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Manhattan Loft Guy

Sep. 27, 2013 - 50 West 29 Street build-out loft sale not as simple as it looks

 

here’s one I know something about
The recent sale of the “1,400 sq ft “ Manhattan loft #13W at 50 West 29 Street looks pretty simple: to market on April 10 at $1.475mm, in contract by June 20, and sold on August 22 at $1.5mm. That first period seems a little long for a loft to sell over ask and the second seems a little short for a coop, but all in all a quick sale. But you see from the extended history that it did not sell in 2011 while asking $1.45mm, or in 2012 while asking $1.415mm, as recently as that August. i know what the public listing history does not show: that there was an accepted offer in 2012 that took a really long time not to get to contract. For all I know there were other accepted offers in 2011 and 2012 that did not get to contract, but I do know why that one accepted deal failed. It gets complicated ….

you can’t sell what you can’t sell
You wouldn’t have known this from any of the marketing materials, and my buyer who made the bid that was accepted in 2012 did not know the funky details until due diligence, but there was then no residential Certificate of Occupancy for this (not quite) half of the 13th floor in this small coop. Of course, we were told more or less that “the paperwork is pending with the city” and should be completed “soon”.

The somewhat shorter very long story involves lawyers (of course) and expeditors and architects. I never got a full account of the details because it would have cost my buyer some professional fees for his team to explain it to me, but it came down to a difference of opinion between Team Buyer and Team Seller about how quickly and how likely a C of O would be issued by the city and, with the seller’s insistence that a contract be signed while all this was still murky, there were protracted negotiations about an escrow arrangement to account for this complexity. At the end of the day, Team Buyer was faced with the likelihood of signing a contract without the C of O, the possibility that no building permit would be issued for a renovation until the C of O was in place, and the certainty that seller would not agree to an escrow both large and long enough that he felt protected, and would give seller enough incentive to move heaven and earth to get ‘his’ C of O.

Did I mention that there was also uncertainty about the terms on which a bank would lend to purchase the coop shares associated with this loft?

None of this complexity was built into the price negotiation, by the way, as none of it was clear until the due diligence exposed the full facts, in all their convoluted glory. Buyer was willing to go to $1.3mm (seller’s then bottom line number) because this was the available loft that best met his needs within his financial resources, even though he thought (I thought, as well) that this value was beyond the comps, given that the loft was in very primitive condition and would need a gut renovation to truly compare to well-finished comparable lofts. (Take a quick look at the building page to begin to see why.)

Did I mention that there was some risk that the wonderful west light and views could be impaired by development on either side of Broadway between 28th and 29th Streets?

Seller was within her rights to want to offload as much risk as possible on my buyer, to reject the escrow terms proposed by buyer to sign a contract at the agreed price, and to reject a price concession as the last offer by that buyer to do the deal. No deal is a deal until it is a contract, and Team Buyer always assumed that Team Seller was acting in good faith (though in an optimistic fog as to what the city was likely to do, when).

Judging from the speed at which the loft was taken off the market when my buyer finally walked away (after incurring lawyer, architect and expeditor bills for the swamp work involved), Team Seller seems (finally) to have conceded that the loft was not saleable in that condition. Alas.

Team Buyer kept in touch with Team Seller in this (publicly) quiet period, at one point being assured that a Temporary Certificate of Occupancy “in 6 weeks”, to which buyer responded that he would do the deal at $1.3mm if that happened. No dice, alas. Six weeks later … same status (alas).

a new market emerges
My emails reflect that the TCO was (finally!) issued in February this year and that my buyer could not get seller to consider his money until seller had put it back for sale publicly. My guy (finally!) walked away and signed a contract elsewhere, loft #13W was brought to market on April 10, and the rest you know.

Did I mention that this was more complicated than it looks?

Seller ended up getting $200,000 more in the 2013 market than the “deal” with my guy almost a year earlier, so good for her. That buyer just paid $1,071/ft for a loft that needs $200/ft or more in renovation. I still think that’s beyond the comps (even with the ridiculously low maintenance of $522/mo), but this data point now exists for other primitive lofts on gritty blocks in non-prime loft neighborhoods.

That’s how values get reset. Alas.

(My guy has since closed on a much larger loft in much better [newly renovated and mint-y] condition with better views and light, at about $1,340/ft; he’s happy.)

reprise
Did I mention that this was a complicated story??

© Sandy Mattingly 2013

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Sandy Mattingly is Manhattan Loft Guy; now with The Corcoran Group (http://corcoran.com/ ; but see the disclaimer at the bottom of the page), he can be reached most easily at Sandy@ManhattanLoftGuy.com or 917.902.2491, and followed on Twitter @ManhattnLoftGuy (note "mis-spelling"). After 7+ years, the blog has moved. Links here on RealTown will work for the foreseeable future, but new posts (and all the old content) has migrated to ManhattanLoftGuy.com.

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