Comments on: Seattle condos compared to other cities

By: Downtown Guy

Downtown Guy — Thu, 29 Nov 2007 04:55:27 +0000

Scrubfree,

What did you have for dinner? I’m curious…

By: scrubfree

scrubfree — Thu, 29 Nov 2007 03:59:01 +0000

Let me clarify: I had a delicious dinner!

By: Downtown Guy

Downtown Guy — Thu, 29 Nov 2007 02:58:24 +0000

Earlier in the blog, I answered your question, Chris. I wrote to you:

“Let me clarify. I am referring to a situation where an entire building or most of a building has not yet sold. In situations where the building is mostly sold, I would agree with you.”

By: mhays

mhays — Thu, 29 Nov 2007 02:50:59 +0000

A lot of true stuff there, but I said nothing directly about margins. Just cost. And that groundbreakings have been slower due to market conditions.

By: Chris

Chris — Thu, 29 Nov 2007 02:19:51 +0000

THREAD SUMMARY……

DT Guy- Developers have huge margins and are not being held accountable for quality. They could build with some combinations of better quality/lower prices if they accept lower margins

Mhays- Margins are slimmer than you (DT Guy) think, due to cost escalation

DT Guy – No prices are rising faster than costs, so margins are not smaller than they used to be several years ago

DT Guy- they guys have more than a 10% profit margin by which they can play, or they wouldn�t drop prices at all as they would begin losing money. They would simply walk away.

Me – No, actually, developers might drop prices even if means having a very slim margin or slightly neg margin b/c its better than defaulting on consrtruction loan

DT Guy – LLCs protect developer from liabilities, so that can walk away from upside down projects

Me- No, when your equity partners and rep are in the balance, or worse your the signatory on a c. loan guarantee, you’d rather have zero margin than walk away

so, DT Guy, please respond to this last question, if you’d indulge me:
If you’re a local developer, have raised $ from equity partners you plan to deal with again, and lets assume one of them signed the loan guarantee, and your project is 80% complete but due to falling prices, you might have minimal to no margin on cost, do you “walk away, as you say??

By: mhays

mhays — Thu, 29 Nov 2007 01:52:17 +0000

BBB, if you’re going to cuss me out you’d better have more than that. Or was this just an uninformed tantrum?

By: mhays

mhays — Thu, 29 Nov 2007 01:51:00 +0000

I didn’t say anything of the kind. Of course they protect the developer. All I said was the lender’s or contractor’s due diligence required knowledge of the firms involved in addition to knowledge of the LLC.

Let me guess…everyone you’re “against” is responsible for every post you don’t like. Not impressive.

By: BBB

BBB — Thu, 29 Nov 2007 01:01:47 +0000

I do not agree with your rambling why LLCs dont protect the developer. You are ridiculous.

By: mhays

mhays — Thu, 29 Nov 2007 00:31:47 +0000

Oh, and please let me know which of my other points you want supporting information for. It’s not controversial stuff.

By: mhays

mhays — Thu, 29 Nov 2007 00:29:26 +0000

I think some of BBB’s “So F&$% YOU, dickie!” comments might qualify for deletion.

BBB, you want background? The 50% escalation figure is from ENR Magazine, the top journal for such things in the US. The 34 condo units started in the last six months is clear to anyone who watches the Downtown market…anyone know of more?

So basically you’re an angry buyer and hate LLCs. That’s your business. Now please explain how this relates to me, aside from your PMS about anyone with any relation to building stuff?