What's going on at "The Madrone" in Hollywood?

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Real Estate Agent with Windermere Real Estate - Palm Springs CalBRE# 01339266

In March last year I attended a fancy launch party in Hollywood for The Madrone, a 180-unit condominium project situated at the corner of La Brea Ave and Hollywood Blvd. The multi-story mixed-use project being developed by John Laing Homes, has a variety of studios, 1, 2 and 3 bedroom condos ranging in price from the $400,000's to over $1 Million.

At the time of the launch I had clients that were interested in a 1 Bedroom condo which was priced at $640,000 (approximately 1000 sq ft) and despite my opinion that the price was high, they signed a Purchase Agreement. As our negotiations proceeded with the in-house sales representative, it appeared that the specifications of finishes kept changing and no-one at the sales office could give definitive answers to my questions.

What concerned me (as the Buyer's Agent) was that the developer was offering to release 50% of the selling agent's commission from the Buyer's Deposit upon the issue of a loan pre-approval from their preferred lender. Since this was in April 2008 and the project was only to be completed in March 2009 I was concerned for several reasons:

What if my client's loan was not approved at the time the project was completed? Would my client lose their deposit because the commission had been paid out early? And what if the building was not selling? Would my clients be one of a handful of sales in a 180-unit building? And what if prices were reduced? Would my client's unit appraise for the required mortgage? And if it didn't appraise, would my clients need to come up with an additional amount for the down-payment?

Before my client's contingencies were removed, we canceled the sale and my clients were out of the deal. That was last year June 2008. Fast forward to January 2009 and construction at The Madrone has been stopped. 

This is not a good sign for the project or the revitalization plans for Hollywood!

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Show All Comments
Rainmaker
336,104
Steven Nickens
Island Sotheby's International Realty - Wailea, HI
R(S)GRI ABR, Maui Real Estate Hawaii

Stewart,

Good job on looking out for your client.  You did the right thing in looking out for your client.  I am sure you found them something else that was the right property for them.

Steve

Jan 14, 2009 09:37 PM #1
Rainmaker
65,339
Paul Kaplan
The Paul Kaplan Group, Inc - Palm Springs, CA
Mid Century/Modern homes in Palm Springs - www.PaulKaplanGroup.com

Too bad so many new construction projects have been put on indefinite hold lately...the same has happened here in Palm Springs.  Good for you for watching out for your client though!

Jan 14, 2009 09:43 PM #3
Anonymous
Anonymous
Anonymous

Stewart - We have taken a beating here with condo pre-sales as well.  I think it is going to be a very long time before another condo project here in Las Vegas will see any substantial pre-sales again.  They are going to have to significantly change their business model to be able to complete construction regardless of pre-sales.

I think it is going to be interesting to see what these condo developers will do to rebuild all of the bridges that were burned once the overall economy turns around.

Good for standing for what is right! 

Oh, and I'm going to be in LA on the 26th, I'd love to get a chance to say hi!

Jan 15, 2009 10:30 AM #4
Rainer
155,429
Anthony Clark
Clark Partners Realty Group - Fayetteville, AR
Real Estate. It's About Lifestyle!

Stewart  What?  There is value in having an agent?  There are things that we agents may think of that the consumer might now?  No!  Surely this was a fluke. 

Jan 15, 2009 11:57 AM #5
Rainmaker
110,667
Jane Wallace
ERA Herman Group Real Estate - Denver, CO
CRS | SRES, Denver Real Estate

It happened here, the developer did pre-sales and co-mingled the funds and used the money for something else, they did not go through with the build and the listing brokers have to harass daily to get the earnest money back - the developer doesn't have the money.

Jan 15, 2009 05:48 PM #6
Rainmaker
476,667
Palm Springs Realtor Stewart Penn
Windermere Real Estate - Palm Springs - Palm Springs, CA
Windermere Real Estate - Associate Broker

UPDATE: John Laing Homes, the developer of The Madronne, has filed for Chapter 11 in the Bankruptcy Court in Wilmington, Delaware.

The curious question now, is what happens to the 180 unit building on Hollywood Blvd and La Brea Avenue?

May 01, 2009 08:56 PM #9
Rainmaker
476,667
Palm Springs Realtor Stewart Penn
Windermere Real Estate - Palm Springs - Palm Springs, CA
Windermere Real Estate - Associate Broker

What the Madronne was meant to be ....

May 01, 2009 08:59 PM #10
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Rainmaker
476,667

Palm Springs Realtor Stewart Penn

Windermere Real Estate - Associate Broker
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