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Manhattan Loft Guy

Nov. 14, 2010 - flight or fight? the disappointed seller’s conundrum, 30 East 21 Street and 205 West 19 Street lofts edition

persist? or take a time out?
There’s a hard decision to be made at some point by every loft seller who is disappointed that The Market does not love the loft as it should, second only to the harder decision as to whether to drop the price: do you stay on The Market as an active listing (possibly beating your head against a wall and rendering your listing ‘stale’) or do you take enough time off the market so that when you come back you can be ‘fresh’ again? I parked two September Manhattan loft sales on my to-do list a while back, germinating this post in my mind for another day. That day has come!

In one case, the seller stayed on the market for two years, eventually selling at a slight discount to a price that had been unsuccessful a year earlier (and fully one-third off the original price). In the other case, the seller took five months off the market, then came back to sell at a price that had been unsuccessful a year earlier. Hindsight suggests that that first loft might have benefited from taking time away from the market.

paging Warner Wolf
Let’s go the videotape (errr ... listing histories). The first Manhattan loft is 30 East 21 Street #3B. This is a long history:

Sept 4, 2008 new listing $2.495mm
Nov 20   $2.395mm
Feb 27, 2009 change firms $2.25mm
April 9   $2mm
Aug 25   $1.75mm
Jan 15, 2010 change firms $1.75mm
April 14   $1.695mm
May 24 contract  
Sept 8 sold $1.65mm

That’s three firms, six prices, and 104 1/2 weeks to finally close only 6% off the price that had been offered eight months before the contract was finally signed. Note that by August last year the overall Manhattan real estate market was showing signs of thawing out of the nuclear winter that began almost immediately when this loft came to market (11 days before Lehman’s bankruptcy filing). You’d think that this loft could have attracted a buyer around $1.75mm a year ago, but it took eight (painful) months more.

What I am about to say is unfair, but seems in retrospect to be accurate.

I am not a betting man, but ...
Had the seller gone off the market for a significant amount of time (3 months? 5 months?) in about May 2009, then come back (August? October?) at $1.75mm, I bet that The Market would have responded with a contract at or better than the (much) later clearing price within a month or two. I can’t lose that bet (or prove that I’d have won), but doesn’t that seem reasonable, just from this sequence?

Actually, I can come very close to proving that I’d have won that bet, because the neighbors two floors up in #5B came fresh to market June 25, 2009 and found a buyer in contract by August 13, 2009. Their quickly clearing price was $1.955mm, a mere 2% discount from the asking price and $205,000 more than #3B could not sell at from August 25, 2009. $305,000 more than #3B eventually got, in a contract 8 months after the #5B contract.

That spread cannot be explained by differences in condition. The nugget from the broker babble on #3B is that it has “architectural wonder throughout” while #5B has “a contemporary renovation throughout”. They have the exact same footprints and are laid out similarly, with 2 bedrooms and 2 baths. #5B has two potential competitive advantages over #3B, but neither (nor both) should be worth $200k in a rational market: #5B has carved a den out of the main living space, and has two windows on each side exposure compared to only one window on each side in #3B. Frankly, #3B strikes me as the more sleek and beautiful renovation but that is a matter of personal taste, and you might (mistakenly, alas) not share mine.

But come back to those painful dates and numbers. When #5B came to market at $1.995mm on June 25, 2009, #3B was asking $2mm but had been on the market for nine months. Within two weeks of #5B signing a contract at $1.955mm in August 2009, #3B dropped its price to $1.75mm. And did not sell.

Do I win my bet?

a different strategy than being stubborn
The second loft under the Manhattan Loft Guy microscope is 205 West 19 St #10R. This seller was also unsuccessful in the Summer (into Fall) of 2009 but ended up eventually clearing at a price that had been unsuccessful in 2009 and only 5% off of where it started.

mind the gap
Note the dividend that staying off the market for a while paid:

July 9, 2009 new to market $2.1mm
Aug 13   $1.995mm
Oct 12 off the market  
March 12, 2010 back! $2.095mm
April 14 contract  
Sept 16 sold 1.995mm

At the same time that the #3B sellers on East 21 Street must have been pulling their hair out after seeing #5B successful above their price, the #10R sellers on West 19 Street were probably frustrated not to strike a deal off the $1.995mm asking price. But instead of changing firms while remaining on the market (as #3B did), the #10R sellers took a time out.

Five months later, they took a risk that the market reaction from those 60 days in 2009 asking $1.995mm was correct (i.e., that $1.995mm was unavailable) and they came back to market above their old asking price. Only a quibbler would note that they were ‘wrong’ about that price, because they had to take a 5% discount to get a deal done. At $1.995mm, their unsuccessful price from August 13 to October 12, 2009.

still not a betting man
I would bet that the #10R sellers would have done less well had they stayed on the market after October 12, 2009. I can’t lose that bet either, but i also can’t prove that I would win it. But it sure looks like a reasonable proposition, no?

© Sandy Mattingly 2010


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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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