what do you think of Peninsula Real at los altos? they have sold 60% of the units but escrow has been

Asked by Animalfarm, Palo Alto, CA Thu Aug 6, 2009

closed for only about 50% of sold units. seems like they have a lot of pending escrows waiting for contigencies. if the loans get rejected there would be more unit unsold. wouldn't the seller have to start reducing the price further if that happens?

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3
Andrea Merten, , Redwood City, CA
Wed Sep 9, 2009
Hi Animalfarm-

We are now over 70% sold at Peninsula Real. It takes about 8 weeks for us to close a home because we allow our buyers to custom select their floors. Since we are selling out very quickly, we often have more than 10 homes close escrow every month.

So far our buyer profile includes well educated, well qualified buyers who are not having any difficulties getting loans. Our relationship with Wells Fargo, one of our preferred lenders, allowed us to begin closing homes with just 25% of the community pre-sold.

Currenly, we are selling about 6 homes per month which is a record setting pace. This tells us that our current pricing is just right. We expect to be fully sold-out by year end.

Please let me know if you have any other questions.

Andrea Merten
Director of Sales
Silverstone Communities
Web Reference:  http://www.peninsulareal.com
0 votes
Rosie, , 95020
Thu Aug 6, 2009
Hello Animalfarm,

Sounds like you may be hoping that the community might not be able to sell as quickly as they planned, and are waiting to see if their prices drop before going to buy. Am I correct??

Currently, this community has 78 total units and only 30 remain unsold. They also have homes in escrow, that is correct. However, all the buyers must have been pre-approved before going into contract. Therefore, the possibility of the loans getting rejected is minimized. Buyers may cancel due to other factors such as job loss, etc. which may impact the number of unsold units.

A builder will have to reduce prices based on supply and demand, just like any other home for sale. If you start to see the prices going up, then there are more buyers and less homes available to sell. If, however the homes sit on the market for a long time, then you can tell there is not much demand and prices would then have to drop.

If you want to live here then it is in your best interest to take your agent with you. I have worked for a builder before and can help you understand the process of purchasing and negotiating your contract.

Best,

Rosie
0 votes
Grace Hanamo…, Agent, Cupertino, CA
Thu Aug 6, 2009
Hello Animal Farm:

For all new homes developments there is a magical "tipping point" when lending gets a bit easier, and that is when 50 percent or more of the homes have closed escrow. For many developers today, the possibility of bankruptcy and the failure to complete the project is so great that lenders are beginning to become a bit "gun shy" with developments where the majority of homes have not yet closed escrow. Bank of America and Wells Fargo, for example, are two of the most active lenders in our area and both firms must "prequalify" a complex before lending. To do this, it can take between 2-3 months of paperwork for the bank to feel comfortable enough to lend in the development.

As to the current delay in closing escrow, there can be many reasons why this has occurred, including incomplete units, wait periods for Certificates of Occupancy (or "COOs") or cash flow issues with the developer. However, I suspect that the previous prequalification from the banks may have expired (these are updated periodically, usually every three to four months) and the banks are again reviewing the financials, budget, and sales data to determine if the property is still "loan worthy."

Peninsula Real is well placed, priced and appointed, so it may be unnecessary for the developer to exercise further price drops to sell the remainder of the available homes. If youichoose to purchase from the developer, remember to take your own Realtor with you to represent your interests.

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
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