A lot of folks put 5% earnest money down years ago to lock up a condo that is only coming to market now. Unfortunately for many folks the purchase and sale agreement they signed very likely didn’t have a financing contingency because as the sales center folks will tell you, that’s just not how it’s done. And of course the developer didn’t really do much due diligence on your ability to actually get a loan.
The Seattle Times has a story today about someone at Veer Lofts who is now out $14,000 and doesn’t have a condo, How much should you pay for a dream?
He’s got the same job, with a slightly higher salary. Yet today he can’t get any loan. The reality is that his condo would eat up a bit more than half his take-home pay, considered A-OK in the go-go days of 2006 but unacceptable today.
And now Vulcan â€” technically the Veer Lofts Venture LLC â€” won’t give him his $14,000 deposit back.
If you dig in the comments Vulcan’s spokesman left a comment:
Danny, you and I talked a long time Friday and I wanted to share a few things you didn’t have room to include in your column.
Vulcan has worked hard to help people close on their condos. We have had success as we work to be as creative as possible with our buyers, whether that means delaying closing or some other fix.
Unfortunately we did not have the opportunity to sit down with Mr. Cohn and, as I told you Friday, we remain committed to do so.
Veer is now approved for FHA loans, which means lower down payments and other benefits to buyers looking for affordable housing. That, too, has helped people close on their condos.
Mortgage companies that over-promised home loans did no favors for us or any developer. The banks got their bailout, but that has done nothing for buyers like Mr. Cohn, or, frankly, for companies like us.
Our website needs to be updated, but as I told you, Countrywide is no longer the preferred lender at Veer. And even when it was, it was made clear to all buyers that there was no requirement to use the firm.
When a buyer is unable to close and move in to their condo, we don’t win by having their earnest money. We lose much more than that with a suddenly unsold condo unit and an unhappy customer who contacts the media.
Are there any stories of any developers giving back the 5% earnest money? Or are any developers putting folks into cheaper units that the buyer could get financing on? Or doing lease to own? What’s the dirt here? I haven’t heard anything.
…I’m in Mammoth Lakes California tired from a day of skiing which explains why I haven’t responded to any of the great comments in the last few days.