This could be a BS story, but I'm less concerned with their excuses than the opportunity it provides me. The poor publicity should give me leverage in dealing with the sellers. If condos were being auctioned off for 250K before this news broke and before the real estate market dipped another 8%, what can I realistically get one for now?
The board of directors of a Sandbridge condominium complex has filed a
$3 million lawsuit against the community's developer.
The board of The Sanctuary at False Cape is seeking to recover the money
for poor workmanship, failure to follow good construction practices and
meet building codes, and failure to install proper hardware and roofing,
according to the lawsuit.
The suit was filed in Virginia Beach Circuit Court earlier this month.
The 248-unit luxury condominium complex overlooks the Atlantic Ocean and
Back Bay National Wildlife Refuge.
It features a restaurant and cabana bar and accommodates a mix of people
who live there year-round, second homeowners, and renters.
The suit contends, however, that there are construction problems with
balconies, roofs, parking garages, elevators and pool decks in the
The first phase of the complex opened in 2006.
Frederick Felini, president of The Sanctuary at False Cape Condominium
Association, signed an affidavit attached to the lawsuit.
Michael Inman, the registered agent for developer Sanctuary at False
Cape LP, did not return a phone call seeking comment.
Take a look at this thread.
Not a smart place to buy IMO even with major fire sale prices. It's still a condo, where is the money to manage & operate the place coming from?
You'd be surprised the restrictions put on appraisers. I've even heard of banks coming back after an appraiser to justify their value to the bank because they couldn't sell the property near the appraised value. There has never been times when we didn't have foreclosures, they always will exist, but just not at the amount we're seeing today. If you notice, they are 95% loans less than 24 months old too. Some people just shouldn't have gotten loans, others are falling on hard times fast.
Honestly,it depends are percentages. If there are 100 sales, and 3 are auctions, it won't be more than a blip on the radar screen. If there were 6 sales and 3 were auctions, it means that the market is in distress and so distress sales are the market.
You are correct, appraisers do take into account properties sold under duress. They typically look for like transactions to determine market value. Foreclosure sale vs foreclosure sale. Now this auction that was held isn't characterized quite the same, so the impact may not be as severe. But it will have some repercussions.
It's a good question. I've run across this in the past, where there was a foreclosure or auction that sold much lower than the traditional homeowner sales. Apparently, the appraisers take into account that these homes were sold under circumstances of duress. So, this will not affect the value of homeowner sales "as much". If anyone knows any different, please post. This is what was told to me and clients.
In addition to the builder possibly losing properties to bank foreclosure (and this auction may have been part of a "short sale workout" with the lender), there are a few other things that I can mention that I don't see here. With condos, there are laws about how many need to be sold as condos. I think it's 2/3 of the building, don't quote me on that. If the builder can not sell them, then they may revert to apartments - there are many strategies. I have seen builders come back and buy back condos after attempting to sell them many different ways, so that the builder can convert it to a rental property (perhaps to sell it as a multifamily property, there's a lot of this going on).
Next, I want to say that selling 19 of 75 homes in a day sounds pretty good to me.
Lastly, to answer your questions about how this affects value... well, if the sales CLOSE significantly lower than the other homes are (and there is sometimes negotiations after the gavel price - like perhaps ungrades), then it just depends. I don't know this property or this auction, but appraisers should be looking at all the comps, including (but not limited to) those sold at auction. Nineteen is a significant number, so it will impact the appraisal prices, which may require the current contracts be lowered, which will further lower the prices. (May being the operative word here).
Hope some of this information is helpful!
I agree with Drew, he's got some good points there. The builder wanted to get a littlie cash infusion going. I am actually working on a contract right now for someone who has a contract on one of the other units, that was not sold at auction. I'd love to work with you if you're seeking financing!
Cavalier Mortgage Group
What will happen to the condos that are left will depend upon what the owners decide to do. Some continue tp market the condos in the regular market; some will add incentives; some may decide to have a special holiday sale; they may set up owner financing; they may convert some units to lease with option or even short or long term rental units. At some point, the condos may go on auction again.
If the builder can handle the bills, he may hold onto the condos until they sell. If he cannot, at some point the lender backing him may insist upon payment which will require the owner/builder/contractor to come up with a way to satisfy the loan.
If you want to see the local market, try going to open houses in older, established neighborhoods too. One auction in one neighborhood will not give you an adequate overall picture. Seek out 5-10 different neighborhoods in your area and find out about sales in those areas over the last 1-5 years to get a fairly good picture. If you're working with a realtor s/he can pull those numbers for you but you should still go to several neighborhoods in person to see and feel the flavor of each for yourself. You can go with your realtor, a friend who knows the area, or by yourself but do go. It will be a real learning experience.
This was a good use of an Auction to attempt to sell properties at market value. Auctions typically get people to overpay, even foreclosure auctions at the courthouse steps. You get so caught up in the moment you're likely to overpay at times. I see it all the time.