 Dear
Steve,
I am planning to purchase a new condo. Can the developer decide to sell the unit to me for higher than the price listed in the offering plan?
-- Wilson
 Dear
Wilson,
At this point in the cycle, that's not too much concern over condo prices getting jacked up because of better-than-expected sales, though there are some regional variances.
Instead, your concern might be over the possibility that the developer/builder could eventually sell neighboring condo units like yours to buyers cheaper than what you paid.
That's happening with some frequency all over the country as markets stagnate or lose value and single-family homebuilders struggle to stay out of bankruptcy.
If sales are slow, there's a pretty
fair chance the builder will adjust his pricing
at some point. To allay these fears, some builders
are promising potential customers that if they
buy today and the builder drops prices in that
development within a set time frame -- anywhere
from three months to two years -- then the buyer
will be refunded the difference.
Others are offering contracts that allow buyers to back out and retrieve their deposits if their homes are appraised for less than what they paid.
If you have not signed a contract, I would insist on some type of written price-protection guarantee. This is particularly important to you because condos are typically harder to resell than traditional single-family residences.
If you have signed a contract, discuss the price-dropping concerns with the developer. He can't afford to lose your business. A lot of buyers who have been caught in this price-adjustment scenario have just walked away from their earnest money and dropped their contracts rather than buy into a development and lose up to 30 percent of their value before the construction dust even settles.
The only assurance from the builder that your price won't go up or down -- other than the soft market -- is to have it in writing. And any protection against pricing gyrations ends at closing. There is still no guarantee that longer-term declines won't leave you owing more than the condo is worth.
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