Dec. 7, 2008 - selling the neighbor's loft / unintended consequences in a Tribeca petri dish?
pricing within a building is ... interesting
I remain fascinated by multiple units offered for sale in the same Manhattan loft building. I riffed on the possibility of one mistaken price leading to another on November 30 in neighborly competition leads to neighborly mistakes? the laboratory at 24 East 22 Street , citing there a New York Times piece (August 10, Neighborly Competition). Today's rumination about neighborly competition concerns the unintended consequence of pricing a loft so that your neighbor's loft sells, leaving you on the market.
There's a Tribeca building that will remain anonymous for now (for obvious reasons, right? April 9 end of an era for Manhattan Loft Guy / a new day dawns?) in which there are multiple lofts for sale. Check out these listing histories in that petri dish:
| |
Loft 1 |
Loft 2 |
| day 1 |
new to market at about $1,450/ft |
|
| day 3 |
|
new to market above $1,200/ft |
| day 34 |
$50/ft price drop |
|
| day 43 |
|
in contract (in 6 weeks) |
Based on the listing descriptions, they have a similar level of outstanding renovation / finishes, with proper proper names in the chef's kitchens, great light, etc, etc, in roughly similar sizes. In other words, there is nothing notably different about them other than the price (they have the same numbers of bedrooms and baths as configured, but one is 10% larger than the other). Most likely, anyone taking the trouble to see one loft also saw the other. Manifestly, the comparison helped sell Loft 2.
fly on the wall that speaks English
I'd like to have been a fly on the wall at some these conversations: (1) The Loft 2 seller had resolved to sell when Loft 1 came to market; did that seller and agent adjust their anticipated asking price in response to the $1,450/ft pricing of the neighbor? (2) Did the Loft 1 seller ask the Loft 1 agent why they were priced so far above Loft 2 on Day 3? (3) Why did Loft 1 drop only $50/ft after five weeks? (4) When Loft 2 went into contract, did the Loft 1 seller feel they no longer had that competition, or did s/he feel that The Market had been established? (No subsequent price reduction suggests s/he feels The Market has not yet been established.)
the plot thickens, considerably
Then ... what happens when a third loft is offered for sale in the building? Let's update the history table:
| |
Loft 1 |
Loft 2 |
Loft 3 |
| day 1 |
new to market at about $1,450/ft |
|
|
| day 3 |
|
new to market above $1,200/ft |
|
| day 30 |
|
|
new to market near $1,330/ft |
| day 34 |
$50/ft price drop |
|
|
| day 43 |
|
in contract (in 6 weeks) |
|
It is tempting to try to read between the lines of the listings descriptions, but the 3rd loft sounds as though it might have a still higher level of finishes than the neighbors who are selling. (Then again, maybe not; maybe the possible differences are -- literally -- semantic.)
eyes of the buyer(s)
On Day 30, that Loft 2 seller had to be feeling pretty good about The Competition, with a second loft in the building priced considerably above Loft 2. With the context of the new Loft 3 listing on Day 30, the $50/ft price drop for Loft 1 makes a bit more sense: while still well above Loft 2, Loft 1 is not so radically priced compared to Loft 3. (Problem is, that both Loft 1 and Loft 3 remain well above Loft 2.)
Chances are that any buyer who discovered Loft 3 between Day 30 and Day 43 also had seen Loft 1 and Loft 2. What we know is that at last one buyer (likely) viewed all three lofts and (certainly) concluded that Loft 2 at $1,200/ft met his/her needs and represented better value than Loft 1 at $1,400/ft or Loft 3 at $1,330/ft. Is any of this surprising? Sometimes the business is not all that complicated.
(On the other hand, sometimes sellers persuade themselves that their loft is sufficiently special [dare I say unique?] that market data like a neighbor selling below them gets filtered out; that gets complicated.)
Of course, any but the most ignorant buyers interested in either Loft 1 or Loft 3 will know this full history. The two remaining sellers' agents will have to convince someone to pay more for their lofts than the Loft 2 seller got (assuming Loft 2 did not get a big premium over the asking price). That may get complicated!
Add some history to the data mix available to all but the most ignorant buyers: two of these lofts sold around $1,100/ft; one last year, one three years ago.
wishing or selling?
One can say that the Loft 2 seller really wanted to sell (and -- absent some post-contract calamity -- got her/his wish). The other two sellers in the building, at this point, remain more wishers than sellers.
© Sandy Mattingly 2008
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