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!