Miami Condo Fiasco

Comment from HousingPanicIsHere
Time: September 21, 2007, 10:55 pm

I have some bad news…

Article:
http://cbs4.com/topstories/local_story_264095336.html

Video:
http://cbs4.com/video/?id=40819@wfor.dayport.com

At the auction of Platinum Condo’s

$350,000 one bedroom sold for $176,000 (1/2 Price)
$600,000 two bedroom sold for $295,000 (1/2 Price)

So basically the condo you own is now worth 1/2 price.
If I were you I would just cut your losses and walk away from the deposit. If you close on the unit it will be 2025 before it is worth what you paid again.

Comment from admin
Time: September 24, 2007, 7:56 am

…that’s for the encouraging words…

Comment from miamicrash
Time: September 24, 2007, 8:06 pm

Good news: The rates got cut, meaning that its gonna be more affordable to close, especially if they come down even more.

Better news: My brother called the Plaza and they told him closing isnt till April. I havent been able to call them myself to confirm, and that sounds too good to be true. But that is what I heard and if its true, its great news.

Comment from admin
Time: September 24, 2007, 8:54 pm

Hi miamicrash,

That’s not good news…it’s GREAT news…needed that today..thanks.

Comment from HousingPanicIsHere
Time: September 25, 2007, 9:01 am

Actually the rate cut does not mean that mortgage rates will be lower. The fed funds rate only effects heloc’s and credit cards and the prime rate that banks charge their best customers on these items.

In fact many analyst will say that mortgage rates will actually rise in spite of the rate cut due to banks protecting themselves against all the defaults.

Here is a good article on the situation:

http://www.baltimoresun.com/business/bal-te.bz.impact19sep19,0,6276601.story

Comment from HousingPanicIsHere
Time: September 25, 2007, 9:03 am

ARM rates are usually tied to the one-year U.S. Treasury bill, which usually stays in proximity to the federal funds rate. Fixed mortgages, however, are tied to the 10-year Treasury bill, which hasn’t moved much from a year ago.

“Mortgage rates are already low,” Stepherson said. “The Fed cut isn’t going to do much for fixed-rate mortgages.”

And the Fed cut won’t increase the value of your home, Morici said.

“If your home is worth less than your mortgage, it won’t matter if you’re going from one fixed-rate loan to another fixed-rate loan or from a flex to a fixed,” Morici said. “Historically, mortgage rates have followed Fed cuts, but that link has been broken in recent years. What’s happened in the industry lately will further weaken that link.”

With home prices flat or falling after a five-year boom, a spike in late payments and a record number of loan defaults, one cut will do little to lessen the current pain.

“This is not a panacea to cure all ills in the housing and mortgage markets,” McBride said. “Nor is it designed to be. This is a step to make sure that the downturn in housing doesn’t drag the rest of the economy down with it.”

Comment from HousingPanicIsHere
Time: September 25, 2007, 9:31 am

I think the way the situation stands you have 3 options:

1) Walk away from deposit and lose 70,000.

2) Close on the condo and pay interest, association fee’s, taxes on a property that is worth 1/2 your mortgage and be a financial drain on you for the next 20 years.

3) Sell your pre-construction condo right now for a dramatic price reduction to atleast reclaim atleast some of your money. You are asking 379,000. And you have had no takers for 180 days.

You are only into the place for 355,000 so it seems ridiculous to me that you would still be trying to make a profit after all this.

Why not list it for 325,000.

If it sells you would lose 30,000 (which you could use as a tax writeoff) but you would still get to walk away with an oh-so precious 40,000 of your money.

I really think you should consider a serious price drop before you have to close and have the additional fee’s and expenses.

Your best options how I see it:

1) Drop the price and only lose 30,000 or your 70,000
2) Walk away from deposit and lose 70,000
3) Close on unit and lose 500,000 over the next 20 years.

Either way you will lose money on this deal, its just a matter of how much.

And I am not trying to make you mad or mess with you. The house I bought has lost money also and I will have to sell at a loss sometime next year. Its just the way it is. Don’t make it worse on yourself though by closing on that unit. It will be the worse financial choice of your life.