Pricing Plan, Financing & Purchase Contract Questions
How does the pricing plan work?
Here's how the tiered program will work:
- Holders of Reservation Numbers 1 through 50 will be entitled to purchase their residence(s) at Round One pricing.
- Holders of Reservation Numbers 51 through 60 will be entitled to Round Two pricing.
- Holders of Reservation Numbers 61 through 70 will be entitled to Round Three pricing, etc.
Note that this does not mean that the first 50 buyers will receive Round One pricing. Since not all Reservation Holders will choose to buy, anyone not purchasing in a given round will simply receive a refund of their reservation deposit, plus interest, and the number will be voided.
Depending upon the strength of sales during each round at our Sales Event, the developer will determine the percentage of price increase for the following round of sales. We will be providing to all Priority Reservation Holders a complete Sales Information Kit prior to the Sales Event, which will contain final condo residence pricing for Round One purchasers, as well as the expected range of increase for each subsequent pricing round.
We expect to maintain this range between one percent and three percent, per round. For example, a studio unit that will be available to Round One buyers for $100,000 (but goes unsold in Round One) will then be offered to Round Two buyers for $101,000 to $103,000. If that same unit still remains unsold during Round Two sales, then it will be offered to Round Three buyers for $102,010 to $106,090. This same percentage range of increase will continue until each round of Priority Reservation Holders have had the opportunity to purchase a residence in the order of their Reservation Number. Once all Priority Reservation Holders have had opportunity to purchase, we will notify via email our Preferred Interest List registrants of remaining unsold inventory prior to offering it to the general public, assuming there is unsold inventory.
Round One unit pricing will be provided to all Reservation Holders as soon as the interior finish planning and specification process is completed and associated costs and pricing are determined with our interior design firm, Johnson Hodson Design.
This tiered pricing plan will only affect the cost of the condominium unit itself – not upgrade options that will be offered to all purchasers at our Sales Event. Regardless of which Reservation Number one uses to purchase a unit (or units), the upgrade pricing will remain constant for a given floorplan. A buyer in Round Three will receive the same upgrade options and upgrade pricing for a given unit plan that was offered to buyers during Rounds One and Two. Obviously, upgrade pricing will change from floorplan to floorplan based on square footage and interior configuration (i.e., flooring or carpet upgrades, countertops, cabinetry, etc.).
What factors determine the pricing per square foot in The Metro?
Our unit pricing is guided by three criteria:
- Level (floor) of the unit in the building
- Projected view of the unit
- Projected "scarcity" of the unit relative to market demand
Scarcity is defined here as the relative perceived shortage or excess of supply of this type of unit when compared to other similar condominium units in the local area. For example, we know that there is exceedingly strong demand for larger condominium units in the local market area, which constitutes a pronounced shortage of supply relative to demand. Smaller units are also in demand in the downtown market, but there is less scarcity of smaller units than larger units in this market at the present and for the foreseeable future. The relative adjustments made here for each criteria are nominal in each case, but taken together provide for the range of pricing of our condominiums.
Will there be any "Escalation Clauses" in the Purchase Contract to protect the developer against future price increases while constructing The Metro?
No. Although it is common in the current era of unpredictable labor and materials markets for a developer to require buyers at a condominium development such as The Metro to accept escalation clauses in the Purchase Contract that would require the buyer to pay more for their condo if construction costs exceed certain limits, Alan Wood, developer of The Metro, has elected to do the work now to lock in all costs to the degree possible and then take the risk of further increases by not forcing buyers to accept escalation clauses as a condition of purchase.
What kind of special financing is available for The Metro Condominiums?
Please contact the Listing Broker of The Metro Condominiums for details on any currently available mortgage incentives that may be offered by participating lenders.
Are buyers required to use The Metro’s preferred lender, Wells Fargo Home Mortgage, for financing?
No. Doing so would be a violation of Federal law outlined in the Real Estate Settlement Procedures Act (“RESPA”) established by the U.S. Department of Housing and Urban Development (“HUD”).
However, as the preferred lender of The Metro, Wells Fargo Home Mortgage is preparing the Master Appraisal of the project so that mortgages can be underwritten by the bank. Given the size of The Metro and the fact that our sales will occur before the building is complete and occupied, any preferred lender assumes a large degree of risk in underwriting a buyer’s mortgage since the underlying equity or value of the project must be forecast rather than known as is the case with existing construction. This is why other lenders may state that they will be able to underwrite loans at The Metro prior to completion, but few if any will be able to perform since their own underwriting departments will not be willing to assume the risk of a new project.
The result of this is almost invariably that the buyer is then left exposed at the last minute without mortgage financing for their condo purchase secured. Their earnest money and any upgrade deposits are fully at risk since the developer is entitled to the funds if the transaction is not completed on time. The developer then has the right to terminate the contract and re-sell the condo to another buyer while retaining all of the original buyer’s earnest money and upgrade deposits.
What advantage will Wells Fargo offer that other mortgage lenders will not be able to provide?
Aside from the primary benefit of being able to close the loan at terms the buyer has agreed to well in advance, we have also been able to negotiate a special 18 Month Rate Lock program with Wells Fargo, which is an extension of their 12 Month Rate Lock offered through the Builder’s Best program. This allows the buyer at the time of the Sales Event to lock in a loan rate and terms with Wells Fargo for up to one and a half years while construction of The Metro is completed. Construction of The Metro is scheduled to complete during First Quarter, 2008. However, if there are delays, buyers using the preferred lender’s Builder’s Best program won’t have to worry about re-locking their rates at the last minute (provided we complete the project within the 18 month period of rate locks, which is all but certain).
And, if mortgage rates actually lower during the period of your rate lock Wells Fargo will allow you to re-lock at the lower rate one time.
Additional benefits of using our preferred lender include:
- Wells Fargo Home Mortgage has agreed to offer qualified buyers at The Metro a specially discounted loan origination fee of 1/2 of one percent rather than the standard one percent origination fee
- StageCoach Priority loan servicing ensuring you excellent customer service
- Free appraisal for early rate lock and pre-qualification
- One of the industry's largest array of financing options
- Stated income/stated asset loans with low fixed-rate options
- Investment property loans
For details on this program please contact the team handling The Metro at Wells Fargo Home Mortgage directly. Our contact there is Debbie Baker, and she can be reached at (801) 867-2317 (cellular #) or via email at: Debbie.R.Baker@wellsfargo.com. Or just visit their website directly at: www.wfhm.com/debbie-baker
Do you have financing assistance for low-income households?
Yes, contact Wells Fargo Home Mortgage at the number above to inquire about low down payment programs they are offering.
Will I be able to negotiate the pricing of a unit, the upgrades, or any other terms of the contract if buying a condo at the Sales Event?
No. We are working to not only build downtown's premier luxury residential condominium development but also to offer it at terms and pricing that are fair to all. But we will not agree to modify any of our pricing, requirements or terms in order to facilitate a sale.
Will I be allowed to assign any or all of my interest in a condo to another party once I am under contract to purchase but before I close on the transaction?
Under certain conditions and only with the prior written approval of the developer. If a buyer at The Metro wishes to assign his or her interest in a purchase contract to another party then the developer will require as one of the conditions of approval that any assignment fee or other "consideration" negotiated between the original buyer (Buyer #1) and the replacement buyer (Buyer #2) be paid to the developer at the time of assignment. Other conditions and restrictions will apply as determined by the developer, and will be disclosed prior to the beginning of the Sales Event. Even if Buyer #1 agrees to all terms specified by the developer, this is no guarantee that the developer will permit an assignment. Assignment other than as permitted by the developer will result in termination of the purchase contract with Buyer #1, and any earnest money or upgrade deposits made by Buyer #1 will be retained by the developer as consideration for Buyer #1's breach of contract.
After The Metro is complete and I have purchased my condo, will there be any restrictions against me then selling the condo to someone else?
Yes. The developer will require that all condominiums at The Metro be sold and “closed” prior to permitting the resale of any units or that one calendar year from your own Settlement date has occurred -- whichever comes first. This is customary on a residential project such as The Metro to limit speculation in the building. Preliminary indications are that all units may be sold during the construction period, and closed in the first several months following completion. As mentioned, the developer will limit the “lock-up” period to be one year from the date your purchase is Recorded; if any units remain unsold by the developer after one year has elapsed then you will be permitted to sell your unit(s) without restriction.
Will the developer of The Metro agree to participate in a tax-deferred 1031 Exchange when I purchase my condo?
Yes, under certain conditions that will be defined by the Developer at or prior to the Sales Event.
Can my upgrades be included in the mortgage so that I am able to finance my upgrade costs?
Typically, yes. Wells Fargo is aware of our upgrade program, and their Master Appraisal should be able to accommodate increased values of upgraded condos as required. Selected upgrades will be part of the purchase contract, outlined in an Upgrade Addendum, which will specify each upgrade selected and the cost of each upgrade.
Because 100% of a buyer’s upgrade expense will be due at the time they are ordered the buyer will have to advance the funds. Upgrade funds paid by buyers will be placed in an escrow account at First American Title, and will be used during construction by the developer to pay the contractors for the unit upgrades installed in the building and for other expenses incurred at the sole discretion of the Developer.
The buyer then will be reimbursed (given a check) for the cost of upgrades at “closing” by First American Title since the cost of upgrades is included in the loan amount.
Will I be allowed to do any of the upgrades on my own or hire my own subcontractor to work on the condo?
No. Due to liability issues any customization of a condo must be performed after the unit has been sold and the owner has taken Possession. At that time the owner may customize the unit provided doing so complies with guidelines established in the Homeowners Association documents.
As a Priority Reservation Holder, will I be able to mail in my “order” if unable to attend the Sales Event?
No. We have reviewed the options for processing Reservation Holders' purchase contracts using a mail-in procedure and determined that doing so provides more risk to the Developer and the Reservation Holder than we want to assume or ask our Reservation Holders to take on. As an alternative to personally attending our Sales Event, Reservation Holders will have the option of appointing an "Attorney in Fact" using a Special Power of Attorney form drafted by the project attorney and available to our Reservation Holders upon request.