Feb. 23, 2009 - what's wrong with these people? agents who speak out of their ...
Manhattan Loft Guy truculence unleashed: caution
I toured some Manhattan loft open houses yesterday with buyers, and saw some interesting lofts. The "highlight" of the tour was a visit to a loft with a terrific skeleton -- clearly a total gut renovation with a lot of potential (handsome building, high ceilings, big windows, good light), offered by a pretty well-known agent. In the eyes of my buyers (and to my own eyes) the agent was an embarrassment. Farcical, at first, but overall an embarrassment to the firm and the licensing authority.
"you will double your money in five years"
The agent started speaking as we entered the loft, and stopped when we left (so far as we know). I have to believe that is that agent's personal style, rather than an unusually caffeinated response. That constant-stream-of-stuff style can be a little entertaining, though not necessarily embarrassing. This content, however, included a great deal of "salesmanship" in the tradition of used cars, or Enron energy 'products'.
In extolling the benefits of the neighborhood, the building, the totally unusable-for-grown-ups-as-is interior of the loft, the agent assured my fully grown-up buyers in the close presence of their agent (Manhattan Loft Guy) that if they bought the loft and paid to renovate they would "double [their] money in five years", which caused one of my buyers to make a skeptical sound and then offer "that's not what I read in the papers", which lead the agent to talk about the opportunity to buy this loft (untouched in 25 years, to all appearances) at "1995 prices".
"if you don't buy it today..."
My buyers are not prepared to bid on this loft today, though they are intrigued by the potential for this loft. Alas, the loft is reportedly about to be sold. Three times we were told that the seller is "ready to sell" and has had an offer on the table, which the seller told the agent ("in a phone call today", dramatically enough) the seller would accept unless someone else stepped up "today." I will be very curious, of course, to watch over the next week or two if the status here is updated to reflect an accepted offer, contract out, or signed contract. [note 3.27.09 update on status below]
details, details
My buyers had the show sheet in hand, and were looking back and forth from the floor plan to the reality, wondering how they might be able to use / adapt / build out the space. One buyer pointed out to me that the number of windows on two different walls was different in reality than as depicted. (Those windows are the main draw in the loft, so this is not a small matter.)
They were also curious about the size of the rooms (reality vs. the floor plan) and the overall size given by the agent in the listing. To my eye, the room dimensions seemed roughly accurate, but adding those dimensions and making some small extrapolations today, the loft is about 15% - 20% smaller than estimated. (At that point, I was hardly surprised. Just disappointed.) Yes, "square footage" in coops is rough on its best day, but if you go to the trouble of putting specific room dimensions you only invite the click-click of a calculator.
why go to the trouble to puff?
Perhaps the agent took my buyers and me as fools, in puffing so hard about the future and the past. Perhaps that is just more of the agent's style. But I don't see any value in a listing agent telling buyers-with-an-agent-present about the future upside, or past history. If the buyers' agent has a brain (or, at least a computer), the buyers will learn the real history. And if they want predictions about the future, they can ask someone they have a relationship with, rather than the agent trying to sell them something.
But the agent crossed over into shameful in offering -- with complete assurance -- that the future would be so bright, so soon for the lucky folks who'd buy and build out that loft. Double your money by 2014! (The explanation, in part, was that the current opportunity was available at a price not seen in more than ten years!!)
I will have this more detailed conversation with my buyers if (when?) the loft remains available into March, but they will not be surprised to learn that the current asking price on a dollars-per-foot basis (using the lower size derived from this agent's room dimensions; which matches the listing for a loft in the same line in 2003) is more than $100/ft higher than any loft has sold for in the building and nearly $300/ft higher than the average for the five sales recorded in the last two years. Of course, my buyers knew they would not have to pay that ask to beat the offer the seller has in the pocket (the one that "will be accepted if not sold [yesterday]"). That price-to-beat is not quite halfway between (a) two sale prices of slightly smaller lofts in June 2008 and April 2007 and (b) the sale of a loft in this line on a higher floor in 2003. [note 3.27.09 update on price below]
This is imperfect science(!), of course, but the offer-in-the-pocket is probably a 2005 or 2006 price -- certainly not a 1995 price.
Anyone with access to (a) a brain or (b) City records can figure this out. So why go the trouble to puff about the past? (Although it stands to reason that someone who would puff about the past would puff about the future, at least as a matter of habit.) In this context, it is hardly surprising that the original asking price was nearly a third higher than the current (higher than seller will accept) price.
call me Pollyanna
Just on the basis of the interaction at the open house (without any additional factual data), my buyers would trust this agent about as far as they could throw the agent through one of those 'missing' windows. Because I can't imagine that yesterday's performance was anything but typical for the agent (the agent's partner did not leap to restrain, correct or sedate the agent), I find it both shocking and disappointing that this agent has had a long successful career at one of the brand name brokerages in Manhattan. Really depressing, in fact.
The only way this technique works is if buyers are both uninformed and moronic. Most buyers who are not morons will (sooner or later) find a way to get educated before making a seven-figure decision. If not, they buy this agent's shtick, and this loft above The Market. Heaven help that bidder who made the-offer-in-the-pocket if their eyes are not open. (I wonder if they are looking forward to 2014.)
And heaven help anyone else who comes into contract with this agent in the future. As much as I felt afterwards that I needed to take a shower, the little pricing history research I did this morning just makes me sad.
[ update 3.27.09: no one will be surprised that the loft is still on the market (that offer-in-the-pocket notwithstanding), and that the price has been dropped 8% -- though it still has a ways to go before reaching that off-in-the-pocket. I'd guess they are pretty negotiable ;-) ]
© Sandy Mattingly 2009
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