Miami condo glut continues, would you like your deposit back?

Law Offices of Eric L. Bronfeld, P.A.
PO Box 22506
Fort Lauderdale, Florida 33335
954-527-1512(South Florida Area)
1-877-527-1512 (Toll Free outside South Florida)
info@go2closing.com
http://www.go2closing.com

In the middle of the biggest glut of condominiums in more than 30 years, Miami developers keep on building.

The oversupply will force prices down as much as 30 percent, the worst decline since the 1970s, and help push Florida's economy into recession as early as October, said Mark Zandi, chief economist at West Chester, Pennsylvania-based Moody's Economy.com, who owns a home in Vero Beach, Florida.

FLORIDA CONDO DEPOSIT RECOVERY SERVICES

``Florida is the epicenter for all the problems that exist in the housing industry,'' said Lewis Goodkin, president of Goodkin Consulting Corp. and a property adviser in Miami for the past 30 years, who also foresees a recession. ``The problems we have now are unprecedented and a lot of people will get burnt.''

Thirty-seven new high-rise condos and 20,000 new units are being built in Miami's 1,040-acre downtown, where sales fell almost 50 percent in May, according to the Florida Association of Realtors. The new units will join the 22,924 existing condos in Miami-Dade County that were for sale in April, according to Jack McCabe, chief executive officer of McCabe Research & Consulting LLC in Deerfield Beach, Florida. That's the most unsold units since McCabe began tracking sales in 2002.

``Have you been to Miami lately?'' Florida Governor Charlie Crist said at a homebuilders' conference last week in Orlando. ``It's like we have a new state bird: the building crane.''

Construction Jobs

While the housing industry is responsible for 10.6 percent of the nation's jobs, in Florida it accounts for 20 percent, Zandi said. Florida construction jobs fell 2.9 percent in May to 626,200 from the peak in June 2006, according to the U.S. Bureau of Labor Statistics.

The national housing industry's weakness prompted Federal Reserve policy makers this week to cut their forecasts for U.S. economic growth for the next two years.

The economy will grow by 2.25 percent to 2.5 percent in the fourth quarter of 2007 from a year before, compared with a range of 2.5 percent to 3 percent the Fed predicted in February, the board said in a report to Congress.

Florida's robust economy of 2001 to 2005 was driven by the thousands of well-paying jobs related to the real estate market and homeowners who used home-equity loans to pay for items such as boats and big-screen TVs, McCabe said.

``All those jobs are going away now, and we're seeing the trickle-down effect in declining sales in big-box retailers and home-furnishing manufacturers,'' McCabe said. ``Florida is headed to a recession.''

Influx of Retirees

A Florida recession could be averted and the state housing industry's ``serious problems'' solved by an influx of American retirees and foreign buyers, said David Denslow, a University of Florida economist in Gainesville.

``The wave of baby boomer retirees is gathering momentum, and the weaker dollar makes Florida seem like a bargain to Europeans,'' Denslow said. ``With any luck at all that will sustain us.''

Downtown Miami developers already are offering incentives for brokers who connect them to buyers. John Rosser, president of the Key Biscayne, Florida-based John Paul Rosser & Associates Inc. estate brokerage, said he is usually paid a commission of as much as 5 percent when a sale is completed. For the Capital at Brickell, a block off Miami's Brickell Avenue, he was offered what he called ``an unheard of'' deal to steer buyers to one of the 832 units proposed. A salesman said Rosser would be paid 5 percent -- payable when buyers put down a deposit. The project has just broken ground and won't open until 2011.

Puig Bankruptcy

Puig Development Group, a closely held company that converted rental apartments to condos, filed for Chapter 11 bankruptcy protection on May 29. The Hialeah, Florida-based Puig and its subsidiaries controlled 2,900 units in Florida, including 980 condos, worth about $210 million, said Ronald Glass of Atlanta-based GlassRatner Advisory & Capital Group LLC, chief restructuring officer for the Puig properties.

``Puig got a little overzealous and a little overly optimistic, and was caught when the market slowed,'' Glass said.

Florida banks have already quit making loans to Miami condo developers, said Kenneth H. Thomas, a Miami bank consultant and a lecturer at the Wharton School at the University of Pennsylvania in Philadelphia.

``South Florida lenders were the first to put money into the condo market, they were the first to see the oversupply and they were the first to get out,'' Thomas said.

Because of the lag time between making construction loans and closing sales on completed condos, loan problems showed up for Florida lenders in first-quarter bank statistics from the Federal Deposit Insurance Corp. in Washington, Thomas said.

Overdue Bills

Florida banks posted a 43 percent jump in the first quarter in loans no longer paying interest compared with the last three months of 2006, while the number for banks nationwide rose 13 percent, according to the FDIC.

Loan payments that were one to three months overdue to Florida banks increased 30 percent in the first three months of 2007 from the fourth quarter of last year. The same number for banks nationwide fell 1.8 percent, the FDIC said.

Angel Medina Jr., who runs the Southeast Florida operations of Regions Bank, a division of Birmingham, Alabama-based Regions Financial Corp., said Regions has financed projects by two of Miami's biggest condo developers: Related Group of Florida, headed by billionaire Jorge Perez, and Ugo Colombo's CMC Group.

The bank hasn't financed any Miami condos in the past 18 months because development is ``too aggressive,'' Medina said.

Chicago Lender

That leaves the business to lenders such as Corus Bank, a division of Chicago-based Corus Bankshares Inc. Corus has lent a total of $1.07 billion to eight condo developments in downtown Miami, according to the company's Web site.

Corus's net income in the first three months of 2007 was $26.4 million, a 39 percent drop from a year earlier, according to a company regulatory filing.

``It would not surprise us to see an even greater impact on earnings over the next several quarters, or even years, depending on when'' the national housing market improves, Chief Executive Officer Robert Glickman said in a statement.

Miami condo sales fell to 599 in May, a drop of 46 percent from a year earlier, according to the state realtors association. Condo sales in Orlando, home of Walt Disney World, have plummeted 80 percent, said Zandi of Moody's Economy.com.

``The statistics are scary,'' said Michael Wohl, a partner in the Pinnacle Housing Group, a Miami developer that has stayed out of the condo market. ``There's going to be a lot of blood in the water in the next 18 months.''

Hedge Funds

With prices falling, international investors, hedge funds, private equity firms and Wall Street banks are beginning to shop for deals, said Peter Zalewski of Condo Vultures Realty LLC, a consulting firm in Bal Harbour, Florida. Miami lags only New York in the number of foreign visitors to U.S. cities, attracting 5.3 million in 2006 from Europe, Canada and Latin America, according to the Greater Miami Convention & Visitors Bureau.

``Bigger and bigger funds are coming to me wanting to buy,'' Zalewski said. ``Prices have yet to hit bottom because the bulk of Miami properties won't come on the market for another six months.''

Cement dust swirls at 10 high-rise condo construction sites on Biscayne Boulevard, with its prime locations overlooking the waterfront; at six sites on Brickell Avenue, home to the glass and steel offices of Banco De La Nacion Argentina, Banco Industrial De Venezuela and Banco Santander Brazil International; and at eight locations on the Miami River, which splits the city into north and south. That's according to data collected by the Miami Downtown Development Authority.

Covering Costs

Since it can take up to four years for a condo project to travel from conception to completion, many of the towers rising from the coral rock of Miami were planned and financed during the Florida housing boom, which lasted from 2001 to 2005.

Lenders typically require enough advance sales to cover the cost of a construction loan. Customers' deposits, however, don't always mean the sales will close, said Ian Bruce Eichner, a developer whose latest Miami Beach condo tower is scheduled to open in November.

``The market is as close to a depression as Miami has seen in 30 years,'' Eichner said. ``There's a gargantuan supply of homes and the overwhelming preponderance were built for speculators, not for people who are living there.''

As much as half of those putting down deposits for Miami condos are speculators looking to flip units, or sell them quickly for a profit without living in them, said McCabe of McCabe Research.

Buyers Walking Away

With sale prices falling, McCabe said he expects up to 50 percent of them to walk away from their deposits in the next 18 months rather than complete the sales.

``What's going to happen to all those units?'' Eichner asked. ``God only knows. You couldn't give me a piece of property in Miami for nothing. I like sleeping at night.''

Condo developers encouraged short-term investors, whose deposits helped them secure funding, Goodkin said.

``The developers didn't get to start building until they had a certain number of contracts signed, so anyone putting down money was good for them,'' Goodkin said.

Many ``flippers'' closed on their units and now can't sell them, said Michael Cannon of Integra Realty Resources-Miami Inc., leaving completed condo towers with floors of dark windows and empty balconies.

The Jade Residences at Brickell is an example, Cannon said. The 338-unit, 48-story waterfront tower, a block from the Brickell Avenue financial district, opened in August 2004 with buyers willing to pay as much as $5 million snapping up all the units. Now, the new owners have listed 112 condos for sale and 17 units totaling $15 million are in foreclosure.

Trade Center

Jade Residences developer Edgardo Defortuna, president of Fortune International Realty, didn't return calls seeking comment.

The desire to strengthen Miami's position as a center of international trade is spurring the growth, said Dana Nottingham, executive director of the Miami Downtown Development Authority.

``We want to be a premiere urban center, not just nationally but globally, and downtown residential development is part of the formula for a great city,'' Nottingham said.

Mayor Manny Diaz said he's happy about what he calls ``the unprecedented flurry'' of residential development because it reduces sprawl and brings more people and money into Miami.

``We will continue to build because I see more and more interest from foreign investors coming into Miami,'' Diaz said in an interview. ``I don't think we're done.''

Island Skyscrapers

For Rosser, a former Air Force and airline pilot who's been working in the South Florida real estate industry for 19 years, a puzzling transformation is taking place on Brickell Key, a 44- acre island made of dredged bay sand connected to the rest of Miami by a 1,000-foot four-lane bridge.

On Brickell Key, 10 high-rises loom over the island's two tree-lined streets. The development is the product of a ``building frenzy,'' Rosser said.

The island's master builder is Swire Properties Inc., a Hong Kong-based developer that's a subsidiary of Swire Pacific Ltd. Swire is building a $140 million tower on Brickell Key called Asia, which is slated to open in December, according to Stephen Owens, president of Swire Properties Inc.

``Anyone who says they're not concerned about the oversupply of condos is practicing the ostrich theory,'' said Owens, who lives and works on Brickell Key.

All of Asia's 123 units are sold, with the average size of the units, 2,800 square feet, and the top sale price of $6 million discouraging speculators, Owens said.

Prices Fell

In the 1970s, when condos were a new product, Florida developers built 500,000 units and prices fell 50 percent, said Brad Hunter of MetroStudy, a research firm in West Palm Beach.

``The difference is, back then they were two-story condo buildings that had $50,000 units,'' Hunter said. ``Nowadays they are $700,000 units in 20-story buildings. Instead of building too much stuff that people could afford like we did then, this time we built too much stuff that people can't afford.''

A lot of the inventory 30 years ago was sold off and converted to rental apartments, Goodkin said. That solution won't work now because prices have soared and properties coming on the market will compete with existing condos whose prices have plummeted, he said.

Goodkin said opportunistic investors will buy construction loans from banks at a discount of 30 percent or more.

``The vultures are in the trees,'' Goodkin said. ``Reality has become the new pessimism.''

Holocaust Survivor

Developer Tibor Hollo, for one, isn't worried about Miami's condo glut. Hollo, 80, was born in Hungary and spent his teenage years in two World War II-era Nazi extermination camps, Auschwitz and Matthausen.

Hollo started building in Miami in 1956 and now his Florida East Coast Realty Inc. has two high-rises under construction, the $603 million, 787-unit Villa Magna, and the $120 million, 635-unit Opera Tower.

``Residential buildings, if they are well-located and top of the line, they will sell,'' Hollo said in an interview in his Biscayne Boulevard office, where the east-facing windows offer a vista of about a dozen new condo constructions.

Well-to-do Central and South Americans like Miami because of its Hispanic culture, while the dollar's weakness against the euro has made Miami attractive to Europeans who seek second homes in the Florida sunshine, Hollo said.

``We sold 38 units of the Opera Tower's 635 units to Russians,'' Hollo said, his eyes widening. ``I would never have dreamed it. I would understand 38 Venezuelans, not 38 Russians.''

The skyline of Miami is visible from Key Biscayne, the barrier island where John Rosser lives. Some nights the real estate broker scans the new buildings and sees more dark windows than lighted.

``This is dumbfounding to me,'' Rosser said. ``It's a building boom in the middle of a housing bust.''

Real Estate and Condo preconstruction Deposit Recovery

With the housing market cooling, a number of people are backing out of their agreements to buy new homes -- spawning some opportunities for bargain hunters.

Typically, new-home buyers must sign a contract and cough up a hefty deposit, even if their house won't be built for months. But that isn't stopping them from saying "no thanks." In recent months, there has been an uptick in buyers asking for their money back or even walking away from their deposits entirely.

Last month, Los Angeles-based KB Home said cancellations rose in December and January, and luxury-home builder Toll Brothers Inc. told analysts that its cancellation rate had increased in the fourth quarter. Other builders are also seeing more deals falling through. A recent survey by the National Association of Home Builders found that 20% of builders were seeing cancellation rates somewhat or significantly higher than six months earlier; just 8% reported rates somewhat or significantly lower.

It is particularly noticeable in many California markets and in Washington, D.C.; Phoenix; and Chicago, according to an analysis of 16 major markets prepared for The Wall Street Journal by Hanley Wood Market Intelligence. In Sacramento, Calif., for instance, the number of cancellations quadrupled in last year's fourth quarter from the year-earlier period. The typical reasons: Buyers can't sell their current home, or they are having trouble getting a mortgage or fear that they may be buying at the top of the market.

Some builders are responding by rolling out incentive programs designed to move these spurned dwellings. In Phoenix, Beazer Homes USA Inc., of Atlanta, is advertising reductions of as much as $44,000 on selected homes in its inventory. At some California properties, another builder is offering incentives that can include such things as new appliances and backyard landscaping.

In Virginia, Brookfield Homes Corp. is running a "FastMove" special with discounts on roughly 60 homes that are completed or will be ready in 30 days. Among the recent offers: a reduction of nearly $100,000 on a five-bedroom, 4½-bath home in Lansdowne, originally priced at $997,925. "A lot of those properties were originally sold to someone else," says Gregg Hughes, a general sales manager in Virginia for Brookfield.

When housing prices are shooting upward, cancellations aren't a problem for builders. They simply put the units back on the market -- often at a higher asking price. But in markets where sales are slowing and inventories of unsold homes are on the rise, higher cancellation rates can create new opportunities for buyers. In some cases, builders are selling completed homes at prices lower than those charged for units still under construction; in others, they are offering other incentives, such as free upgrades or builder-paid closing costs.

The deals typically are short-lived and aren't available in all markets or even in all communities in a particular market. But some analysts expect them to become more plentiful this year.

Unless you have a compelling need to move, "it's better to be prudent and wait," says Ivy Zelman, a housing analyst with Credit Suisse. "It seems as if the builders are going to get more aggressive and offer more discounts that will make it more compelling for buyers." In some cases, she notes, buyers who thought they had nabbed a good deal have been surprised to find their builder offering a similar home at a lower price a few months later.

Not every cancellation creates an opportunity, but there are ways to sniff them out when they are happening.

Buyers looking for special deals should check builders' Web sites for listings of completed homes or ones near completion, and for any special offers. Builders often run ads for "move-in specials" in newspapers. Real-estate brokers can often provide information about incentive programs in particular markets.

It doesn't hurt to ask, either. Some builders, such as Pulte Homes Inc., based in Bloomfield Hills, Mich., "are very private about their incentives," says Rick Murray, a housing analyst with Raymond James & Associates. "You are only aware of them upon taking a look at the community."

A Pulte spokesman said the company doesn't have a national incentive program, and the use of incentives "is pretty much left up to the individual markets."

Builders are more likely to offer incentives if the home is near completion than if the buyer backed out early in the construction process. Other factors include the time of the year, the strength of the local housing market and even the attractiveness of a particular community. "You can be in a poor market with some good-selling communities" where the use of incentives is less likely, says Marshall Ames, director of investor relations for Lennar Corp.

The higher cancellation rates right now are particularly notable because they come at a time when new-home sales are slowing in many of these areas. That is the case in Sacramento, where cancellations have jumped in part because buyers have pulled back from purchasing higher-end homes amid worries that they may be buying at the "top of the market," says Jonathan Dienhart, director of published research at Hanley Wood.

In all, Hanley Wood saw higher cancellations in 10 of the 16 markets it examined.

The increase in deals falling through isn't limited to new construction. In a conference call with analysts last month, Cendant Corp. said its company-owned real-estate brokerage offices in Florida, southern California and New England saw a 30% increase in their cancellation rate in December. Cendant, of New York, says it reflects the departure of speculators from those markets. Thanks for the visit to the Dollar / Rupee Forex Currency news

Larry Greenberg, a salesman for a surgical-supply company, is among those getting cold feet. Last summer, Mr. Greenberg put down an $80,000 deposit on an $810,000 condo-hotel unit in Miami's South Beach. When the developer recently approached him for an additional $80,000 down payment, Mr. Greenberg decided to back out. "It was too much risk for the potential reward," says Mr. Greenberg, who received his deposit back last week.

Just how costly a change of heart can be depends on a variety of factors, including the terms of the buyer's contract, the reasons for pulling out and even the strength of the local housing market. Initial deposits typically range from as little as $1,000 to 10% of the purchase price. In South Florida, some developers now require a 20% deposit, says Jack McCabe, chief executive of McCabe Research & Consulting.

Many builders say they will generally return a deposit if the borrower can't obtain mortgage financing. Beyond that, policies vary. In a recent conference call with analysts, Toll Brothers, of Horsham, Pa., said it retains the "vast majority" of deposits from buyers who cancel. At D.R. Horton Inc., a builder based in Fort Worth, Texas, division presidents have discretion over whether a deposit is returned.

Refunds are less likely if the buyer has made custom changes, for instance, like adding purple countertops that must be ripped out before the house is sold to another buyer. Miami-based Lennar says it may seek verification if a would-be buyer decides to cancel because of illness, divorce or other personal hardship.

In these conditions, some buyers could find themselves on the hook for more than their initial down payment. If a house is resold for less than the original purchase price, "we are able to go back to the initial purchaser and recoup some of the losses we had there," says Mr. Hughes of Brookfield Homes, based in Del Mar, Calif.

One person's buyer's remorse can be another's opportunity. Beazer Homes, the company with Phoenix-area properties, recently advertised price reductions of $16,000 to $44,000 on completed homes in the region. The company has roughly 100 completed homes in inventory there, many of which came back on the market in the last month because of cancellations.

Mercedes Homes Corp. recently ran specials to move homes that are completed or near completion in North Carolina and certain Florida markets. "We don't want to carry those homes [in inventory]," explains Mark Neubauer, president of sales and marketing. However, prices have moved up enough that Mercedes is selling some of these homes for more than the original purchase price, even after factoring in the discounts, Mr. Neubauer says.

In February, Meritage Homes Corp., of Scottsdale, Ariz., began heavily promoting a "Done Deal" promotion in Sacramento that offers buyers of homes that are completed or nearing completion incentives valued at $20,000 to $90,000. They can include not only backyard landscaping and new appliances, but also window coverings and as much as $15,000 toward closing costs.

"The message has resonated with buyers," says Boyd Roberts, vice president of sales and marketing for the Sacramento region, noting that Meritage sold 34 homes in the area in February, up from 23 in January. The promotions were triggered in part by a spike in cancellations at the end of the fourth quarter as some investors got cold feet and other buyers ran into trouble selling their current homes, Mr. Roberts says.

In San Diego, cancellations reached their highest level in years in 2005, says Philip Romero, chief executive of Award-Superstars, which operates real-estate brokerages in southern California. "A lot of those cancellations have been replaced by new buyers" drawn in by price reductions and other promotions, Mr. Romero says.

Law Offices of Eric L. Bronfeld, P.A.
PO Box 22506
Fort Lauderdale, Florida 33335
954-527-1512(South Florida Area)
1-877-527-1512 (Toll Free outside South Florida)
info@go2closing.com
http://www.go2closing.com

NY Times speaks of Condo Deposit Recovery in Florida

(New York Times)

MIAMI, May 25 — As dozens of condominium towers conceived during Florida's real estate boom near completion, investors who snatched up units in the preconstruction phase in hopes of turning a quick profit are increasingly trying to break contracts, even walking away from fat deposits.

“Motivated” sellers are flooding online forums like Craigslist with advertisements for condo units still months or years from being finished. And lawyers have been inundated with calls from people hoping to avoid closing on units they bought during the speculative craze of 2004 and 2005.

“I get two or three of these calls a day,” said James Ryan, a lawyer in Boca Raton who said he had 40 clients looking to get out of condo contracts. One, Mr. Ryan said, abandoned a $340,000 deposit rather than close on a $1.6 million unit that lost its appeal as the market faltered.

The numbers suggest that it will only get worse. In Miami-Dade County alone, 8,000 new condo units will be completed this year and nearly 12,000 more in 2008.

But demand has dropped markedly, and people who thought they could “flip” condos — buying, then selling for a steep profit before construction is done — are parting with that fantasy. After years of stunning price increases — 25 percent in the West Palm Beach-Boca Raton area, for example, from March 2005 to March 2006 — condo prices have started dropping.

Condominiums in West Palm Beach and Boca Raton sold for a median price of $211,800 in March, down from $224,600 a year earlier, according to the Florida Association of Realtors. And in Fort Lauderdale, the median price in March was $195,500, down from $202,600 the previous year.

As a result, many buyers want out — not an easy prospect unless they are willing to forfeit the 10 percent or 20 percent they put down, from $15,000 for an inexpensive studio unit to hundreds of thousands of dollars for a waterfront penthouse.

“I see buyers unleashing all possible means to try to get out of contracts,” said Gary Saul, a lawyer in Miami for developers, adding that in some projects, 20 percent of buyers want their money back.

Frank Scarfone, a retired engineer who bought two preconstruction units at Hollywood Station, a complex going up in Hollywood, is seeking to cancel his contracts. Each unit is priced at $300,000. The developer promised a city view from both units, Mr. Scarfone said, but now another building in the complex is blocking it — a change that he said made the contracts unenforceable.

He sent a letter demanding his total deposit of $120,000 back, and after getting no reply, picketed the developer’s office. Then Mr. Scarfone called a lawyer, Matthew Schlesinger, who has been unable to recoup the deposit so far.

“If we have to sue,” Mr. Scarfone said, “we’re planning on suing.”

Tom Leon, a retired business executive who moved here from Illinois, said he planned to give up $200,000 in deposits on two condo units in Miami, priced at $500,000 each, after finding “no loopholes” in his contracts. He said he was not especially bitter, since he had made money flipping other properties at the height of the boom.

“I’m of the frame of mind that you have to be prepared in business or investments to take a loss,” said Mr. Leon, 72, adding that he never had any intention of living in either of the units. “There are some people that mentally can never bring themselves around to that, especially in real estate. But there’s a time to hold and a time to fold, and in my opinion, this is a time to fold.”

The condo mania of recent years also beset cities like Las Vegas, Phoenix and Washington, but while those markets are also full of resales, analysts say South Florida drew the most investors.

“Between the Latin American influence and the out-of-state buyers who have a love affair with Miami because of its ambience,” said Jack McCabe, a consultant in Deerfield Beach who tracks the South Florida housing market, “they flocked to it and pushed it to the point where about 70 percent of all sales were to investors.”

Real estate analysts say South Florida’s housing market peaked late in 2005, and would-be flippers stopped buying in 2006. People who bought condos before 2005 might still make money or at least break even if they sell soon, the analysts say, but those who bought at the height of the mania stand to lose a bundle.

Ann Nortmann, a sales associate with Majestic Properties, said one of her clients, a New Yorker, bought 11 condo units in Miami starting in 2004 and has sold six — the last at a $40,000 loss. Ms. Nortmann and others said that with the glut of properties for sale, it might be more prudent to lose a deposit than hold onto a condo indefinitely.

Many speculative condo buyers were foreigners, especially Latin Americans looking to shelter their wealth from precarious economies in their home countries. Mr. Schlesinger said he was trying to help some Colombian investors get out of contracts in a project on the Miami River, a hot area during the boom, where prices are now languishing.

Getting out of real estate contracts is hard, Mr. Schlesinger said, because under state law, buyers have to prove that developers “materially” changed a project in a way that is “adverse” to the buyer. Many buyers want soaring property insurance rates to fall into that category. But a new state law says they cannot.

“About half the time I have to tell people, ‘Listen, there’s nothing I can do,’ ” said Mr. Schlesinger, adding that 20 percent of his clients end up forfeiting deposits.

Gregg Covin, a developer building Ten Museum Park, a downtown high-rise overlooking Biscayne Bay, said that none of his buyers had lost down payments, but that 45 out of 200 had resold their units before closing, often at the same price they paid in 2003 and to so-called vulture investors looking to scoop up multiple units at pre-boom prices.

Like many other developers, Mr. Covin requires original buyers looking to resell to do so through an in-house program, and keeps a 6 percent commission. Because his is one of the first boom-time buildings to be finished, he said — closings are taking place this month — he has had no problem finding replacement buyers.

“Right now, today, there is no shortage of end-users in Miami for finished, nice product,” Mr. Covin said.

Still, the few new buildings that have opened report many units up for resale. In Blue, a downtown high-rise that opened last year, 87 of the 330 units, or 26 percent, are back on the market, according to the Multiple Listing Service. In One Miami, which also opened downtown last year, 155 of the 800 units, or 19 percent, are for sale.

“When you drive by in the daytime, they are gorgeous,” Mr. McCabe said. “But when you drive by at night, there’s no furniture on the patios and only one light on out of 10.”

This being South Florida, some are figuring out how to profit from the downturn.

Mark Zilbert, a real estate agent, recently started CondoSuperCenter.com, a clearinghouse for people willing to resell preconstruction units at their original price. He said he expected thousands of listings.

“I ask if they’d be willing to sell at their 2003 price and walk away with their deposit back,” Mr. Zilbert said. “A lot of people are saying, ‘Yes, please, yes, please, yes, please.’ ”

Law Offices of Eric L. Bronfeld, P.A.
PO Box 22506
Fort Lauderdale, Florida 33335
954-527-1512(South Florida Area)
1-877-527-1512 (Toll Free outside South Florida)
info@go2closing.com
http://www.go2closing.com

Questions? - Florida law regarding preconstruction condo deposits.

Law Offices of Eric L. Bronfeld, P.A.
PO Box 22506
Fort Lauderdale, Florida 33335
954-527-1512(South Florida Area)
1-877-527-1512 (Toll Free outside South Florida)
info@go2closing.com
http://www.go2closing.com

Do you have questions regarding the return of your preconstruction condo deposit?

Please contact How does Florida law protect the purchaser of a preconstruction condo?

In Florida, purchasers have a fifteen (15) day rescission period starting with their receipt of the Public Offering Statement, which includes the condominium documents, association by-laws, preconstruction purchase contract and escrow agreement; to review and complete or rescind any condominium purchase and escrow agreement and receive a full refund of their deposit if they rescind.

The most important protection under Florida law is that your deposit is held in an escrow account. These funds will be not released until the closing of your unit unless the developer designates a portion of the deposits may be used for construction in the contract.

Why are preconstruction sales necessary?

Most developers are required by their lenders to pre-sell a certain percentage of their projects before the bank or lender will lend them the funds for construction. This is the risk (and the opportunity) when buying a preconstruction condo unit. If for some reason the developer decides not to build the project then your deposit money has not been appreciating. Preselling condos has become a standard practice. Once the required presale percentages have been reached and construction has begun, your risk is greatly reduced.

Why buy a preconstruction unit when I can buy one that is available now?

By purchasing at pre-sale you are able to leverage your down payment and control 100% of an appreciating asset with a small (20%) investment. Many people have purchased preconstruction condos and have sold their units for a profit even before the building is completed.

On what floor and what size unit should I buy?

If you are expecting to close and live in the residence then you should select the view and floor height that will appreciate most over time as well as one that you will enjoy living in. The higher floor with unobstructed views are the best.

If, however, you plan to lease the condo to a tenant, you will want one that appeals to the greatest number of potential tenants. This can also depend on the area your purchase is located. If you are in an urban environment, a one bedroom for single tenants may be best; in a resort area, a condo-hotel unit with a management program may work for you. In a suburban neighborhood, two bedrooms are often better because they attract couples without children, single parents with a child or singles with a roommate.

If you plan to sell your condo purchase for a profit as quickly as possible then the least expensive unit on the lowest floor (typically studios and one bedrooms) have shown the highest percentage of return based on previous condominium resales.

What are the required deposits for preconstruction condos?

With most preconstruction condos you will be required to deposit twenty (20) percent by the time the developer "breaks ground". Typically, there is an initial reservation fee, then the remainder of the first ten(10)percent at the time of contract. The final ten (10) percent is required when the developer breaks ground.

Can I sell my preconstruction purchase before it's completed?

You must have written permission from the developer.

1. You may sell your right to the condominium unit by transferring or assigning the contract to a subsequent purchaser.
2. You may sell your unit under a real estate contract upon completion of the condominium. Two real estate closings will occur simultaneously, your purchase, and the sale to your buyer.

Who may resell my condo?

You have two options in most cases:

1. The developer may resell the unit for you.
2. Your REALTOR® may find a buyer for you.

In either case there will be a real estate commission but this choice is solely up to you.
Miami - Broward - Florida - Condo security deposit recovery - real estate attorney - law
What are the advantages of having a relationship with a REALTOR® when purchasing preconstruction condos?

A professional REALTOR® will:

* Alert you about new preconstruction projects before they are made public
* Help you compare the pricing in similar buildings in the neighborhood
* Inform you about community infrastructure developments such as service retail and civic investment that may effect the future value of your property
* Help you negotiate the terms of the contract and advise you on alternative choices that may meet your needs
* Share information regarding the relative financial strength and track record of a developer with you.

How does Florida law protect the purchaser of a preconstruction condo?

In Florida, purchasers have a fifteen (15) day rescission period starting with their receipt of the Public Offering Statement, which includes the condominium documents, association by-laws, preconstruction purchase contract and escrow agreement; to review and complete or rescind any condominium purchase and escrow agreement and receive a full refund of their deposit if they rescind.

The most important protection under Florida law is that your deposit is held in an escrow account. These funds will be not released until the closing of your unit unless the developer designates a portion of the deposits may be used for construction in the contract.

Why are preconstruction sales necessary?

Most developers are required by their lenders to pre-sell a certain percentage of their projects before the bank or lender will lend them the funds for construction. This is the risk (and the opportunity) when buying a preconstruction condo unit. If for some reason the developer decides not to build the project then your deposit money has not been appreciating. Preselling condos has become a standard practice. Once the required presale percentages have been reached and construction has begun, your risk is greatly reduced.

Why buy a preconstruction unit when I can buy one that is available now?

By purchasing at pre-sale you are able to leverage your down payment and control 100% of an appreciating asset with a small (20%) investment. Many people have purchased preconstruction condos and have sold their units for a profit even before the building is completed.

Recommendations for real estate deposit / "down payment"

Law Offices of Eric L. Bronfeld, P.A.
PO Box 22506
Fort Lauderdale, Fl. 33335
954-527-1512(South Florida Area)
1-877-527-1512 (Toll free outside South Florida)
info@go2closing.com
http://www.go2closing.com/

After you have come up with an offer price, the next step is to determine how large a deposit you want to make with your offer. You want the "earnest money deposit" to be large enough to show the seller you are serious, but not so large you are placing significant funds at risk.

One recommendation is to make sure your deposit is less than two percent of your offered price. The reason for this is that if your deposit is larger than that, the lender will pay particular attention to how you came up with the funds. You might have to provide a copy of a canceled check along with a bank statement showing you had the money to begin with. Normally, this is not a problem, but if you have a short escrow period or are barely coming up with your down payment, it could pose an inconvenience.

Another reason to limit your deposit is "just in case." Although significant problems are the exception and not the rule, they do occur. "Just in case" there is a nasty or prolonged dispute between you and the seller, the less money you have tied up in a deposit, the fewer funds you have placed at risk.

Real Estate Deposit Recovery Services and Law

As with practically everything in real estate, there are exceptions to this rule, too. During a hot market there may be multiple offers on the property that interests you. A large deposit may impress a seller enough so they will accept your offer instead of someone else’s, even when your unknown competitor is offering the same price or slightly higher.

Since large deposits do impress sellers, you may also find that by making a large deposit you can convince the seller to accept a lower offer. More money up front may save you money later.

Law Offices of Eric L. Bronfeld, P.A.
PO Box 22506
Fort Lauderdale, Fl. 33335
1-877-527-1512
www.Go2Closing.com

Law Offices of Eric L. Bronfeld, P.A.
PO Box 22506
Fort Lauderdale, Fl. 33335
954-527-1512
1-877-527-1512(Toll Free-Outside South Florida Area)
info@go2closing.com
http://www.go2closing.com/

Real Estate Deposit Recovery information: Did you get your Deposit back?

You can't miss the flocks of cranes that hover over Miami's skyline. They were hatched by a condo fever that seized the city and fueled what is now the biggest construction boom in the country.
Not long ago the only thing going up faster than buildings in Miami was the prices -- and Lucy Blanco wanted in.
Related Stories

"It was going up so rapidly that I was fearful that if it went any higher I could not afford it anymore," she said(REAL ESTATE CONDO DEPOSIT RECOVERY). "So I needed to get it while it was still at a price I could afford…before it went out of my range.
"If we don't hurry up and buy something now," she said, "we're never going to be able to buy anything."

In February 2006, Blanco bought a preconstruction one-bedroom unit in a condo community called Quantum on the Bay. She paid $465,000. Today, however, Blanco estimates the property is worth $100,000 less than what she agreed to pay.
The condo has lost more than the val(REAL ESTATE CONDO DEPOSIT RECOVERY)ue of Blanco's $93,000 deposit. And so, just as fast as Blanco wanted in, she now wants out. That's where Michael Schlesinger comes in.
'Can I Get Out?'
Schlesinger is at the forefront of a new subspecialty in Miami real estate law, that might be called condo extractors. He said he gets 20 or more calls a week from people like Blanco.
"They're all asking the same questions," he said. "Can I get out? Do I have a chance to get my deposit back? If not, what are my options?"
Schlesinger said he looks for a flaw in the condo contract -- a blocked view, a change of design, delayed construction -- anything about the new building that allows him to argue the developer isn't delivering on what was promised.
Schlesinger said he's got about 50 active cases today. He only takes on a few new cases a week -- the ones he thinks he can win.
"Most of the time, unfortunately, I have [to] say that the contracts are too tight," he said. "There's not much I can do, and the options are either you close or you leave your deposit on theUltimately, Schlesinger said, greed played a huge role in Miami's current situation.
"I think two years ago people wereaking hundreds of thousands of dollars doing exactly what they're asking me to get them out of today," he said.
Related Stories

Blanco is convinced she's not getting the square footage she paid for. She's enlisted an architect to measure her floor plans.
"It's wrong," she said. "It's not what I purchased. I paid a lot of money for that. I want every square foot of it, because I paid for it. I'm entitled to it."
It's not clear that she's right and the lawyers for Quantum on the Bay have not responded to her case.
Lessons From Desperate Buyers
Steven Landy is a lawyer who represents other developers seeing a surge of similar cases from buyers desperate to get out of their contracts.
"I can't think of any other area of investing," said Landy, "whether it be investing in the stock market or putting your money on a particular horse…where if it doesn't go your way… you say, oops, it didn't work out, now I want my money back."
Blanco said she has learned "lots of lessons. Never put so much money in a preconstruction. I would never d(REAL ESTATE CONDO DEPOSIT RECOVERY)o that again," she said.
Miami has a long history of greed-fueled building booms and busts. This round is a not a lot different. It is the logical endgame in a market fueled by speculators selling to other speculators. Inevitably, the market would run out of speculators.
The situation in Miami is also a classic case of oversupply. From 1995-2005, 10,000 new condo units were built in Miami, and in the next two years another 20,000 units will be completed.
'Learn to Take Some Hits'
Retired businessman Tom Leon knows a bad deal when he sees it. He bought two condo units two years ago for $500,000 each, hoping to flip them for quick profit.
Today, as the buildings near completion, Leon is certain he couldn't he even get $400,000 for each of the units -- so he's decided to cut his losses and walk away from $200,000 in deposits rather than pay the $800,000 balance he now thinks is a bad investment.
"Listen, you can be the richest guy in the world. Nobody wants to lose a hundred grand," he said. "But in business you(REAL ESTATE CONDO DEPOSIT RECOVERY)'ve got to learn to take some hits. I've made a lot of money so once in a while you've got to be smart enough…to leave when the time is right and I think now is the time."
When those cranes arrived in Miami, it seemed they were constructing towers of gold. But as more and more buildings approach completion and the cranes begin to disappear from their perches it becomes clear that for many it was a fool's gold.