- Miller Samuel Real Estate Appraisers & Consultants - http://ms.clash.outthinkgroup.com -

Assuring The Seller (Just In Case)

Hat tip to Bubblemeter [1] for the condo ad in this post [2]. I have never seen such a guaranty before. It brings to mind a few thoughts.

A price guaranty would seem to suggest weakness in the project. Developers rarely show their hand. However, it also might reduce the time required to sellout.

As a buyer, I’d also have to wonder how valid the pledge is. How does a developer admit that a project has declined in value before its sold out? Its seems like a catch-22. If this begins to happen and existing buyers get wind of it, there could be additional problems. In addition, how does the decline get substantiated? Does the developer determine this? They are digging into their own pockets of sure money to payout to some of the buyers. Does the price decline apply to all units at the same time? One could argue that different unit lines and unit types may behave a little differently.

Its an interesting marketing approach, but I don’t think it will be terribly effective because it will seem to cause more problems than solutions.