Cohousing-L Mailing List: Re: Incentives for early joiners (fwd)

[Fred H. Olson (fholson]

Howard A. Landman howard [at] polyamory.org
is the author of the message below but due to a problem 
(posted from address other than subscribed address),
it was posted by Fred the Cohousing-L list manager:  fholson [at] cohousing.org

To get off Cohousing-L, send email with UNSUBSCRIBE COHOUSING-L in the 
msg body to:  listproc [at] cohousing.org   Questions? email Fred - addr above
--------------------  FORWARDED MESSAGE FOLLOWS --------------------

> it's a zero-sum game if every $ put towards making 
> unit A (or buyer Z) more affordable means that unit B (or buyer X) is 
> priced out of the project.

That's not how it works.

The main advantage is to the developer.  If they are able to show
a number of people who have put down some kind of "earnest money",
it is much easier for them to get additional funding for the project.
This may reflect itself in shorter delays, lower interest rates,
or other benefits.  These savings, or some part of them, can be
passed on to those members who made them possible.  It's not a
zero-sum game at all, unless maybe you include the banks in your
sum.

Another factor is that paid-in members reduces the risks
for the developer, since a unit with a deposit on it is much
more likely to sell quickly than one without.  So they don't
need to leave as much margin for uncertainty, nor do they need
to budget as much for advertising unsold units.  (In extreme
cases, an unsold unit might require a broker's assistance to
be sold, and brokers usually charge 6% or more.)

At River Rock, I think we had something like a 6% discount for
very early buyers, a 3% discount for fairly early buyers, and no
discount in the last 6 to 12 months.  In order to get the discount
you had to make a moderately large deposit, some of which was
non-refundable.  We had at least one family change their mind
and lose that part of their deposit when they left.  But, many
of the earliest and most enthusiastic members saved a fair bit
on their units.

        Howard A. Landman