how to negotiate a price cut on an apartment in contract

If they already have your deposit they have you by the short and curlies. Not much you can do. Why would they entertain any further negotiation now that they have your dough? As far as they're concerned, you have two choices--walk, and forfeit your deposit (free money for them), or proceed with the deal as agreed.

fair enough. just a question. i personally think many developers, especially with unsold and very pricey units, may entertain a price reduction to avoid have to deal with financing the units themselves, and remarketing in this enviroment. may be worth 5% to them.

I agree. But it becomes a whole different ballgame once a deposit has been put down. That said, you have nothing to lose by trying... I just don't see what incentive the developer would have to agree to a reduction at this stage in the deal.

Would your deposit cover the difference between the price you'd like to negotiate to and the price they'd likely get after re-listing, not to mention the trouble and expense of re-marketing? If not, then they do have an incentive. The tougher part is getting them to seriously believe that you would forfeit your money.

bramstar, the incentive is as follows: say you are in contract at 2 mil and have put 200k down, if you walk and they would get less then 1.8 on resale, then they have a clear incentive, now factor in the time (remember they have debt too which they want to pay down) and trouble of resale and the incentive becomes greater. It all depends upon what they think they could get on resale relative to the contract price minus deposit and how hard they think resale would be. In this day in time I would a rational developer would very likely negotiate but that said I'm not sure how many rational developers you will find.

Mr Chow I would say that you have a very powerful story. Its one thing to just threaten them that you're going to voluntarily walk away but from your other posts its seems that could truthfully tell them that you simply can't close without a price reduction because you can't get the necessary financing.

thank you and appreciated. seems i will be able to get the financing after all. so i can close, but it will be VERY tight. nothing to lose. its not just wishful thinking on my part. i asked for exactly the reason you stated. i think the developer has to look at the bigger picture. theyre holding 552k. not exactly small change, so.....we shall see...

How is the builder of this development doing in terms of their time line? Is the building (more or less) on schedule, or is it backed up? Can you take advantage of the completion date "out" window in the offering plan?

ccdevi--yeah, but the lynchpin here is the downpayment. Do you really think a seller is going to take seriously a buyer's threat to walk away from, in this case, $552K? Sorry, but I don't think so. And unless there is a mortgage contingency the buyer is bound to either complete the deal or lose his deposit regardless of whether or not he can get financing. The seller knows this--why would he budge?

Meanwhile, malraux may be on to something...

very backed up. offering plan expected that closings would begin in jan 2008. they have till dec 31 2008 to close first unit and get first TCO. or buyers can opt out, penalty free. i think its going to be very tight as they dont have tco yet and no 30 day notices have gone out.

Well, that could be your way out. 12/31's only a couple of months away, after all.

does the contract have a "pending financing approval" contingency?

any way to claim you can't get the financing?

I always wondered how that one worked...

i wish. no mortgage contingency. that wasnt standard in june 07. never know on the 12/31. long shot, though.

"""any way to claim you can't get the financing?

I always wondered how that one worked..."""

It works this way: You insist on a mortgage contingency in your contract. You find you are unable to secure financing. You demonstrate as much. You are free to walk away from the deal without penalty.

"but the lynchpin here is the downpayment."

Not really it just changes the math.

"Do you really think a seller is going to take seriously a buyer's threat to walk away from, in this case, $552K?"

If a comparable apt was available or would be available for more then 552k less, yes. if its economically rational for the seller to negotiate (because what the apt would sell for today plus the deposit is less then the contract price, and lets put aside the time and hassle of resale), then it may well be economically rational for the buyer to walk and forfeit the deposit. Not to mention that people are starting to walk away from deposits, its happening.

Isn't there a number for filing anonymous construction site complaints?

;-)

ccdevi--but then it just becomes a game of chicken. Because the buyer's going to need a darn good poker face to convince the seller he is willing to leave half a mil on the table and walk.

And sure, one could argue a comp might come along at $500k less but even if it does, the buyer will at that point have a far lower cash reserve for the new deposit and downpayment.

mr. chow -- you really should talk to a great real estate lawyer, and one who's experienced in similar litigation if at all possible. I've been told that the courts are very sympathetic to would-be buyers who want or need to back out of a RE sale contract, and if correct that would be understood in the industry, and thus a great pre-emptive threat. But that's just my hearsay -- find that specialist.

Plus what talljaystreet says.

on it, thank you. have a 2pm conf call on the subject today. supposedly a pit bull (not with lipstick), who mostly represents sponsors. so....we shall see. that said, there is a lot to consider. even if we do get the mortage (which is not a layup), we still have 200k in closing costs and more downside than upside in our compensation outlooks for the next 1-2 years. (we're unlucky enough to both be in finance, but very lucky to both be gainfully and forseeably employed). carrying the place could prove very difficult and we could be forced to sell at a loss. the sale could take months and the loss would also include the 200k spent on closing costs on the way in plus the 100k on closing costs on the way out plus a broker fee. so its not just a game of chicken. we may in fact walk.

"but then it just becomes a game of chicken"

it is a game of chicken, I agree, but again how serious the seller will take you depends on what the market is, and how objectively the seller is viewing the market. for example lets say Mr Chow is in contract on a place for 3.6, but now the same place in the building goes on the market for 2.6, I would think the seller would take Mr. Chow very seriously.

mr. chow--you are doing absolutely the right thing by speaking to a good attorney. Please let us know how this all works out. Best of luck to you.

Mr Chow, I'd be very interested in your thoughts after your call.

Mr. Chow - how was thee conference all with the attorney. Is he/she any good? Appreciated if you can share his/her info.

This is fascinating & I'd love to hear the punchline, too, but I'd caution about sharing a lot of information before you resolve the situation - THEN, let's dish!