all of the buyers.

who's own people? the broker is saying that no one has signed anything?

"I can tell you zero so you don't waste your time."

I can tell you you're wrong since I know my broker bought one. That didn't take much time to remember.

No Developers Group employees or any of their friends would go anywhere near this building even though they are the company trying to sell the building and telling everyone how great it is going to be. That's who I am talking about.
By the way it is the same brokers that keep telling everyone that a Whole Foods is coming to their retail space which is a joke.

nyc, my broker is a Developers Group employee. He told me this after I had bought my place, so not sure why he would lie about it. I've heard the Whole Foods rumors, but not from brokers themselves. Does that really matter though? If you're buying on a rumor or a hope of an overpriced grocery store... I do think it's inevitable that some kind of large grocery store steps in at some point though. Tops can only handle so many people.

Just be sure and get a good mortgage contingency that protects you if the building goes rental. If the Edge is so sure of sales they should not have a problem signing one. If you own in a rental building you will never be able to sell and no buyer will be able to get financing.

Well, I think there's still concern even if they have 30% of units under contract: first, there's still ~400 units out there; second, out of all those signed contracts, how many will actually close (you have to assume a decent amount were signed very early on); third, the price reductions at NSP1 do pose a threat, no matter what they think about the quality of their product; and lastly, can they hold steady at the more recent pace of sales? That's a lot to worry about in my view.

I am sure if you check the Offering Plan they have already missed the date that they had to have a closing by. In that case anyone that wants their deposit back has to be let out of their contract. That means that anyone that signed in 2008 or early 2009 will accept the offer to get their deposit back.

Why is it bad to own in a rental building?

nyc2009 pls present some facts on the edge. I wanna belive you as im bearish on the place, but ur talkin some big talk

In August 2008, a Developers Group broker had the gall to tell me that the ludicrous price Douglaston offered me to combine two units (they just summed up the two asking prices!) was so good that I would be able to "flip it" at a nice profit in 2009.

minocqua - will u be able to get financing for a rental building?

All new developments have to file an Offering Plan with the Attorney General. In the Offering Plan is a date that they have to have the first closing by. Since the Edge was going to have closings in the middle of 2009 I am sure they missed the date. But since I do not have an Offering Plan from them someone that has one can check. Once the date is missed anyone that has put down a deposit can ask for their deposit back. I would think that anyone that has put down a deposit would ask for their deposit back if they have any sense.

minocqua - Renters do not take care of their property like owners do. Banks know this. It lowers the value of the property. It is not bad if you can get a loan and will never try to sell your place.

nyc2009, you're right about the deposits, but I would guess they gave themselves a bit more time, since they had as firm a grasp on completion date and snags as any. But would be best to hear someone with an actual offering plan (or contract) in hand.

bjw2103 - They can not change dates in the offering plan without filing an amendment with the AG. Once they do that you also have the right to get your deposit back. Maybe they are hoping no one notices the date.

I'm not saying they changed the date; I'm saying they may have placed a very conservative date in the offering plan in order to cover themselves.

The Offering Plans that I have seen do not give you an option of a conservative date. The point of the Plan is to give buyers some protection. It has to be a set date from when you start sales. That is why I am saying they almost surely have missed the date.

By the way W11 missed their closing date and that is why they had to give deposits back despite all of their other problems.

Right, but it is not a fair assumption that just because marketing materials tout a completion time, that is the legal time required to close first unit-- it could be a year away.

The Offering Plan is not marketing material.It is a legal document. You have to have a closing by a certain date that is approved by the AG.That has caused a problem for a lot of buildings around New York. Just lok at the problems at the Rushmore on the West Side.

I'm sorry, but these "constraints" even when bounded by law, are fairly lenient towards developers. But again, let's have someone with an actual contract expound on this. I think you're a bit too quick to make some of these declarations.

right nyc2009, but you are confusing what was advertised in marketing statements and applying that to what is in the legal documents-- the content of which you admit you do not know, but are just making assumptions.

The offering plan closing date was how I was able to get my deposit back from W11. I could teach a class on Offering Plans after what I learned from that process and working with the AG. There is zero leniency when it comes to the Offering Plan. Just call the AG if you don't believe me.

nyc'09, thank you. makese sense.

The date is 4 years from contract date. Please do no speculate and start rumors without having read the offering plan.

realestate2010- By law the sponsor has to have a close on at least one unit within a year of the date it had originally projected for the commencement of closings -known as the "outside" date. If they do not meet this date all buyers must be offered the right of rescission. This is on the Attorney General's website. It is not speculation. I think the Egde has missed that date or will soon. When they do everyone will ask for their deposit back. The AG would not approve a plan that has 4 years from contract date.

"This is on the Attorney General's website. It is not speculation. "

ok, but...

"I think the Egde has missed that date or will soon."

this statement by definition is speculation as you begin it with "I think..."
this is what people here are trying to tell you

Someone will have a good attorney read the plan and the Edge will have big problems. Just like the Rushmore, Warehouse 11, 40 Broad Street Condos and many others that missed their closing date.

I'm very concerned as to the actual amount of people in contract at this project. I dont think the sales force is being honest.

Tell them you are interested in buying there and you need to give your bank a list of the number of apartments in contract as well as which apartments . See what they say then. If they have sold as many as they claim it should not be a problem to give you a list. If they won't do it you will know they are lying. They have to give you this anyway when they declare their Offering Plan effective

Things will be a lot clearer when the first closings happen in a few months. Also, financing is available for this project regardless of the number of units in contract.

As soon as the Developers Group have sold as many apartments as they can and those people have closed they will turn the building into a rental. At that point anyone that has closed is screwed. You will never be able to sell your apartment unless someone pays cash and the value will drop like tube socks on Kate Moss.

How would a developer benefit from truning anything to Rental?
it's like you are buying stock for trade and expect to make a profit on it, and altimately become a share-HOLDER.

They file bankruptcy and get out with what they can. Leave the buyers with all of the common charges. Common charges will go up at least 5 times when the developer runs. It has already happened to at least 20 other building in New York. Check Crains Business Magazine real estate section.

nyc2009, would the developer not go through a round of discounts first? Maybe at a certain price point, those units will start moving (especially for a luxury waterfront development).

nyc2009, as has been pointed out before, your assertions aren't much more than hypotheses at this point, if not blatant exaggerations (ccs will go up "at least 5 times"? Please). I get that things turned sour for you at W11, but that doesn't mean the Edge will undergo the same process. At least one poster with inside knowledge here has stated that Douglaston has no underlying mortgage on the property, so I don't see them in any hurry to turn this into rentals. As ingenieur said, they're much more likely to go through discounts (whether published/marketed or not).

Developer will go bankrupt
AND
Deposits will be returned
AND
CC's will increase at least 5x
AND
it will go rental ???

Ouch!

kiz, also, the "oil fields" will explode. And 15,000 units are coming online this year!

Should be an exciting 2010!

Check the AG website under new condo development.When a project advertises accross the board lower pricing they have to file an amendment with the AG. When they do that it gives people that have already bought the right of rescission based on a material change in the plan that affects the purchasers. I verified this with the AG. That is why developers are stuck. Once they file a plan with prices and some people buy they can't go back. All they can do is negotiate one on one for a lower price but they can't advertise lower prices.

This is a link to the website
http://www.ag.ny.gov/bureaus/real_estate_finance/pdfs/part20.pdf

that makes sense why the edge hasnt lowered prices. as far as there being no mortgage at the edge, the sales person told me that they cant go below a certain price becuase each unit has a loan (its own portion of the property loan im sure)...the edge better come out and set some things straight

nyc, could you point to the particular page #s? This doesn't really jive with what's happened at other condos, where there have been notable advertised price reductions. It seems like if they reduce pricing on some, but not all units, then the scenario you're talking about isn't really applicable. If that's the case, it's a very easy loophole.

"State that the offering prices set forth in Schedule A must be changed by a duly
filed amendment to the plan when the change in price is an across the board
increase or decrease affecting one or more lines of units or unit models, or is to be
advertised, or is a price increase for an individual purchaser."

Yes they have to file an ammendment, and ususally during the course of completion many ammnedments are filed for various reasons. Where is it stated that contract holder has right of recission?

Price change amendments. An amendment proposing to change any offering price is
subject to the requirements set forth below and must be consistent with Section 20.3(k).
- 85 -
(l) Notwithstanding Section 20.5(a)(3), if the amendment is solely limited to price
changes, and no prior amendment has been submitted to but not yet filed by the
Department of Law, the amendment shall be deemed filed when submitted to the
Department of Law.
(2) If the amendment contains price changes and supplements or amends any other
part of the offering plan, the amendment shall be filed on the date indicated in the
letter issued by the Department of Law stating that the amendment has been filed,
and not sooner.
(3) The transmittal letter for a price change amendment must be accompanied by a
completed copy of Form CD-ll as promulgated by the Department of Law.

Page 81 number 5. Any material change to the offering plan that adversely affects purchasers they have to be given a right of rescission. I verified with the AG that lowering prices was adverse to people that had already bought.
They can try to get around it but if you watch their advertising in the paper and see they are doing it you have them.

By the way there is no way a developer would file this.They would be killing themselves. Someone will have to catch them and point it out and take it to the AG for anything to be done about it.

nyc2009, thanks. Does this apply only to contract holders who haven't closed yet, or is this applicable to any purchaser? I'd be quite surprised if it's the latter, but if that's the case, it's definitely something more buyers of new construction should be aware of.

I do not know if you can use this defense once you close. But probably not.

How much can prices be altered before it is considered a "material change" this seems very vague
What happened at NSP. they lowered prices 20-30%,

kiz, yeah, but looks like this is only applicable if the building is vacant (ie: pre-closings). That makes a lot more sense, and would help to explain why they haven't officially lowered prices here. Once they close the first unit though, I think that opens the door to advertise price reductions, with all the zany marketing and exclamation marks they can conjure.

Any across the board lower pricing change according to the AG is a material change and an amendment has to be filed.
If anyone that bought at NSP figures this out NSP is screwed if they want to get out and file with the AG. No one tells you about the AG website. Least of all condo sales people or developers.

nyc, how is NSP screwed? Anyone living there now (who presumably paid higher prices) has already closed.

They claimed they are 30% in contract and then the Bank of America guy told us he could still lend us money.

If someone has not closed NSP could be screwed. They waited until they had closings to start lowering prices. The same thing the Edge will do once enough suckers close. Some places last year if you remember started offering price guarantees to people that if they would sign a contract and the prices lowered before they closed they would offer them the same percentage. That is why a lot of people that would of been able to get out did not try.

Once again they are 30% in contract for what they have made available for sale. They have listed less than 2 hundred apartments. They probably have 60 or 70 contracts. Way short of 30% of the total of apartments. Ask them not for percentage but for total number of contracts and see if you can get a straight answer.

Streeteasy shows 30 sales and 35 listings. So maybe they only have 30 total sales.

It's 30% of total of 565. Got that from them this week.

we know they havent closed because they have no TCO and the ground floors arent even close to being finished. total construction zone. sales began in march 2008 and closings were suppoesed to be summer 2009. this place must be in serious trouble.

I have serious doubts that they have contracts for 150 apartments but we will see when they make the Offering Plan effective and have to list the apartments and buyers.

they told me 30% at the end of december. does that mean theres been no new signings since then?

I don't know Marco. Try asking ConcernedBuyer.

i think concerned would have the same thing to say

They were saying 30% one month after they started sales.

nyc2009...what do you do for a living?

you make so many dubious assertions with such bizarre certainty that it is basically self-discrediting and makes me discount everything you say...

to clarify, i don't see how you can be so absolutely certain they are lying about contracts signed (and there is no doubt they say they have contracts for 30%+ of ALL units in the buildings..the 587 number...they are very clear on that "lie")...and i wonder if your legal interpretations are accurate given that thousands of people are apparently not aware of some of the points you make...which is why i was wondering: are you a re lawyer?

I visited the Edge sales office in early 2008 when it was only open for a short time. They were claiming 30% sold and that they would be sold out long before they opened. How did that turn out?
I am not a lawyer but I have a lot of experience in new developments.
All I am saying is have a very good lawyer read every page of the Offering Plan.
No one is on your side when you buy a condo but yourself. Not even your own broker.

nyc2009, when we went there summer of 2008 (a year and a half ago), they said they were 20% in contract. And there was an article somewhere during that time quoting Levine, the developer, saying they are at 20%.

proof of the 20% level even as recently as this past July. http://www.nytimes.com/2009/07/19/realestate/19sqft.html?_r=1 Basically they are saying that they went into contract on another 50+ condos since then to reach 30%+

NYC2009 please get your "facts" straight before posting BS stuff on here. That's not benefiting anyone