[urbanrealtor]

[quote=ltsdd]urbanrealtor,
Interesting that you brought the contingency thing up. We’re more than a week past that 10-day “remove contingencies” period. What exactly is the ramification for that? (No, my agent didn’t provide any firm response to this question). I am moving forward with this transaction because it’s been a long and arduous struggle to get to this point (and, of course, because I think I’m getting a reasonably good deal). Otherwise, I would have walked.

Regards.[/quote]

When you buy a place there are 2 main types of contingencies.

Investigation contingencies:
These are the contingencies that state if you are unhappy about the inspection or about the HOA’s finances (or the zoning or the color of the neighbor’s dog), you can back out. That contingency fails. In most RPA’s, you are presented with a default of 17 days (10 days in your version; see paragraph 14 and any counters) within which you need to remove investigation contingencies. In other words to either decide you hate it and want to cancel; or to request repairs (and come to a consensus with the result of that request) or to fall in love and decide you don’t want to ask for anything else. This contingency is automatically extended by the revelation of new material disclosures after the original 7 days that the seller had to give them to you. The bottleneck on disclosures could be caused by anything (your agent, the seller, the listing agent). I am prepping today disclosures that are 2 weeks late. This is the fault of the seller being out of town after accepting an offer. This means the buyer has more time to back out.

Lending contingencies:
These are the contingencies related to loans.
Generally the loan is a requirement (and contingency) of the purchase (most people don’t buy for cash). If some part of that breaks down (the appraisal comes in low, or the borrower writes off half his income), then that contingency will fail and the buyer will not buy.

Removal of contingency:
Generally, in CAR RPA’s, active contingency removal is needed. That means you need to remove your contingency manually. So day 10 can come and go but until you sign a piece of paper stating “the buyer hereby removes xxxx contingency” that contingency will remain in effect. On the expiration of those time frames, the seller can demand that the buyer remove contingency or cancel escrow. So being bullheaded can cost you the purchase even if it does not cost you money. Some developers and flippers and banks will modify this so that contingencies cancel purely based on the date (passive removal). However, usually buyer-seller deals are active.

Once the contingencies are removed (passively or actively), the deposit is in jeopardy if the buyer backs out. I have only had a deposit dispute once and I won because the seller (demonstrably) misrepresented an engineering report that was part of the disclosures. Because that misrepresentation came to light after contingencies had been removed thus creating a new disclosure.

If your agent is not scheduling an inspection until after contingency removal dates, then you should really consider bolting on this. Really. Sounds like you have inadequate or questionable representation.

[urbanrealtor]

[quote=ltsdd]urbanrealtor,
Interesting that you brought the contingency thing up. We’re more than a week past that 10-day “remove contingencies” period. What exactly is the ramification for that? (No, my agent didn’t provide any firm response to this question). I am moving forward with this transaction because it’s been a long and arduous struggle to get to this point (and, of course, because I think I’m getting a reasonably good deal). Otherwise, I would have walked.

Regards.[/quote]

When you buy a place there are 2 main types of contingencies.

Investigation contingencies:
These are the contingencies that state if you are unhappy about the inspection or about the HOA’s finances (or the zoning or the color of the neighbor’s dog), you can back out. That contingency fails. In most RPA’s, you are presented with a default of 17 days (10 days in your version; see paragraph 14 and any counters) within which you need to remove investigation contingencies. In other words to either decide you hate it and want to cancel; or to request repairs (and come to a consensus with the result of that request) or to fall in love and decide you don’t want to ask for anything else. This contingency is automatically extended by the revelation of new material disclosures after the original 7 days that the seller had to give them to you. The bottleneck on disclosures could be caused by anything (your agent, the seller, the listing agent). I am prepping today disclosures that are 2 weeks late. This is the fault of the seller being out of town after accepting an offer. This means the buyer has more time to back out.

Lending contingencies:
These are the contingencies related to loans.
Generally the loan is a requirement (and contingency) of the purchase (most people don’t buy for cash). If some part of that breaks down (the appraisal comes in low, or the borrower writes off half his income), then that contingency will fail and the buyer will not buy.

Removal of contingency:
Generally, in CAR RPA’s, active contingency removal is needed. That means you need to remove your contingency manually. So day 10 can come and go but until you sign a piece of paper stating “the buyer hereby removes xxxx contingency” that contingency will remain in effect. On the expiration of those time frames, the seller can demand that the buyer remove contingency or cancel escrow. So being bullheaded can cost you the purchase even if it does not cost you money. Some developers and flippers and banks will modify this so that contingencies cancel purely based on the date (passive removal). However, usually buyer-seller deals are active.

Once the contingencies are removed (passively or actively), the deposit is in jeopardy if the buyer backs out. I have only had a deposit dispute once and I won because the seller (demonstrably) misrepresented an engineering report that was part of the disclosures. Because that misrepresentation came to light after contingencies had been removed thus creating a new disclosure.

If your agent is not scheduling an inspection until after contingency removal dates, then you should really consider bolting on this. Really. Sounds like you have inadequate or questionable representation.

[urbanrealtor]

[quote=sdrealtor]Sounds like a real hands on agent.[/quote]
Yeah no shit.

I don’t think the motivation is necessarily bad.

However, results matter more than motivation.

The bottom line is that the communication sucks (and it really doesn’t matter if its a time issue or if he has some split loyalty).

For that reason alone, you should consider getting a second opinion.

Your current agent may take that badly.
With a capital b.

Another option is to just point out that he has been less than acceptably communicative.

Seriously, if he is waiting until the end of the contingency period to give you disclosures, he is probably being inattentive.

[urbanrealtor]

[quote=sdrealtor]Sounds like a real hands on agent.[/quote]
Yeah no shit.

I don’t think the motivation is necessarily bad.

However, results matter more than motivation.

The bottom line is that the communication sucks (and it really doesn’t matter if its a time issue or if he has some split loyalty).

For that reason alone, you should consider getting a second opinion.

Your current agent may take that badly.
With a capital b.

Another option is to just point out that he has been less than acceptably communicative.

Seriously, if he is waiting until the end of the contingency period to give you disclosures, he is probably being inattentive.

[urbanrealtor]

[quote=sdrealtor]Sounds like a real hands on agent.[/quote]
Yeah no shit.

I don’t think the motivation is necessarily bad.

However, results matter more than motivation.

The bottom line is that the communication sucks (and it really doesn’t matter if its a time issue or if he has some split loyalty).

For that reason alone, you should consider getting a second opinion.

Your current agent may take that badly.
With a capital b.

Another option is to just point out that he has been less than acceptably communicative.

Seriously, if he is waiting until the end of the contingency period to give you disclosures, he is probably being inattentive.

[urbanrealtor]

[quote=sdrealtor]Sounds like a real hands on agent.[/quote]
Yeah no shit.

I don’t think the motivation is necessarily bad.

However, results matter more than motivation.

The bottom line is that the communication sucks (and it really doesn’t matter if its a time issue or if he has some split loyalty).

For that reason alone, you should consider getting a second opinion.

Your current agent may take that badly.
With a capital b.

Another option is to just point out that he has been less than acceptably communicative.

Seriously, if he is waiting until the end of the contingency period to give you disclosures, he is probably being inattentive.

[urbanrealtor]

[quote=sdrealtor]Sounds like a real hands on agent.[/quote]
Yeah no shit.

I don’t think the motivation is necessarily bad.

However, results matter more than motivation.

The bottom line is that the communication sucks (and it really doesn’t matter if its a time issue or if he has some split loyalty).

For that reason alone, you should consider getting a second opinion.

Your current agent may take that badly.
With a capital b.

Another option is to just point out that he has been less than acceptably communicative.

Seriously, if he is waiting until the end of the contingency period to give you disclosures, he is probably being inattentive.

[urbanrealtor]

Alright it has finally happened.
I agree with CAR on something.
The only qualification I would have is that I think food is more elastic than fuel.
Supply shocks or price spikes in gas will effect a lot more things more quickly than wheat (or other foodstuff) prices.
The biggest inflationary pressure it will have is in the lowest consumer rung (people who spend more of their income on groceries).
I think this compartmentalization is due to the fact that we produce so damn much of the stuff.
My two bits.

[urbanrealtor]

Alright it has finally happened.
I agree with CAR on something.
The only qualification I would have is that I think food is more elastic than fuel.
Supply shocks or price spikes in gas will effect a lot more things more quickly than wheat (or other foodstuff) prices.
The biggest inflationary pressure it will have is in the lowest consumer rung (people who spend more of their income on groceries).
I think this compartmentalization is due to the fact that we produce so damn much of the stuff.
My two bits.

[urbanrealtor]

Alright it has finally happened.
I agree with CAR on something.
The only qualification I would have is that I think food is more elastic than fuel.
Supply shocks or price spikes in gas will effect a lot more things more quickly than wheat (or other foodstuff) prices.
The biggest inflationary pressure it will have is in the lowest consumer rung (people who spend more of their income on groceries).
I think this compartmentalization is due to the fact that we produce so damn much of the stuff.
My two bits.

[urbanrealtor]

Alright it has finally happened.
I agree with CAR on something.
The only qualification I would have is that I think food is more elastic than fuel.
Supply shocks or price spikes in gas will effect a lot more things more quickly than wheat (or other foodstuff) prices.
The biggest inflationary pressure it will have is in the lowest consumer rung (people who spend more of their income on groceries).
I think this compartmentalization is due to the fact that we produce so damn much of the stuff.
My two bits.

[urbanrealtor]

Alright it has finally happened.
I agree with CAR on something.
The only qualification I would have is that I think food is more elastic than fuel.
Supply shocks or price spikes in gas will effect a lot more things more quickly than wheat (or other foodstuff) prices.
The biggest inflationary pressure it will have is in the lowest consumer rung (people who spend more of their income on groceries).
I think this compartmentalization is due to the fact that we produce so damn much of the stuff.
My two bits.

[urbanrealtor]

[quote=davelj][quote=Eugene]On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.[/quote]

I already addressed these issues above. Vantage Point units are not for sale. Zell’s company bought the whole project as apartments a few months back.

The last few large projects to get completed downtown were Vantage Point, Smart Corner, Aperture, the Legend, and Bayside (might be a couple of others I’m missing here). These projects broke ground in ’07 or thereabouts (if memory serves). Nothing of size broke ground once ’08 began (as the lenders put a halt to things about three years too late), so it’s been over three years since a major project got underway. I doubt we’ll see anything break ground for another 5 years but we may see some proposals start to pop up in 3-4 years.

It’s a bit difficult to find out exactly how many new and existing units are available downtown but I’m pretty sure I can find someone who has that data, and I’ll report back once I have it. Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we’re at anything resembling a “normal” level of inventory downtown simply because no new inventory will be coming on over the period.[/quote]

1: Vantage point units will totally sell.
A landlord with a pre-mapped building that cash flows positive is in no hurry to fire sale them but I would expect that at some point in the next few years, the nominal prices will cause selling to make more sense than renting.
Further, VP can sell them off slowly and at its leisure (while still pulling rents). The only question in that strategy is the cost of HOA obligations for the project owner.

2: Generally when a project hits the market, it does so with a very small MLS footprint. If every project showed up with dozens of units for sale, they would modify the market through problematic signaling. By saying that there are dozens (or hundreds) of units for sale, the perception is created that there is no urgency and thus buyers can wait or bargain. I actually think honest listing would be preferable but I don’t think any strategically thinking developer would do this and I am sure banks would avoid lending on such a building.

3: The mean rate (taken over the course of the year) for closings in downtown is about 75/month.
The instantaneous rate of change on this is highly correlated to season (about 50 per october to march and about 100 per month april to september) but it works out the same. About 900 per year. Currently, there is about 400 active for sale in 92101 with roughly translates to about 5 months of inventory.
In a distress-heavy area, that is an impressive mean closing speed.
There are currently about 139 pendings listed in 92101. That means there are approximately 3 units for every one buyer as of today.
If you ask Jim Klinge about this, he will probably tell you that this is a healthy ratio with a just a hint of tilting toward a seller’s market.

Therefore, I think that we are staring a temporary equilibrium right in the face. There is some persistent downward pressure but I don’t think we need to wait until 2-3 years to see “normal” (partially because I don’t think there is such a thing). In sum, I would argue that what we are seeing is heaps of property being dumped onto the market there (resales, short sales, reo’s, late releases) but (to modify my previous statements) that there is also a complimentary voracious appetite among buyers there. Thus we are looking at, I think, a potential inflection point. If rates remain low, the new lending innovations for attached housing remain intact, and inbound inventory does not swell by an order of magnitude (and that is a fuckton of “if’s”), we could be looking at a seller’s market there soon.

I have been running numbers on 92101 since 2008 and this the first time I have thought that.

Your knife catching, davelj, may have been a much better decision than you realize.

[urbanrealtor]

[quote=davelj][quote=Eugene]On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.[/quote]

I already addressed these issues above. Vantage Point units are not for sale. Zell’s company bought the whole project as apartments a few months back.

The last few large projects to get completed downtown were Vantage Point, Smart Corner, Aperture, the Legend, and Bayside (might be a couple of others I’m missing here). These projects broke ground in ’07 or thereabouts (if memory serves). Nothing of size broke ground once ’08 began (as the lenders put a halt to things about three years too late), so it’s been over three years since a major project got underway. I doubt we’ll see anything break ground for another 5 years but we may see some proposals start to pop up in 3-4 years.

It’s a bit difficult to find out exactly how many new and existing units are available downtown but I’m pretty sure I can find someone who has that data, and I’ll report back once I have it. Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we’re at anything resembling a “normal” level of inventory downtown simply because no new inventory will be coming on over the period.[/quote]

1: Vantage point units will totally sell.
A landlord with a pre-mapped building that cash flows positive is in no hurry to fire sale them but I would expect that at some point in the next few years, the nominal prices will cause selling to make more sense than renting.
Further, VP can sell them off slowly and at its leisure (while still pulling rents). The only question in that strategy is the cost of HOA obligations for the project owner.

2: Generally when a project hits the market, it does so with a very small MLS footprint. If every project showed up with dozens of units for sale, they would modify the market through problematic signaling. By saying that there are dozens (or hundreds) of units for sale, the perception is created that there is no urgency and thus buyers can wait or bargain. I actually think honest listing would be preferable but I don’t think any strategically thinking developer would do this and I am sure banks would avoid lending on such a building.

3: The mean rate (taken over the course of the year) for closings in downtown is about 75/month.
The instantaneous rate of change on this is highly correlated to season (about 50 per october to march and about 100 per month april to september) but it works out the same. About 900 per year. Currently, there is about 400 active for sale in 92101 with roughly translates to about 5 months of inventory.
In a distress-heavy area, that is an impressive mean closing speed.
There are currently about 139 pendings listed in 92101. That means there are approximately 3 units for every one buyer as of today.
If you ask Jim Klinge about this, he will probably tell you that this is a healthy ratio with a just a hint of tilting toward a seller’s market.

Therefore, I think that we are staring a temporary equilibrium right in the face. There is some persistent downward pressure but I don’t think we need to wait until 2-3 years to see “normal” (partially because I don’t think there is such a thing). In sum, I would argue that what we are seeing is heaps of property being dumped onto the market there (resales, short sales, reo’s, late releases) but (to modify my previous statements) that there is also a complimentary voracious appetite among buyers there. Thus we are looking at, I think, a potential inflection point. If rates remain low, the new lending innovations for attached housing remain intact, and inbound inventory does not swell by an order of magnitude (and that is a fuckton of “if’s”), we could be looking at a seller’s market there soon.

I have been running numbers on 92101 since 2008 and this the first time I have thought that.

Your knife catching, davelj, may have been a much better decision than you realize.

[urbanrealtor]

[quote=davelj][quote=Eugene]On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.[/quote]

I already addressed these issues above. Vantage Point units are not for sale. Zell’s company bought the whole project as apartments a few months back.

The last few large projects to get completed downtown were Vantage Point, Smart Corner, Aperture, the Legend, and Bayside (might be a couple of others I’m missing here). These projects broke ground in ’07 or thereabouts (if memory serves). Nothing of size broke ground once ’08 began (as the lenders put a halt to things about three years too late), so it’s been over three years since a major project got underway. I doubt we’ll see anything break ground for another 5 years but we may see some proposals start to pop up in 3-4 years.

It’s a bit difficult to find out exactly how many new and existing units are available downtown but I’m pretty sure I can find someone who has that data, and I’ll report back once I have it. Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we’re at anything resembling a “normal” level of inventory downtown simply because no new inventory will be coming on over the period.[/quote]

1: Vantage point units will totally sell.
A landlord with a pre-mapped building that cash flows positive is in no hurry to fire sale them but I would expect that at some point in the next few years, the nominal prices will cause selling to make more sense than renting.
Further, VP can sell them off slowly and at its leisure (while still pulling rents). The only question in that strategy is the cost of HOA obligations for the project owner.

2: Generally when a project hits the market, it does so with a very small MLS footprint. If every project showed up with dozens of units for sale, they would modify the market through problematic signaling. By saying that there are dozens (or hundreds) of units for sale, the perception is created that there is no urgency and thus buyers can wait or bargain. I actually think honest listing would be preferable but I don’t think any strategically thinking developer would do this and I am sure banks would avoid lending on such a building.

3: The mean rate (taken over the course of the year) for closings in downtown is about 75/month.
The instantaneous rate of change on this is highly correlated to season (about 50 per october to march and about 100 per month april to september) but it works out the same. About 900 per year. Currently, there is about 400 active for sale in 92101 with roughly translates to about 5 months of inventory.
In a distress-heavy area, that is an impressive mean closing speed.
There are currently about 139 pendings listed in 92101. That means there are approximately 3 units for every one buyer as of today.
If you ask Jim Klinge about this, he will probably tell you that this is a healthy ratio with a just a hint of tilting toward a seller’s market.

Therefore, I think that we are staring a temporary equilibrium right in the face. There is some persistent downward pressure but I don’t think we need to wait until 2-3 years to see “normal” (partially because I don’t think there is such a thing). In sum, I would argue that what we are seeing is heaps of property being dumped onto the market there (resales, short sales, reo’s, late releases) but (to modify my previous statements) that there is also a complimentary voracious appetite among buyers there. Thus we are looking at, I think, a potential inflection point. If rates remain low, the new lending innovations for attached housing remain intact, and inbound inventory does not swell by an order of magnitude (and that is a fuckton of “if’s”), we could be looking at a seller’s market there soon.

I have been running numbers on 92101 since 2008 and this the first time I have thought that.

Your knife catching, davelj, may have been a much better decision than you realize.

[Author]

Posts