Q. are price reductions unfair?

Here’s a timely question being asked of Elizabeth Rhodes in her Homes Forum blog, Developer’s discount price riles others:

A few months ago I helped my son buy a condo in a small, newly refurbished building. He got it for about $10,000 off the asking price, and the developer paid his closing costs. A month later, the developer sold an identical unit on the same floor for $30,000 off. This seems quite unfair to my son. What can he do about it? Shouldn’t the developer have disclosed he was desperate to sell?

Short answer: No.

(Wouldn’t you all like to know which conversion this is? I do.)

Maybe with Olive 8 leading the way with a price guarantee and Trio following suit more developers will offer this without buying asked and those who don’t offer it will have it demanded of them by buyers.

Sidenote: Wendy, I think you went easy on Trio in that post. They’ve been on the market over two years and haven’t yet sold 50% of their inventory? For a downtown project that’s unacceptable. No matter what the initial issues were they should have been able to react much quicker. They also still need to work on their marketing (see last post re: $80k price reduction and sub-par MLS listings.)

About Matt

Matt , Urbnlivn's publisher, has a love for lofts, floating homes and mid-century moderns.

For years Matt resisted becoming a real estate agent preferring to be an executive in the startup world but he recently caved in the spring of 2014 and became an agent.

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  • The MD

    Helllllllllo????? Ummmmm, UNFAIR? Its called a FREE MARKET, folks! It isn’t unfair, nor is it illegal for a developer not to disclose her/his plans for sell of other units in their inventory. Market conditions dictate prices paid by consumers. The bottom line is YOU paid a price for a unit because YOU thought it was a fair price at that particular time.

    The art of negotiation dictates that none of the players will ever show their entire hand as that would put all of the power on one side of the table. If you could have afforded to pay more for the unit, would YOU have told the developer? I think not. Likewise, if a developer can afford to go lower on price, she/he isn’t obligated to tell you.

    Because another individual was able to get $30,000 off the unit price, as opposed the the $10,000 off the price you negotiated, it simply means one thing – The other individual negotiates better than you.

    When you buy a Toyota Camry at a local dealership, do you honestly believe the next person walking in the door is paying the exact same price you are paying? I certainly hope not. That next buyer will most definitely pay more or less than you paid. That dealership isn’t going to tell you the next buyer will pay the exact same price as you.

    If you have concerns about pricing at the time of negotiation, ask for a PRICE GUARANTEE, or don’t buy from that development. Otherwise, make a deal! That’s the name of the game.

  • The MD

    Helllllllllo????? Ummmmm, UNFAIR? Its called a FREE MARKET, folks! It isn’t unfair, nor is it illegal for a developer not to disclose her/his plans for sell of other units in their inventory. Market conditions dictate prices paid by consumers. The bottom line is YOU paid a price for a unit because YOU thought it was a fair price at that particular time.

    The art of negotiation dictates that none of the players will ever show their entire hand as that would put all of the power on one side of the table. If you could have afforded to pay more for the unit, would YOU have told the developer? I think not. Likewise, if a developer can afford to go lower on price, she/he isn’t obligated to tell you.

    Because another individual was able to get $30,000 off the unit price, as opposed the the $10,000 off the price you negotiated, it simply means one thing – The other individual negotiates better than you.

    When you buy a Toyota Camry at a local dealership, do you honestly believe the next person walking in the door is paying the exact same price you are paying? I certainly hope not. That next buyer will most definitely pay more or less than you paid. That dealership isn’t going to tell you the next buyer will pay the exact same price as you.

    If you have concerns about pricing at the time of negotiation, ask for a PRICE GUARANTEE, or don’t buy from that development. Otherwise, make a deal! That’s the name of the game.

  • http://www.condocompare.com Brett

    Though it is unfortunate when identical homes are sell for 20k less. It is more unfortunate when a developer for what ever reason does not lower prices to respond to market conditions and the project reverts back to the bank who dumps the inventory at much steeper discounts. On a side note, rarely have I seen “identical” units. Many seeminly “identical” units are on a different floor, different exposure to the sun, different views, different finish on the cabinets and counters, or simply a different feel. Every piece of real estate is unique by nature.

  • http://www.condocompare.com Brett

    Though it is unfortunate when identical homes are sell for 20k less. It is more unfortunate when a developer for what ever reason does not lower prices to respond to market conditions and the project reverts back to the bank who dumps the inventory at much steeper discounts. On a side note, rarely have I seen “identical” units. Many seeminly “identical” units are on a different floor, different exposure to the sun, different views, different finish on the cabinets and counters, or simply a different feel. Every piece of real estate is unique by nature.

  • Realist

    Don’t you think the developer would prefer to sell their units with less incentives given to buyers??? Of course they would! Unfortunately, the market is soft so they have to negotiate to move the product. I always find it funny when buyers think it is unfair of the developer to sell units for less. Nobody thinks it’s more unfortunate than the developer. Those are less dollars that they making on their investment.

  • Realist

    Don’t you think the developer would prefer to sell their units with less incentives given to buyers??? Of course they would! Unfortunately, the market is soft so they have to negotiate to move the product. I always find it funny when buyers think it is unfair of the developer to sell units for less. Nobody thinks it’s more unfortunate than the developer. Those are less dollars that they making on their investment.

  • mike2

    Did this person somehow miss that we’re in a housing bubble and $30K(+?) reductions are to be expected?

  • mike2

    Did this person somehow miss that we’re in a housing bubble and $30K(+?) reductions are to be expected?

  • nitsuj

    “What can he do about it?”

    Suck it up and realize they aren’t the best negotiator. But, being as this is the new millennium and there is no such thing as personal responsibility anymore (went out of vogue in the 80s), so maybe find a lawyer that will take the case…

  • nitsuj

    “What can he do about it?”

    Suck it up and realize they aren’t the best negotiator. But, being as this is the new millennium and there is no such thing as personal responsibility anymore (went out of vogue in the 80s), so maybe find a lawyer that will take the case…

  • missjulie

    TheMD is right. Its all about supply and demand. And right now theres alot on the market.

  • missjulie

    TheMD is right. Its all about supply and demand. And right now theres alot on the market.

  • http://deflationland.blogspot.com christiangustafson

    I loved this article in the Times. Finally, people are starting to get worried around here.

    I hear people discussing RE on the 28 bus up through Whittier Heights. They’re still whistling past the graveyard, saying in hushed tones that it “can’t happen here.”

    Too funny.

  • http://deflationland.blogspot.com christiangustafson

    I loved this article in the Times. Finally, people are starting to get worried around here.

    I hear people discussing RE on the 28 bus up through Whittier Heights. They’re still whistling past the graveyard, saying in hushed tones that it “can’t happen here.”

    Too funny.