November 16, 2007
A Price Guarantee From (And Proof Of Price Reductions At) Esprit Park
While the Homes on Esprit Park website was originally advertising 1 bedroom, 1.5 bath homes from the “Upper $600,000’s,” we note that it now reads from the “Low $600,000’s.” And in fact, according to a sales office email forwarded from a plugged-in tipster, they are now starting “around $626,000.”
And while we were going to call it foreshadowing (prior to noticing that “upper” to “lower” change), the Homes on Esprit Park sales office is now offering price guarantees (against future price reductions):
The team at Homes on Esprit Park and Build, Inc. want to ensure our future homeowners their investment in our wonderful community is secure and represents very good value in today’s dynamic marketplace. To bring you that confidence, through December 15th of this year, any home placed in contract will come with a price guarantee that assures you of the value of your investment near the close of escrow on your home.
When you purchase a home in our community, we will assign one or more similar properties in the project to your purchase contract. Should any of those assigned homes reduce in price or be sold at a lesser price than originally listed, we will reduce the price of your home as well by the same percentage amount prior to your close of escrow. No questions asked.
We understand that in uncertain markets, even exceptional communities like Homes on Esprit Park need to address the investment concerns of their clientele, and with this price guarantee we hope to do so for you. With our model units expecting to be delivered at the beginning of the year, a rebound in the lending market (already underway) and much greater progress on construction, we anticipate vibrant activity and sales in the new year. That’s why this offer is extended only through the pre-holiday season and only to our registered customers.
And no, we don’t know if the price guarantee applies to those who are already in contract (or whether or not we should have filed this one under "trends").
∙ Sales Office For Esprit Park (888 Minnesota) Opens Tomorrow (10/5) [SocketSite]
∙ Homes on Esprit Park: Pricing [espritpark.com]
First Published: November 16, 2007 3:00 AM
Comments from "Plugged In" Readers
If they haven't started selling, how is this proof that prices have dropped? Where is SF? Why is this blog so adamant to prove that prices are declining when prices are actually rising all over SF? Why not highlight the many properties that have sold for new record highs this year?
Posted by: Rent at November 16, 2007 6:25 AM
Rent, you don't need to offer a guarantee against price declines if you don't think prices will decline (or that your buyers think so. . .)
I obviously haven't read the Esprit contract, but as described it looks pretty empty. They could just "assign" the same couple of units to everyone who takes this offer and then make damn sure they don't sell those specific units at a discount while remaining free to discount all other units. It would be much more meaningful if the guarantee applied if ANY similar unit were sold at a lower price during some specified time period.
Posted by: Trip at November 16, 2007 6:42 AM
hat's off to these guys. very smart move.
Posted by: james at November 16, 2007 7:01 AM
"If they haven't started selling"
They started selling a month ago. My guess on the "similar properties" assignment is to differentiate between the brick and timber and all new construction units. I remember reading that the brick and timber one bedrooms were the first to sell.
Posted by: Michael at November 16, 2007 8:13 AM
Sorry folks, but let’s try to keep the conversation on Esprit Park in specific (or at the very least the price guarantee in general).
Posted by: SocketSite at November 16, 2007 9:23 AM
A price guarantee during escrow...now that makes me feel comfortable.
"Good value in today's dynamic marketplace"...
What exactly does "dynamic" mean in this instance?
Gyrating, totally unpredictable, on the brink?
Posted by: gh at November 16, 2007 9:28 AM
A price guarantee is certainly more useful (and more creative) than giving out free Vespas, but the guarantee only extends to the closing date, right? That's good, but of course buyers nowadays are much more worried about what will happen 6 or 12 or 24 months from now.
Does anyone know if other new developments in the Bay Area have tried price guarantees?
Posted by: Foolio at November 16, 2007 9:42 AM
A Price Guarantee would really help get a lot of people off the fence I think. Especially with all the new buildings.
Posted by: Cooper at November 16, 2007 10:26 AM
This just seems a little goofy to me. The Esprit message seems to be "we think we'll be forced to reduce prices or accept lower offers in the future." If I were a prospective buyer who received this e-mail, I would just lower my offer now...
Posted by: zoe at November 16, 2007 10:43 AM
This is smart marketing to address a consumer perception issue that is more psychological than economic. Five years from now it will not matter whether or not the condo price may have dipped 5% in the latter months of 2007. If Buyer is not planning on living in the condo for at least five years; he/she should not buy. Period.
Posted by: sanfrantim at November 16, 2007 10:49 AM
I agree with James. This move will help promote sales - and give people the gurantee that they will pay market value. No other developer is doing this- innovative for sure!
Posted by: agent at November 16, 2007 10:52 AM
I would be wary of "innovative" things like this...be it a Vespa, a Mini, or knowing that you won't lose money until after you close escrow. These are gimmicks and nothing else, IMO. The bigger issue is that hundreds of these units are coming to market in this area, and I just don't see the value in buying down there. It's a $600K commodity if you ask me.
Posted by: gh at November 16, 2007 11:15 AM
I would be wary of "innovative" things like this...be it a Vespa, a Mini, or knowing that you won't lose money until after you close escrow, rather than during. These are gimmicks IMO. The bigger issue is that hundreds of these units are coming to market in this area, and I just don't see the value in buying down there. It's $600K of a commodity if you ask me with almost zero differentiation.
Posted by: gh at November 16, 2007 11:17 AM
I like the idea! Buying during the first release does not always have the lowest prices. Look at the units from the recent condos that have been for sale.
The Watermark, Palms, Beacon and even 170 Off Third had prices lowered throughout the sales cycle. People should be rewarded for buying early and I think this development is trying their best to honor that.
Posted by: um at November 16, 2007 11:45 AM
I doubt it would make me more likely to buy there. Firstly, as has already been pointed out, it's after close of escrow that's likely a bigger potential issue. And secondly, remember who controls the (re)pricing of other units and who thus can potentially time any such repricings to minimise reductions on escrows in progress.
Posted by: Amen Corner at November 16, 2007 11:56 AM
"This is smart marketing to address a consumer perception issue that is more psychological than economic."
How is this more psychological than economic if they are already lowering prices along with many other new developments in town?
I agree about the five year timeframe but that's because I'm not expecting any appreciation over the next couple of years. I don't think that makes me a "bear" just realistic.
Posted by: Michael at November 16, 2007 12:04 PM
As the saying goes, the devil's in the details, and in this case, this offer is, as another commenter said, "empty".
Promise me that you'll match the PP SQ FT for all comparable units until 100% sell through regardless of when I close and you'd have my attention; anything less than that is just smoke & mirrors, IMHO.
These guys obviously don't have much faith in their inventory.
Posted by: tony at November 16, 2007 12:13 PM
If they would extend that offer for up to 5 years, i might jump on it.
But, alas, i jsut keep dreaming.
it is reasonably clear to me that the prices for these units will be selling for less in 5 years.
Posted by: Spencer at November 16, 2007 12:23 PM
"If they would extend that offer for up to 5 years, i might jump on it."
If you want to play the game, if the property goes up in value in 5 years, will you pay them more?
Posted by: Usually Named at November 16, 2007 12:37 PM
yes, anything above the traditional home price appreciation of 5%. I would need that to breek even.
Posted by: Spencer at November 16, 2007 12:53 PM
That's an interesting offer, and I think given the emerging nature of that location it is a good marketing idea.
I am not sure about this particular development, but I think this neighborhood has one of the greatest long-term upside potentials in SF. Mark my words, once Mission bay is built out, dogpatch is going to have much higher prices per foot, tons of yuppie restaurants, etc. (and, no, I don't live there)
Regarding later releases being sold for lower prices, let's get this straight. It is only the dogs that don't sell which get repriced. All the high-floor 2BRs with a view are probably sold the first day or at most weeks after the sales office opens and would never ever be repriced.
Posted by: anon at November 16, 2007 1:59 PM
Early releases should always have the lowest price. There should be some reward for those that get pre-approved and buy during the first few days. Also, early phase sell-outs create buzz and momentum for the whole development.
Esprit Park should have been smart and priced a few of their units below market initially. Then slower raise prices, not lower them.
Look at OneRincon, though I'm not a fan, the place blew away sales during the early release by pricing low, thus creating momentum that resulted in a near sell-out within weeks. Infinity priced their units below market the first 3-4 days and most of those flew off the shelf.
Both developments won't lower prices now, but even if they did, those that got in early already have a 10-20% buffer.
Now before you critics come out of the woodworks, I'm talking about pre-sales only, not what will happen when it comes to closing and resales...
Posted by: missionbayres at November 16, 2007 2:26 PM
Yes, I was one of the first people to buy my new home on Esprit Park, and the price guarantee was extended to me, which was a great surprise. My home is not closing until June of 2008, and if any of my comparable properties reduces in price up until JUNE, my property will automatically get reduced by that same percentage.Since I have been in contract over the last 3 weeks, I have only received more and more good news about my new home. For example I also just received word that they are going to re-landscape the building across the street from my new home, AND they just upgraded the fixtures in all kitchens to an even more impressive line.
Posted by: Dan at November 16, 2007 3:15 PM
Hey quick question about the neighborhood. What is happening on the opposite side of the park from the Espirit Park condos. They are completely remodeling a warehouse but it is hard to tell at this point what outcome is intended ie. residental or another warehouse. Hopefully, it's a positive addition as I think Espirit Park will be a hidden gem.
Posted by: Luvinmissionbay at November 17, 2007 10:40 PM
well if more articles like this popping up in the SF Chron it's not wonder buyers want some reassurance.
Posted by: badlydrawnbear at November 18, 2007 10:14 AM
"What is happening on the opposite side of the park from the Espirit Park condos?"
The building that's being remodeled across the park (the old Amersham Biosciences building) is owned by UCSF. As far as I understand it, they'll be running their facilities management office out of there--so that's commercial space. The rest of the warehouses on the other side of the UCSF building, up to Mariposa, are zoned for heavy industrial and are likely to stay that way.
Posted by: dogpatchrenter at November 18, 2007 5:55 PM
congrats dan. to the poster that suggested low balling the developer, good luck. that doesn't work in the first year or two, sometimes three of selling a new building here in the city.
Posted by: james at November 18, 2007 6:02 PM
to the poster that suggested low balling the developer, good luck. that doesn't work in the first year or two, sometimes three of selling a new building here in the city.
Not true. I got my Infinity treetop view unit for less than the asking price last Dec, so it doesn't hurt to ask.
Posted by: anonSF at November 19, 2007 9:57 AM
lowballing the developer works if everyone lowballs the developer. then they have no choice.
Posted by: spencer at November 19, 2007 11:17 AM
Signature and Pulte will guarantee your purchase price for two years. That is putting your money where your mouth is.
Posted by: jimmythekid at May 6, 2008 8:12 PM
Here is the post purchase guarantee.
Posted by: jimmythekid at May 6, 2008 8:18 PM