South Florida condominium developers are decreasing the deposit requirements for buyers, but why is up for debate.

Buyers who want to buy at Canvas, a 513-unit building rising at 1630 NE First Ave. in Miami; Aria on the Bay, a 648-unit tower rising at 1770 N. Bayshore Drive in Miami; and Riva, a 100-unit building completed in Fort Lauderdale, can put down 20 percent. That's less than the previous requirement of 50 percent, although Riva previously required only 35 percent.

Aria's developer, the Melo Group, and Canvas developer NR Investments said it's an opportunity to domestic buyers who can't afford the 50 percent deposits but are interested in buying.

But one real estate attorney said developers are responding to an unfavorable tip in the supply-and-demand balance.

“We have less demand and more supply, so developers need to sell their product, and they will offer incentives to do so,” said Bill Sklar, a real estate attorney with Carlton Fields in West Palm Beach and a University of Miami School of Law professor of condominium and planned development law. “It doesn't mean everyone is lowering pricing, but some are willing to make the deal.”

Developers are, in a way, victims of their own success, he added.

In the post-recession years, condo demand from wealthy foreign buyers looking to safeguard their money in U.S. real estate was peaking and fueling more condo construction, said Sklar, who also is the director of UM's Boyer Institute on Condominium and Cluster Developments. With construction nearing completion, not every unit has sold, he noted.

“In a building with maybe 300 units, maybe they were successful in selling 200 units, but there are still perhaps as much as 100 or 70 or 80 units not under contract,” Sklar said. “They just want to be able to enter into binding contracts knowing those units will be completed imminently.”

At Riva, which is getting some final touches, more than 70 percent of the units are pre-sold. At Aria, which is to be completed early next year, 90 percent of the units are sold. And at Canvas, also to be finished next year, at least 75 percent of the units have been sold.

But two of the developers and the real estate professional doing the sales for Aria on the Bay had a different take on why deposits are being decreased.

Buyers can pay a 50 percent deposit over time, staggering payments over about two years while the building is under construction, said Cervera Real Estate principal Alicia Cervera Lamadrid, who is doing the sales for Aria on the Bay.

That's why, for buildings nearing completion, a 20 percent deposit is more digestible for buyers.

“When you get close to completion, very few buyers are prepared to pay 50 percent in such a short window,” Cervera Lamadrid said.

Premier Developers said it was a matter of timing for Riva.

“We've had a lot of enthusiasm from potential buyers and see an uptick in sales,” said Bradley Deckelbaum, Premier Developers principal.

Ron Gottesmann, NR Investments principal, said the notion that developers are lowering deposits because of an oversaturation is an oversimplification.

Some developers might be finishing their product in a month, ”and the incentive is just to finish the product,” he said. ”For us, we are not delivering the building tomorrow. We are delivering the building in almost 8- to 10 months.”

And he added Canvas was meant for domestic buyers looking for a primary or second home since day one.

“I can do what is the right thing to do and go after my goal,” he said.

Canvas also has received conditional approval from Fannie Mae, which allows qualified domestic buyers to get up to 97 percent financing for a primary residence and up to 75 percent for a second home, on loans up to $424,100.

Future Market

The lower deposits and higher inventory of unsold units doesn't mean developers — or the condo market — are in trouble, Sklar said.

“It's part of the cycle. I wouldn't say there's a major downturn and certainly nothing like what occurred in 2007 and 2008,” he said, adding the unsold inventory now is much less than what it was before the housing crash.

Developers might be getting creative in other ways to attract buyers, Sklar added, such as an offering an additional parking spot, subsidies for amenities like gyms, spas or maintenance fees.

At Canvas, which has mostly one-bedroom units priced from $345,000 to $690,000, some of the amenities are a rooftop bar and restaurant, a gym, three pools, racquetball court, spa and sauna.

At Riva, which has two- and three-bedroom units starting at $748,00 and penthouses at $2.25 million, has an indoor-outdoor resort on the fourth and fifth floors complete with a 65-foot pool, gym, spa, wine room and a dinner party kitchen and lounge.

And at Aria on the Bay, which still has one- to four-bedroom units available that cost from the $400,000s to $1.8 million, amenities include swimming pools, Jacuzzi, barbecue grills and outdoor kitchens.

Gottesmann said 15 potential buyers approached Canvas because of the lower deposits. Riva has secured three buyers since the deposits decrease in August.

South Florida condominium developers are decreasing the deposit requirements for buyers, but why is up for debate.

Buyers who want to buy at Canvas, a 513-unit building rising at 1630 NE First Ave. in Miami; Aria on the Bay, a 648-unit tower rising at 1770 N. Bayshore Drive in Miami; and Riva, a 100-unit building completed in Fort Lauderdale, can put down 20 percent. That's less than the previous requirement of 50 percent, although Riva previously required only 35 percent.

Aria's developer, the Melo Group, and Canvas developer NR Investments said it's an opportunity to domestic buyers who can't afford the 50 percent deposits but are interested in buying.

But one real estate attorney said developers are responding to an unfavorable tip in the supply-and-demand balance.

“We have less demand and more supply, so developers need to sell their product, and they will offer incentives to do so,” said Bill Sklar, a real estate attorney with Carlton Fields in West Palm Beach and a University of Miami School of Law professor of condominium and planned development law. “It doesn't mean everyone is lowering pricing, but some are willing to make the deal.”

Developers are, in a way, victims of their own success, he added.

In the post-recession years, condo demand from wealthy foreign buyers looking to safeguard their money in U.S. real estate was peaking and fueling more condo construction, said Sklar, who also is the director of UM's Boyer Institute on Condominium and Cluster Developments. With construction nearing completion, not every unit has sold, he noted.

“In a building with maybe 300 units, maybe they were successful in selling 200 units, but there are still perhaps as much as 100 or 70 or 80 units not under contract,” Sklar said. “They just want to be able to enter into binding contracts knowing those units will be completed imminently.”

At Riva, which is getting some final touches, more than 70 percent of the units are pre-sold. At Aria, which is to be completed early next year, 90 percent of the units are sold. And at Canvas, also to be finished next year, at least 75 percent of the units have been sold.

But two of the developers and the real estate professional doing the sales for Aria on the Bay had a different take on why deposits are being decreased.

Buyers can pay a 50 percent deposit over time, staggering payments over about two years while the building is under construction, said Cervera Real Estate principal Alicia Cervera Lamadrid, who is doing the sales for Aria on the Bay.

That's why, for buildings nearing completion, a 20 percent deposit is more digestible for buyers.

“When you get close to completion, very few buyers are prepared to pay 50 percent in such a short window,” Cervera Lamadrid said.

Premier Developers said it was a matter of timing for Riva.

“We've had a lot of enthusiasm from potential buyers and see an uptick in sales,” said Bradley Deckelbaum, Premier Developers principal.

Ron Gottesmann, NR Investments principal, said the notion that developers are lowering deposits because of an oversaturation is an oversimplification.

Some developers might be finishing their product in a month, ”and the incentive is just to finish the product,” he said. ”For us, we are not delivering the building tomorrow. We are delivering the building in almost 8- to 10 months.”

And he added Canvas was meant for domestic buyers looking for a primary or second home since day one.

“I can do what is the right thing to do and go after my goal,” he said.

Canvas also has received conditional approval from Fannie Mae, which allows qualified domestic buyers to get up to 97 percent financing for a primary residence and up to 75 percent for a second home, on loans up to $424,100.

Future Market

The lower deposits and higher inventory of unsold units doesn't mean developers — or the condo market — are in trouble, Sklar said.

“It's part of the cycle. I wouldn't say there's a major downturn and certainly nothing like what occurred in 2007 and 2008,” he said, adding the unsold inventory now is much less than what it was before the housing crash.

Developers might be getting creative in other ways to attract buyers, Sklar added, such as an offering an additional parking spot, subsidies for amenities like gyms, spas or maintenance fees.

At Canvas, which has mostly one-bedroom units priced from $345,000 to $690,000, some of the amenities are a rooftop bar and restaurant, a gym, three pools, racquetball court, spa and sauna.

At Riva, which has two- and three-bedroom units starting at $748,00 and penthouses at $2.25 million, has an indoor-outdoor resort on the fourth and fifth floors complete with a 65-foot pool, gym, spa, wine room and a dinner party kitchen and lounge.

And at Aria on the Bay, which still has one- to four-bedroom units available that cost from the $400,000s to $1.8 million, amenities include swimming pools, Jacuzzi, barbecue grills and outdoor kitchens.

Gottesmann said 15 potential buyers approached Canvas because of the lower deposits. Riva has secured three buyers since the deposits decrease in August.