Front Page Forum: Walk Away from Downpayment?
This post from yesterday on the Forum has already received seven comments but we thought it deserved even wider input. Take a gander: A couple of months ago I entered into a contract on a one bedroom apartment. I put 10% of the $380,000 purchase price down at contact. I am scheduled to close at…
This post from yesterday on the Forum has already received seven comments but we thought it deserved even wider input. Take a gander:
A couple of months ago I entered into a contract on a one bedroom apartment. I put 10% of the $380,000 purchase price down at contact. I am scheduled to close at the end of October. The apartment is great and I can afford the monthly payments (only slightly higher than our current rent). The apartment is priced around or a little lower than comps in the past year. I have been getting cold feet watching the news this past month and have been thinking about walking away and losing my deposit. Is that crazy? Also, is there anyway I could recover even part of the 10% deposit? I’ve already passed the board interview otherwise I would think of talking about my love of piano playing, etc.
Words of wisdom?
Break Contract or Not [Brownstoner Forum]
Photo by Mike Hurren
While the media is very informative about the state of the market, there ia also a biased opinion involved as well, the worse the media makes the economy look, the more of a story they have and the more you watch the news, the more you let the media control your decisions.
Do you love your condo? In about a year or so when the economy is getting back on its feet are you going to regret not taking it? Buying a condo is like marrying someone, it’s one of the most stressful decisions of your life. Do you have cold feet and are just using the media to furthur confirm your doubts in backing out anyway?
I say turn off the TV, put down the newspapers and really think about what’s best for you, not what the media or anyone else here says what’s best, not what your family or your friends think what’s best, what YOU think is best!
Maybe sebb’s point is that even this Brooklyn condo mmight be worth $32 MM…. “in the year 2525” as the song goes!
And yes, I am aware that I posed three questions rather than two.
I answered before I saw your post that you will put down another 10% at closing. This completely changes my advice.
Unless you are planning to be in this place truly long term, run, do not walk, run from this closing. Start saving again and you will live to buy again without being trapped underwater and wondering when you will be right side up again.
Sebb what does your example of a 32million property have to do with anything?
This buyer is talking about a property in Brooklyn for under 400K.
As someone who is a bit anxious by nature, I can understand thinking about backing out of this deal given the current market env’t. However, if it is a Condo and you can rent the apartment should you need to, I don’t see how you can go wrong over time. In terms of losing the 10%, that’s real money. Any market fluxuations are just paper losses until you sell. Can you afford to hold onto the place for 7 years — even if you had to get a renter for a while? If so, I’d move forward and bring a bottle of Single Malt with me to the closing (seriously). BTW – Part of me likes Corcoran’s idea of trying to negotiate better terms for yourself before the closing — using the market env’t and your willingness to back out as a reason to do so. However, I’d be very cautious about taking that approach in the event that you’ll run into the sellers at some point down the line. Kharma is a factor.
You have probably already lost your deposit. Either you walk away and lose it cleanly or you close and have zero equity on day one. That basically makes you a renter with a tax deduction. Either way your down payment is gone.
Which means your decision boils down to two very simple quesitons:
1. How long (realistically) will you be at this apartment?
2. How much will your total after tax cost of owning be if you close (including maintentance, insurance, improvement, etc., plus closing costs spread over the amount of time you will live there)?
3. What does it cost to rent an equivalent apartment?
If you are going to be in this place for less than, say, seven years, and if it is cheaper to rent, then just rent. If for any reason you decide to move before you are currently planning to (which happens to a lot of people) it will be easier to walk away from a lease than a mortgage.
Seems to me that if both apartments are similar, I’d rather be paying the same monthlies into my own pocket, regardless of the market. You can’t possibly think that you are going to lose your down payment over the long term. Plus there are tax benefits to owning. All that besides losing $38K.
This is why you don’t back out, you never know. The FED is coming to the rescue and will not let this Govt Fail.
Sutton Square mansion sells for $7.5M over asking
Seven Sutton Square
Despite a down market, after being listed at $25 million, Seven Sutton Square sold for $32.5 million on September 23, according to public records posted today. The billing address was given as “care of Wildenstein & Co.,” so the buyer is assumed to be art collector Guy Wildenstein. The home was originally two townhouses that were renovated and combined to create a 9,250-square-foot townhouse with five bedrooms, gym, sauna, rooftop garden and 15-foot glass rotunda. There are no mortgages for the property filed in city records, likely meaning it was bought in cash.