Your answer likely rests with your attorney, your contract, and the developer's attorney. Most contracts include language alluding to the need for the property to "appraise out." Not looking at the contract you signed or additional language inserted by your attorney, I don't know if that language exists so I can't comment on what direction you have available to you. Another typical clause in a developer's contract unless removal is agreed upon between parties is the developer's ability to get a mortgage for you if you are not able.
One thing I wish to submit having been ill-served by an appraiser or two is that it is plausible that the property was not accurately appraised. This being the case it is likely that the developer will have another appraisal ordered. This was the course my buying client and I took a year ago Memorial Day when a Bucktown one bed sold but the appraisal came back well under what the buyer agreed to pay. The buyer tried to back out of the contract. Our stand was that if the appraisal was accurate, we would view the buyer's actions as reasonable. However, an appraisal that we ordered came back favorable to the sales price. So we were determined to keep the buyer in the contract. At this point the issue became more legal than anything else. But my client was not willing to release the earnest money.
At the end of the day an agreement was reached between the parties and the buyer remained in the deal. I wouldn't be surprised if the developer didn't have another appraisal conducted. I would imagine that the true value of the condo is somewhere between the numbers generated by each .
By the way, were you represented by a real estate professional? If so, did this individual run comps to help you determine how much to pay? If so, aren't you surprised by the variance between what you agreed to pay and the appraised value? Again, perhaps the agreed upon price varies from "true" value, but I find it difficult to fathom that you were so severely off the mark with respect to the contract you originally negotiated.
The Real Estate Lounge Chicago
Understand that $24,000 in upgrades won't add anywhere near $24,000 in value to your unit. Nor will it even cost the developer $24,000 to put the upgrades in. I don't know what upgrades are involved, but it might be only $4,000-$6,000 out of pocket for the developer.
And even though you've got the cash to buy the place, you'd essentially be overpaying by $24,000. That'd be an unwise decision.
Go in there an negotiate tough. Start off asking for a $24,000 price reduction and $15,000 in upgrades. You can trade a bit of the price reduction off for hefty upgrades, or you can trade most of those upgrades off for a $24,000 reduction.
Your argument is that you're a qualified buyer...and that's worth a fortune in today's market. But you're not going to overpay, especially when the market may be declining further. And if the developer's first response doesn't move significantly in your direction--more than halfway--then walk.
Hope that helps.
If not, what you do is up to you. You could pay the difference in cash, and reduce your down payment to 20% if you need to. Whether or not the more involved scenario regarding getting the upgrades is advisable at this point is something you should discuss with an attorney. It would likely involve completely rewriting the contract. Then again, it's possible that doing this might bring the appraisal up to the original price, and cost you no extra.
Personally, I would walk if the seller does not accept the appraised price. Like improvements, the value of upgrades does not add appreciably to the value of a property at resale.
I like this drift. But is this what you're implying?
I wish you well in your situation. Do you have a mortgage commitment. With only 25% sold, here is my blog on non-warrantables for your consideration. You may want to ask your lender whether this issue has been addressed.
I am a big fan of buying a new home when it is 1-3 years old. Let the original owner get the headaches.
If you are buying the least expensive unit in the building and can get the reduction, perhaps. I wouldn't ask for upgrades since $24K in upgrades may only be worth $15K on resale.