New York: Apartment Buyers Abandoning 6-Figure Deposits
February 28th, 2009Via: New York Times:
At 304 Spring Street, a sleek condominium building in SoHo with stunning Hudson River views, the buyer for the duplex penthouse recently decided he would not go through with the deal and walked away from a $780,000 deposit.
At 1120 Park Avenue, a classic prewar co-op filled with multimillion-dollar apartments, it appears that a buyer forfeited a deposit of as much as $1.1 million.
Real estate agents representing buyers of at least three other multimillion-dollar properties also report clients who knowingly left deposits of more than $1 million or hundreds of thousands of dollars on the table.
In each case, the buyers had signed their contracts before the financial meltdown last fall, but decided in recent months that because values in the luxury real estate market have dropped 20 to 40 percent, it no longer made sense to go through with their deals.
Sam Chandan, the president of Real Estate Economics, a research company in New York, said the fact that people were forfeiting such large deposits was “indicative of the degree of uncertainty in the market.”
Given how difficult it has become in recent months to get a mortgage, he said, even buyers at the high end may be concerned about getting financing to complete their deals.
And because the volume of sales has dropped to a trickle in the luxury market, “there are so few comps that it’s hard to even know what a property is worth,” he said, referring to comparable-sales data. “That uncertainty undermines people’s sense of what the actual value might be, so they’re taking actions designed to limit their exposure.”
Research Credit: Pookie
