When plans for the One Lincoln Park condo tower downtown were announced three years ago, it was easy for potential buyers of the units to get financing.
But times have changed, and with loans harder and harder to come by, many of the contracts on the condos — and those in other big projects throughout the metropolitan region — are likely to fall through now that it’s time to close. That means some buyers will leave earnest money on the table, and developers could be stuck with empty units.
“It isn’t just the buyer’s side or the seller’s side. All the sides have a dog in this fight,” said Byron Koste, director of the real-estate center at the University of Colorado at Boulder. “You’ll see a lot of creativity because there are a lot of things at stake on both sides. The developer is incentivized to help anybody close who wants to.”
One Lincoln Park had 145 condos under contract before the market went into a tailspin, said Ed Cerkovnik, a partner in the project. He said he expects about 30 of those buyers either will not be able to close or will have difficulty closing.
“People who entered into a contract to buy a unit expecting they wouldn’t have any difficulty qualifying for a mortgage found out that things have changed dramatically,” he said. “In a lot of cases, people are having a real hard time qualifying for any type of mortgage.”
Buyers at the Landmark’s second tower in Greenwood Village are just starting to close on their condos. All but 16 of the 141 units, priced from $550,000 to nearly $2 million, are under contract, said Rike Palese of Re/Max Classic, who is marketing the property.
Palese said he expects up to a dozen buyers will be unable to close because of difficulty in getting financing.
Developer Peter Kudla of Metropolitan Homes started presales at his Vallagio development in 2005. There are about 300 residences completed, and Kudla said he’s pleased that only 10 percent of those sales have been canceled.
Some of the buyers who can’t close their deals at One Lincoln Park and the Landmark are walking away from more than just the 5 percent earnest money they put down. They’re also are losing the money they spent on upgrades to their units.
The thought of losing that money is keeping some buyers committed and looking for ways to close on their units, Cerkovnik said.
Cerkovnik and his partners have enlisted American Home Funding to assist Countrywide in helping buyers close. The biggest issues are how much it will cost to close and what a buyer’s payment will be, said Dennis Lairamore, who handles business development for the mortgage brokerage.
“The financing structure is one of the biggest influences over whether the transaction makes sense for the client to close,” he said. “We figure out how we can structure financing to get the cost of capital down.”
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
