Recently a lot of local and national press have been focused on a small group of buyers at CityCenter. Some early condo buyers are demanding significant price reductions….despite signing a contract. Now, I’m not taking sides. I had agreed to buy a property, sight unseen, years before it would be completed and then as it neared completion the market had dropped significantly, I wouldn’t be happy either.
Somehow, I don’t think the same buyers would have thought it was fair if the market had shot up and CityCenter demanded more money. As almost everyone in the country has found out of the last few years, there is no guarantee in the real estate market that the value will always go up. Mark Connot, a partner with Hutchinson & Steffen whose firm is representing a few CityCenter buyers had this to say:
It is simply not possible by any stretch of the imagination to close on the units at the contracted price.
I’m not a lawyer, but when you sign a contract it is binding…unless there are special circumstances. MGM Mirage has stated that they are not going to reduce prices for buyer in contract at this time. However, legal and morals aside, Mark is absolutely correct. These units will need to be appraised if the buyers are not paying cash. Given the current state of the market, I think buyers will find a hard time finding the necessary financing to complete their contract. Plus most contracts include an out clause if the buyer can not secure financing. Whether the CityCenter contracts have that loophole, time will tell.
In the end, I think MGM Mirage will be forced by market conditions to make some kind of adjustments to get the units closed. Of course, this episode is just the latest of the troubles that have plagued the project. So given the market, do you think early buyers are entitled to massive price reduction?
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