Your best bet in this situation is to speak with the seller about changing the agreement. If they are on hard times like a majority of the country then maybe a renegotiation would work best for both of you. They probably don't want you to walk away from the sale, and they know you don't want to lose the Earnest Money. Try to renegotiate and if that doesn't work, try to look at all the options available in Seattle as far as your contract. Hopefully your buyers agent can help you through the process. Good Luck!
One of today's real estate delemas is getting property to appraise for the amount the sellers are asking.
This goes beyond the resale market and extends into new construction.
Anyone finding themselves in a building project that has extended from 2006 to 2009 should be asking anyone and everyone associated with this project if their property will appraise for the sale price. Banks will not finance a property that does not appraise for the sale price.
It is with this understanding that we would recommend basing your position.
Take a look at the finance contingency portion of the contract. The condo must appraise for the purchase price. If you can not afford, nor wish to pay for an attorney you may want to have one of these amazing Seattle Agents take a look at the contract for you, unless you have a buyers agent (not the onsite selling agent).
I understand all the units in Olive 8 under 750K sold out by 2007 and there are currently only 7 nuits listed on the NWMLS (that I can see) with prices ranging from 795K to 1.8Mil. If this is the case then I would think these units have held their value and may still be a good investment.
There is a lot of fear in the air with the state of the current economy, however I would like to offer another point of view: Economy will improve and the downtown area is an awesome place to live. I understand it seems like doom and gloom right now and you may be thinking "What if I am making a Mistake"?
Just my opinion here, but I beleive the economy will improve within the next two years and downtown condo values will go up and I would hope you are looking at holding the condo for a while. The current state of economy should not be the deciding factor.
All of the agents here have great advice, so you will have to decide what is best for you.
Lastly, I always, always, always buyers have BUYERS agent representation when buying new construction.
My best to you!
I concur with what many have said below. It would be best to consult an attorney and/or financial advisor to help determine what's the best option for you. I have known pre-sale buyers to walk away (they were investors) who decided it was better to take the EM loss upfront rather than take a potentially larger loss trying to flip the property or lease. Everyone's situation will be different and investors will view a condo purchase differently from a home buyer.
I'm guessing you have another screen name on my blog...if so, one thing you and the other O8 buyers might consider is pooling funds for an attorney consultation, maybe something to discuss with "olive8buyer" since he's taken a role in coordinating the O8 buyers group/meetup/blog. At the very least, everyone's contribution will be low and you'll be able to discuss the situation with a legal professional. Just a thought.
First off take a deep breath. The last thing you want to do is make a rash decision.
Determine what the unit would currently be worth compared to what you paid in 2006. If the value of the home currently is $40K or more less then what you paid, it may make sense to walk away. If the unit is now only worth $70K less, giving up the unit might save you $30K vs. going through with the close.
Also consider what your time horizon is. Are you planning on owning the home for five to ten years? If so you are likely to make you money back over time. You will may well be bailing on the home at the bottom or near the bottom of it's value.
Also, think about your life over that time period. Will your income change, and will you have difficulty making the payments necessary to hang onto the property long enough to make your money back.
Here is the bottom line. If you walk away now it will cost you $40K. If you choose to hang on you will need to wait quite a while to make your money back.
So which decision is going to allow you to sleep at night?
Depending on the kind of person that you will determine the tollerance you have. It may be five, seven or ten years until you make your money back. Can you wait that long? If not get out. If you can wait, you will make your money back, but it is anyone's guess how long you may need to wait.
Please have a lawyer look at your contract before making an expensive error. If you didn't have your own agent (not the agent working with the seller/builder) when making the purchase agreement then paying a few hundred dollars is a far cry from losing $40,000. There may already be gounds for you to terminate the contract just based on deadlines and delays. A reasonable lawyer can give you an estimate of their fee regarding an opinion of your legal options.
If you used a buyer's agent then I would have them look at today's value of the condo you are purchasing compared to price you paid in 2006. I just sold a condo in downtown Kirkland that was purchased on a presale offer in 2005 and the seller made a considerable profit as they bought so early. If you bought
from the site agent than you might want to get the advice of another agent. If the value is considerably
lower than I would ask how long you intend to own this unit and if you think the value will increase during that time. If todays value is considerably lower (lower than your $40K earnest money) and you do not intend to keep this unit for more than 2 or 3 years then I would highly advise you to have an attorney review your contract to see if you might have legal excuse to terminate your contract. A real estate attorney should not charge you more than a few hundred to review your contract and it is money well spent considering the earnest money loss you face. I had a buyer in the same situation who bought non-contingent in a new building on Queen Anne a year ago and when putting his present unit on the market for sale found out that his building will be undergoing over 1 million of repairs in the next year and was unable to sell his unit. The
building in which he purchased did allow him to try and sell his position for the purchase which he was unable to do and he did lose his earnest money. After evaluating your purchase value with todays market you can also try and renegogiate your purchase if the value is considerably lower but I would first get the advice of a real estate attorney. If you don't know of a good attorney I can recommend one in Kirkland.
Another consideration is that if you signed your contract in 2006--At this time the condo may not be worth anywhere near what you agreed to pay for it. You might end up walking away based on this alone, but again, you need to talk to your Realtor.
If you don't have a Realtor because you made the mistake of buying directly from the seller (or at an on-site "sales center"), then you can start by trying to work something out with them as the previous poster mentioned. Make sure you are VERY familiar with every aspect of the contract you signed--There may be a provision in it for you to get your EM back.
This is another example of why it's important to have proper representation.