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VOL. 45 | NO. 46 | Friday, November 12, 2021

What a difference a year makes in new build prices

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When preparing to take the real estate examination, students learn of the term force majeure, a little used procedure in the world of real estate. Force majeure would fall into the “Let the buyer beware” category, though both these terms have more relevance than they have had in the past 40 years.

It is getting nasty out there.

The definition of force majeure is “unforeseeable circumstances that prevent someone from fulfilling a contract.” In many builders’ contracts there is a paragraph for force majeure, and the clause was usually invoked for acts of God including flood, think Genesis and Noah; lightning, Sodom and Gomorrah; or earthquakes, an experience with numerous biblical references. The Bible verses are inserted as proof that these have been acts of God in the past.

With prices on the upswing and many new houses requiring close to a year to complete, builders are finding their products are worth far more than the original contract sales price. In fairness to builders, there is a worldwide supply shortage coupled with an anemic labor force.

Builders in the area are utilizing the force majeure condition of the contract in order to terminate contracts with buyers who might have had the property under contract for months. Additionally, the buyers have performed all responsibilities included in the contracts only to have the contracts terminated.

In the eyes of the legal teams of the builders, COVID-19 is an act of God, not China. Those whose home purchase has not yet been completed, beware.

Many developers are choosing a different route and reviewing timelines and deadlines. If the buyers were late on either, they terminate, while others are attempting to run buyers away with sheer rudeness and intimidation.

Buyers should comply with all conditions of the contracts in the manner specified.

Sale of the Week

The house located at 501 South Wilson is situated in the shadow of prestigious Montgomery Bell Academy and was marketed by its owners for at least a year. In November 2020, it was listed by Edwin K. Hoover with Mark Spain Real Estate for $1.2 million.

501 South Wilson

The home had languished on the market for a lengthy period under the aegis of “For Sale By Owner.” With its visible location, the house was shown on numerous occasions by Realtors and the homeowner, all to no avail.

At $1.2 million, the house floated on the market for 153 days. It eventually sold for $1 million. With its months of exposure and its décor, the price was fair, perhaps excessive, but it is 2021, after all.

Mary Beth Thomas with Parks and John Brittle with Village represented the buyer, who paid the $1 million. Thomas and Brittle are two of the most revered brokers in Nashville, and those who followed the property noted the home was purchased by an LLC and closed on July 2, 232 days after the list date.

Thomas and Brittle often represent builders who demolish existing homes and replace them with magnificent structures, usually featuring all of the latest trendy household accoutrements on the market.

It wasn’t hard to guess what would happen next at the property. Cue the bulldozers.

So the real estate world was perplexed when the house jumped back onto the market Aug. 23, eight weeks after closing for $1 million. There is, after all, only so much that can be done to a house in eight weeks – especially in this time of supply shortages and the lack of a stable construction workforce – to increase a home’s value.

And review of photographs comparing the listing with Mark Spain Real Estate and Parks and Village, the firms housing Thomas and Brittle, revealed little had been done to the house other than staging. Additionally, Thomas and Brittle listed the property for $1.189 million, slightly less than the original price when the Parks/Village client purchased the home.

Timing is everything, as is staging and pricing, and this time, with Parks and Village as the listing firms, the house sold in three days with numerous offers for backup contracts.

Interestingly, with only some brilliant staging and a few, well-placed strokes from a paint brush, the house sold for $1.285 million and closed in 41 days.

Amanda Beam, one of the leaders from Berkshire Hathaway Home Services Woodmont Realty, represented the buyers, who beat all of the other suitors to the closing table.

The house has four bedrooms, three full bathrooms and one half bathroom, all within its 3,859 square feet. It sold for $333 per square foot on this transaction. Perhaps it takes a Village.

Richard Courtney is a licensed real estate broker with fridrich and Clark Realty, LLC and can be reached at richard@richardcourtney.com.

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