The Vulture
Now is the time to get even with all the developers who kept raising prices on homes with no justification other than greed. It's about time the tables are turned and I dearly love being out there turning them.
It's May 15th in sunny Baja, California Mexico and we're enjoying unprecedented sun instead of the usual "May gray" this time of year. Maybe it's Mother Nature's way to give us some bright spots after violence, Swine Flu and lousy economy. If that's the case, well, thanks Mom!
I'm having a great time driving up and down the coastline hitting all the sales offices of the vastly overpriced condominiums that were hastily built a while ago to take advantage of the housing boom in the States. They started out as bargains with two bedrooms two baths, nice floor plans, selling from the low 100 thousands to a top of three hundred for the larger penthouses or top floor models in taller buildings. Then, as soon as they saw the US bubble begin to swell, the prices were jacked up too. At the top of the market they more than doubled.
In the US, I've seen completed homes in developments plowed under to not have to pay costs of putting in streets and utilities. Here in Mexico, condo towers that are nothing but empty frames sit deserted on the road south in Baja. Many have already been abandoned. The last time this happened, it took 12 years for the market to come back enough to risk finishing construction.
A large mall was built in the center of Rosarito about twelve years ago and last year was finally plowed under because there were no businesses to fill it. The developer's mantra is build in the boom and run in the bust. Any drive down the coastline shows plenty of high-rise skeletons on the Oceanside with wind whistling through them.
And then there are the holdouts. The sales offices are open and they try to tell you what a good deal their projects are as they hide the number of buyers who renege on closings. The Mexican model was to take a substantial down-payment and have the balance paid on completion of the project.
Oh yeah, and Donald Trump even had his name on a project in Playas de Tijuana, it was sold out in a matter of days, very substantial down payments taken, like half of purchase prices running from 250 thousand for a studio, to prices in the million dollar range. The balance due on completion. Well, the project's tanked. The buyers went to the company for refunds of their money and were told it had all been spent. I drive past it every week or so, it's vacant land with some dirt pushed around and flags and billboard with The Donald's picture. If the money's been spent, it must have been spent in someone's pocket 'cause it sure doesn't look like much was done to begin the project.
There are a load of condo developments, new and shiny, some still being built, some with a small, and I mean a small handful, like eight residents out of 400 units, of tenants in place, developers fronting costs for security, common areas maintenance, pools, balance of construction, and no one closing on the remainder of units. Why on earth would someone pony up two hundred and fifty thousand dollars more on a unit that in this market is barely worth the down payment that was made? Get a grip!
How the hell do you plow under a twelve story building? They just sit with the few residents pissed off out of their minds at the developer – if they can even find them, rattling around in these grandiose projects.
And here I come, and make no bones about it. I waltz in and cheerily announce I'm a vulture looking to buy and if they're bleeding enough I'll talk to them. No blood no conversation. I don't need arrogant salesman bullshit they fed to everyone for so long they believed it themselves.
That was then, this is now. New rules, new game. There is virtually no one who has enough equity in their home to float a second to buy these condos, no matter how lovely. The Boomers who wanted to downsize and retire here in Mexico try to sell their homes in the states and find there is precious little equity left in them unless they bought years ago – like 15 or 20 years ago, and never refinanced to take out the equity.
But still the brokers try to spin the web of deceit and con the buyer into thinking they have a deal. And where are their heads?
Here's a true story that will really give you an idea of the no-clue mentality. One of the projects I visited around Christmas time last year. I saw really nice three bedroom unit with a small lap pool on a large terrace. The asking price was just under six hundred thousand, way too much for me. It was 2800 square feet inside and the terrace/patio must have been around 1200 square feet. It was overpriced but not as much as some because it had full ocean view and spacious. I asked the price last week and the agent told me it was nine hundred and something. I broke out in laughter and got an odd look. "I love your attitude," I told him, "the unit doesn't sell so you almost double the price. That's Mexican mentality?"
He looked confused. "We did that two years ago on another project and every time we raised the price the units sold." I found that hilarious and broke up laughing some more. He was clueless and didn't get it. Too bad.
I really enjoy the irony. It's pleasurable to make them squirm when you make them 'fess up to the truth. If they stuck to their original offering prices, maybe a small increase if costs of construction went up, I wouldn't be so mean, but they are so deserving of a good butt kicking I can't help myself.
If you are looking to buy something, a home, condo, car, furniture, appliances, any big ticket item, I strongly suggest you make an offer, hondle, bargain, go for blood. Ignore the price tag, retail price, manufacturers suggested price, just reduced price – whatever, and make an offer of what you are willing to pay for it, no matter how ridiculous it might seem. Go low, offer no more than 50% of the asking, maybe even lower. Don't be embarrassed, be arrogant that you have the money to offer!
Remember businesses need cash flow and there is little of it. The only places doing business are those selling at rock bottom prices. A store might have overhead to meet, auto dealers might have floor planning payments for cars in inventory and need a cash infusion – and need it bad! Especially if you're interested in a used car, go for the jugular. It is never an insult to offer to pay someone money. If they refuse, move on, someone else may be very glad to take your offer. It might save them from financial disaster.
As I left the last place, I handed the guy my card and suggested if they changed their minds, they could always call me, and if I hadn't yet bought from their competitors I might still be interested.
Be polite, don't rub it in too much, but be clear you understand they need to grovel a bit and have a major reality check. Actually, that's the hard part for me. It's all I can do to not crow things like "You arrogant bastards, this is where your greed got you and you deserve every pain of it. " But no, I can smile inside and keep it to myself. Payback's a bitch and usually delivered by one!
Just know if you're on the other side of my fence that a really charming and very canny old broad with nice smile, white hair and steely ice-blue eyes is out there gunning for you. Beware, I'm gonna' get ya!
This weekend I plan to visit a few more projects. I know I'll find a bargain if I just keep trying, there'll be someone out there bleeding profusely and this old vulture will get a deal. All it takes is perseverance and a hard heart. I'm not Curmudgeon Gal for nothing.
And next weekend I intend to go car shopping. Those welfare Queens are the next ones on my list for punishment. Who knows, I might get a deal there too.
This is the Curmudgeon Gal, Alice Donenfeld-Vernoux, signing off. Thank you for listening to me, I appreciate the time you take from your busy schedule.
This podcast is copyright 2009, Alice Donenfeld-Vernoux, all rights reserved. It is intended for podcast only and any other use requires the permission of the copyright owner, and that's me.
Bye for now and have a great day!
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