Condo Developers Battle Buyer Remorse

Buyers who renege on a contract to buy a condominium are a growing concern to developers.

"There's a fine line a developer has to walk to get these unsold units off the market," says William Rich, a vice president of Delta Associates and director of the firm's condominium practice.

Rich says builders in the Baltimore-Washington region have taken steps ranging from converting for-sale projects into rentals to offering buyer incentives. But they avoid lowering prices because it upsets buyers under contract at higher prices, he says.

Some builders are forgoing preconstruction sales altogether. Instead, they wait until the project is complete to set prices. Rich says that might make sense. "If a building is already up, it doesn't give buyers months to think about canceling a contract," he says. "These contracts are more likely to go to closing.”

The Ritz Carlton, which is building its first-ever all-condo complex in Baltimore, says its potential customers are too well-heeled to worry about the economy, but "If we have certain situations that are challenges, we would work with individuals on a case by case" basis,” says Gabe Pasquale, director of sales for RexCorp Realty, which has joined Ritz developer Midtown Equities LLC to form RexMidtown LLC.

Source: The Baltimore Sun, Lorraine Mirabella (05/29/08)