Appraisal on condo puts buyer in pinch
March 4th, 2008 - Category: CondoTwo years ago, Angie Cifarelli of New Jersey signed a pre-construction contract to buy a condo at the Residences at Midtown in Palm Beach Gardens.
Purchase price in the contract: $404,500.
Last month’s appraised value of the newly completed condo: $200,000.
A property worth less than half its value in 2006 is all you need to know about how bad the real estate market is these days.
But this 50 percent drop is not just academic for Cifarelli, who wanted the Midtown condo as her vacation home. With the rock-bottom appraisal, she says she can’t get a mortgage for $283,000, as planned. And she says she certainly can’t go into her pocket for the balance.
Cifarelli says she asked the developer either to drop the price or to let her out of the deal and give back her $80,000 deposit.
Ram Development’s response: No, thanks.
Ram told Cifarelli she signed a contract for a cash deal that was not contingent on mortgage financing. The fact that the property fell in value is, well, Cifarelli’s problem.
Cifarelli’s case is just another way the market crash has ensnared buyers and builders.
Midtown wants to sell and Cifarelli wants to buy, “but I’m not going to buy something whose value is half the price,” Cifarelli said.
Casey Cummings, president of Palm Beach Gardens-based Ram, wouldn’t talk specifically about Cifarelli because the case might go to court.
But he said he knows appraisers are having a tough time with Midtown, a mixed-use complex of condos, shops and offices. “Purchasers are having a difficult time getting appraisals that support the purchase price,” Cummings acknowledged. “We’re obviously in unprecedented times.”
Cummings said Midtown appraisals will come in too low if appraisers compare units to recent sales at Legacy Place and San Matera. The nearby condo conversions, while nice, don’t compare in quality to Midtown, a new, 225-unit, mid-rise project with elevators and impact-resistant doors and windows, Cummings said.
Cummings said appraisers should look to recent cash sales at Midtown for their comparables.
During the past couple of weeks, seven units closed at an average price of $408,262, Cummings said.
If people still can’t get a mortgage, Cummings said he’s sympathetic. “But it’s a two-way street,” he said. “When prices were going up, no one offered to pay us more money. Now that prices are going down, the purchaser has the option to close, or walk away and lose their deposit.”
Though Cummings said Ram does not sue people to force them to close, “we don’t return deposits, either,” he said.
It’s possible Cifarelli might end up in court anyway. Her lawyer, Gary Nagle of Juno Beach, said Ram has given Cifarelli an impossible choice: “Lose $200,000 at closing, or walk away from your $80,000 deposit.”
Nagle said Cifarelli’s contract doesn’t contain language protecting her if the property’s value falls lower than the purchase price. But Nagle said he still might be able to get her out of the deal because he believes Ram didn’t comply with certain provisions of a federal housing law known as the Interstate Land Sales Full Disclosure Act. Nagle said Cifarelli and at least one other Midtown buyer have notified Midtown they want out within two years of signing, as required under the law.
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King’s Gourmet Market may have left the food kingdom for good. Word is that a market planned for west of Boca Raton, in the Shops of Boca Grove center, might not happen.
It’s the third strike in a row for the former Boca Raton grocer.
King’s popular store on Military Trail in Boca Raton was shut down by a bad roof last year, and King’s now is in a fight with its insurance company over unpaid damages for the building.
Meanwhile, plans to build a new market in downtown Delray Beach recently were shelved after King’s decided the space was too small.
(As an alternative, King’s had offered to buy the space and then lease it out to nationally known restaurants in the “fast-casual” category. But word is city officials really want a grocery store and are looking around for another prospect.)
King’s owner Jeff Sussman did not return phone calls seeking comment, and reps for Woolbright Development, which owns the Shops west of Boca, wouldn’t talk. But two sources say the King’s deal west of Boca isn’t happening.
Making matters worse: King’s has sued its insurer, Mt. Hawley Insurance Co., alleging it breached an insurance contract. In a Dec. 7 lawsuit filed in Palm Beach County Circuit Court, King’s claims Mt. Hawley failed to pay the full amount of King’s damages and losses at the Military Trail store. King’s says Mt. Hawley forked over only $377,000 out of a promised $614,000 payment.
