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Jul. 15, 2013 - memory lane: Field of Dreams pricing sells 130 West 17 Street penthouse loft at huge premium

 

Five Years Ago Today on Manhattan Loft Guy

You were warned in my July 4 post that you had a couple of weeks of archived Manhattan Loft Guy material coming up; almost up. In my July 15, 2008, 130 West 17 Street #9S went for it + got it, I considered a loft that was very aggressively priced that succeeded in selling despite, in my view, no rational basis for the asking or clearing prices. What I did not know 5 years ago was that this was a very Peak-y sale (March contract, June closing, so it was just past The Peak, in retrospect), but I had been on this listing for some time: back when I would comment on active listings I called this a Going For It! listing (“As in similar Going For It! posts, I was intrigued by an asking price that I could not find justification for in any traditional analysis -- nearby comps, past sales in the same building, particularly”).

 

Of course, what I did not know then was that The Peak had passed, and that Lehman was about to pull the last bit of underpinning out of the market. That’s what happens when you take snapshots.

 

© Sandy Mattingly 2013

 

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Mar. 22, 2011 - when a condo board sues a developer, must resales die?


the cat may already have left the bag
The Christine Haughney Appraisal story in today’s New York Times touches (again) on the consequences to owners who would like to sell when there is a dispute about the condition of the building. In this case, there is a case: the condo board of a six-year old (former) new development in Brooklyn has sued their developer over $4.7 million in needed repairs to a (formerly, not very long ago) new building. One specific seller profiled by Haughney is caught up in the fall-out.

Attentive readers of Manhattan Loft Guy will recall that I have previously talked about the sometimes hard choices that a coop or condo board have to make in escalating a dispute into a lawsuit. I touched on this almost as an aside in my March 16, can a condo board remove a member??, about a Manhattan condo owner who sued her board (and who has been sued by her downstairs neighbor), in which I cited two earlier posts on this To Sue, Or Not To Sue … dilemma.  

Of course, by the time a building is actually faced with a choice about suing or not, the problem that such a dispute causes for prospective sellers has already occurred. Further publicity should not add (much) to that problem. In fact, I will suggest at the bottom, that the additional publicity might actually help. Haughney’s unfortunate seller illustrates the point and the possibilities.

laundry can be dirty enough to hurt, whether it is fully aired out or not
The Haughney piece, How a Building Dispute Can Sink a Sale, profiles the pain of one unit owner in a Brooklyn condo described as “one of the first condominiums finished in the building boom”. (That’s a nice touch, rattling anyone who bought a new development in the last six years with the example of this building in which post-closing kinks have not been worked out even six years later.) The condo board at Boulevard East (at 53 Boerum Place in downtown Brooklyn) chose to sue the developer over (what looks now like) up to $4.7mm in repairs that the board believes the developer should pay for, just before the statute of limitations on such a claim would have expired.

Haughney’s unfortunate seller is a researcher-by-day, bass-player-by-night who has been trying to sell for a year. The listing history shows that she started at $775,000 and dropped twice (to $669,000) before accepting the offer for $632,500 in December that Haughney notes. (Any number not ending in $xxx,000 implies an already difficult [protracted] negotiation; it got worse ….) Unknown to the seller (!), the condo board was then on the verge of suing the developer, after a series of unit owner complaints, two engineering reports, negotiations with the developer, the board’s complaint to the New York State Attorney General’s office, and (obviously) a lack of resolution.

The sequence is a little odd. The offer was accepted in December, so attorney due diligence to review the condo board minutes should have discovered an extensive history not later than very early 2011, but the seller did not offer to reduce the price (by $30,000) until “[a]fter the board filed its lawsuit” (which was February 23). Not good enough: the bidder countered with $550,000, which the seller rejected. After having been on the market since March 2010, that unit is now off the market, to await developments from the board and/or the lawsuit. She paid $735,000 in October 2007 … not quite The Peak quarter for the overall residential real estate market (in Manhattan, at least), but close. Her agent’s opinion is that the dispute is “killing all the owners as far as selling”.

As this seller’s experience makes clear, it was not the lawsuit that changed her ability to sell near where she thinks her apartment is worth, but that the underlying facts as revealed in the board minutes were discovered by the prospective buyer’s counsel. In other words, the additional publicity of the lawsuit (and a New York Times interview!) don’t change the fact that any buyer with competent counsel would have found the dirty laundry since whenever these problems got sufficient notice in the board’s minutes.

I would guess that this was at least by the first engineer’s report, if not earlier, when owners were reporting problems such as “mud spurting from their bathtubs”.

Here is an awkward thought: I wonder if this October-2007-buyer-now-would-be-seller has had a conversation with the lawyer who did her front-end due diligence about what was in board minutes before she paid $735,000 for an apartment she can’t now sell for around $600,000. When did the board talk about retaining those first engineers? (Who were retained before she bought.)

More awkward still: have any of the
six 2010 buyers here talked to their lawyers about what was (or was not) discovered in dues diligence before they bought? Each of them paid at least 90% of the price-per-foot last offered by Haughney’s October-2007-buyer-now-would-be-seller, and some paid a premium to her last ask.

to sell in this market, call Rumsfeld
This seller seems to be hopeful that the dynamic may change shortly (she will “re-evaluate her options after the next board meeting, on March 30”), but it is always hard to negotiate with a very large Known Unknown. It is obvious that some repairs are needed (the engineers estiamte $4.7mm) but until any needed repairs are made even the scope of the problem is not precisely known, let alone paid for.

Unless there is insurance involved, it is doubtful that the board would take this on until there is a settlement with the developer and/or an assessment from unit owners. This seller was on the right track, by offering to drop her price $30,000 from the accepted offer last month, but the negotiating dynamic was probably too dramatically shifted by the surprises in due dilgence. The lawsuit (and the publicity in the New York Times) might actually serve to make it easier to sell during this uncetainty, by educating potential buyers about the uncertainty. That is, if the buyers can be made (reasonably) comfortable about the dollars at stake. (I.e., the Known Unknown becomes a Known But Reasonably Estimated.)

The seller’s unit has a 1.1417455% interest in the condo. If the worst case scenario is that the developer pays nothing and the condo assesses unit owners to make $4.7mm in repairs, this unit’s share is under $54,000. So long as the facts are stable and known about the scale of the problem, buyers and sellers can negotiate comfortably about the likelihood that the developer will ultimately contribute a non-trivial amount (net of the costs of the lawsuit) and what that contribution might be.

Were I a seller, I might propose an escrow instead of a price reduction, such that I would get some money back (in 3 years?) if there is no assessment for this problem up to the amount of the escrow. If I were the buyer here, I might prefer the price drop method, but then I might reasonably have to accept a smaller discount than I might get the seller to agree to escrow.

Again, emotionally and in terms of practical negotiation dynamics, the negotiation Haughney presented was probably doomed by the surprise. With that cat out of that bag, even this publicity might not kill the market in the building so much as re-set it.

Emphasis on might....

© Sandy Mattingly 2011
 

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Nov. 8, 2010 - bloody competition at one Manhattan loft building


tight smiles in the elevator?
It has been a while since i have posted about active listings (even without identifying them). I suspect that it would be less than interesting to read many Manhattan Loft Guy posts that said, in essence, I’ve got a secret! But this one is just too juicy for me to contain...

There are three neighbors in a relatively small loft building (no more than 20 units) all offering for sale lofts in the same line, with the exact same footprint and with only slight variations in the floor plans (same number of bedrooms and baths in each). They all claim to have a high level of finishes. Because of how the building sits in relation to neighboring buildings, they all have very, very similar views and exactly the same quality of light.

They are not small and they are not cheap. Any buyer who has been looking at premium lofts probably knows which trio I am talking about and I can’t imagine why any buyer interested in visiting one would not visit all three.

In round numbers and with approximate dates, here is the outline:

on market asking $/ft originally
11 months $1,100/ft $1,240/ft
8 months $1,300/ft same
2 months $1,050/ft same

What’s even more interesting is that another neighbor sold this Summer. For some reason, that loft has a slightly smaller footprint than the 3 still-for-sale neighbors (7%), though with the same number of bedrooms and baths and with the same high level of finishes. At this scale I am not even sure that a buyer would discount that unit for being slightly smaller, and might well consider all four lofts as functionally equivalent. In fact, that unit sold for a bit more per foot than two of the still-for-sale units, at an actual price very close to the lowest of the 3 current asking prices.

thin market syndrome?
It may prove to be that the Sold unit attracted the single summertime buyer in this price range for this building. (It was really only directly competing with one neighbor then, just as the two lower price lofts are really only directly competing with each and not the high price loft.)

So it will be interesting to see when another buyer emerges. Given that summer sale, if I were a seller here I would be very tempted to hold the price in the $1,100/ft to $1,050/ft range, because that is where the last deal got done. But it looks as though the first of these pair to sell will be the one most negotiable for the (single??) next buyer.

The owner and agent of the high-priced outlier believe they have a $200/ft advantage based solely on finishes. Eight months in, how long can they afford to wait until someone else agrees with them?

neighbors, Hatfields + McCoys
I love these same-building discussions, especially when neighbors are directly competing against each other for a sale. I don’t recall another building with 3 essentially identical lofts for sale and a recent neighboring comp, but here is a selection of Neighborly Ruminations from the Manhattan Loft Guy archives:

May 11, 2010, 29 East 22 Street loft closes off 40%
April 9, 2010, closing at 40 West 15 St relieves ALL shareholders
March 9, 2010, 45 Crosby races to contract above ask / could it be a million dollar renovation?
May 6, 2009, pretty efficient (depressed) market at 505 Greenwich Street as both 6F and 7F sell, off 25%
April 17, 2009, break away to win the neighborly competition / so many lofts, so many dollars ... but no sales (yet)
January 7, 2009, are they fooling only each other? / 3 neighbors push, 1 smiles
December 12, 2008, more unintended consequences in petri dish of Tribeca neighbors
December 7, 2008, selling the neighbor's loft / unintended consequences in a Tribeca petri dish?
November 30, 2008, neighborly competition leads to neighborly mistakes? the laboratory at 24 East 22 Street

Enjoy! I will report back when all three competing lofts are sold or off the market.

© Sandy Mattingly 2010

 

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Oct. 24, 2010 - real estate market psychology: about seller refusal to take a loss


just ‘cuz “everyone knows” doesn’t mean it is not true
Yes, it is no great revelation to state as fact that apartment or loft sellers in Manhattan (and elsewhere) are reluctant to sell (even when “on the market”) if they can only sell at a lower price than they bought the apartment or loft for.

Here’s some actual science to the same effect, from an August 25 post on Wired by Jonah Lehrer (if the science is timeless, I can’t be called tardy, right?). The money quote is from a 2001 academic paper (see ... timeless science) about a real estate market that experienced a 40% drop between 1989 and 1992 (timeless!) (my bold):

Classical economics assumes that people will adjust to the new reality. They’ll realize that the market has changed, and that they made a costly mistake. But that’s not what happened. In their paper, “Loss Aversion and Seller Behavior: Evidence From the Housing Market,” Mayer and Genesove found that, for essentially identical condos, people who had bought at the peak of the market (between 1989-1992) listed their properties for nearly 35 percent more than those who had bought after the collapse. Why? Because they couldn’t bear to take a loss.


h/t Andrew Sullivan

similar psychology, less academic ‘science’
I hit a similar point about the potential errors that buyers or sellers can make in negotiating loft prices (or anything else!) in my August 8,  negotiation science / The Anchoring Effect.  

In all cases with these psychological barriers, a good agent will help a buyer or seller recognize and compensate for the tricks his or her mind is playing on his or her judgment. It is up to that buyer or seller to decide, of course, if he or she really wants to buy or sell within the confines of the then-current market.

bottom line = humans are human
Many people say they do; some of them are tricking themselves.

© Sandy Mattingly 2010
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Aug. 8, 2010 - negotiation science / The Anchoring Effect


indeed, "we" are not so smart
Interesting post from an interesting blog that I have been mulling over this past week, as it had great personal relevance this week (story below) and has a real estate nexus. The post is
Anchoring Effect; the blog is You Are Not So Smart with the clever subtitle, A Celebration of Self Delusion. Here's the lede, where the key factor (after you understand how it works) is where that "initial conception" comes from:

The Misconception: You rationally analyze all factors before making a choice or determining value. 

The Truth: Your first perception lingers in your mind, affecting later perceptions and decisions.

Read the whole thing. I am pretty sure that at least one of his examples will resonate with you (the leather coat, the population of Venezuela, African countries in the UN, car sales, auctions and social security numbers, Vuitton vs. Wal-Mart handbags, summer camp volunteers). The Anchor Effect definitely exists, and understanding how it works helps us better able to overcome it.

Let me give you one (true!) story about the car we bought this week (after I read this post), before getting to some highly relevant Manhattan real estate issues.

me and my Anchors buy a car
Long story, short: I did tons of research, over-preparing to buy a certified pre-owned Prius, had Net Number (after trade-in) in mind we were comfortable with, and identified two dealers with interesting low-mileage inventory. Both had a pair of a fully-loaded 2008 and a 2010 with fewer options. At the NJ dealer, the 2008 and 2010 were offered at essentially the same price and we preferred the 2008 (partly due to the exterior and interior colors). Valuing the trade-in, that dealer and I got within $550 of each other, net.

I have to believe that was the dealer's best price, because we said NO, walked out, and did not hear from them again.

At the CT dealer (90 miles north of the first dealer!), the web price for the fully loaded 2008 (which we again preferred) was $3,000 less than the 2010 but (it turned out) this dealer valued the trade-in much lower than the NJ dealer, complicating the Net Number calculation.

I became aware of three Anchor Effect problems. First, my expectation based on the lower 2008 sticker price in CT was that I should do much better there than in NJ, so I was disappointed (distracted?) when I did not. Second, my expectation from the NJ experience was that the 2008 fully loaded should be equivalent in price to the 2010 with fewer options, while in CT there was a relative over-valuing of the 2010 (a car I did not prefer). Third, I had negotiated a much lower discount on the 2008 in NJ than it looked as though I was getting in CT (absolute prices aside), so it did not feel like a better deal.

As it played out, I negotiated a Net Number in CT for the fully loaded 2008 that was clearly going to be better than the price I would have been willing to pay in NJ (but that dealer would not meet it). The mistake I almost made was to walk away in CT to return to NJ to buy the 2010, even though we originally preferred the 2008 to that 2010, and even though I could get the 2008 in CT for less than we would have been satisfied paying in NJ. Weird behavior.

Fortunately, I had enough time to reflect through (and get over) my anchor biases, and to return to my original goal: to buy the Prius we preferred within our original dollar comfort zone, net. We preferred the 2008 fully loaded, so the 2010 valuations were only a distraction. I could get a better deal (net) in CT even though that dealer was willing to give me (significantly) less on trade-in. The fact that my negotiating margin in CT was smaller than in NJ was irrelevant, so long as the result was better.

a 5% solution
We are picking up our new-to-us certified pre-owned 2008 Prius (did I mention that it is fully loaded?) in CT on Tuesday. The Net Number in CT is 5% lower than the number I would have taken in NJ but that dealer let me walk away without offering.

Now I spend too much time second-guessing my CT negotiating strategy since I only pushed back once when the dealer said I had squeezed him to his "final" number. Yes, I got $250 less than his "final" number, but could I have gotten another $100 off his final final number??

Never mind. What does this have to do with real estate?

difference for real estate buyers and sellers: who sets the anchor
There are the obvious points of relevance for buyers to recognize the Anchor Effect of an asking price, and maybe someday I will do a post about how sellers of (truly) unique lofts set arbitrary anchors (perhaps using as a point of reference the June 2008 sale of #
9S at 130 West 17 Street, which I hit when it it came to market, 130 W 17 9S is new + really going for it, and again when it went into contract, don't sneeze at 130 West 17 Street contract, as I believe that seller created an arbitrary anchor that succeeded in generating an above-market deal). For now, I want to focus on the difference between anchors for sellers and buyers.

As Raney suggests in his blog post, a buyer is more likely to be aware that the seller has created a likely-to-be-arbitrary asking price than the seller is to be aware that she has been (irrationally?) influenced by an anchor in setting (and sticking to, stubbornly) a possibly-too-high asking price. As he puts it:

External anchors, like prices before a sale or ridiculous requests, are obvious enough you can sidestep the actual price, the real appeal. Internal, self-generated anchors, are not so easy to bypass.
 

I take that to mean that a seller who paid $1.5mm for a loft at any earlier time will probably use that $1.5mm as the anchor from which to make adjustments for current market conditions but that seller is prone to making poor adjustments because of the anchor. As Raney quotes some other smart folks:

In many situations, people make estimates by starting from an initial value that is adjusted to yield the final answer. The initial value, or starting point, may be suggested by the formulation of the problem, or it may be the result of partial computation. In either case, adjustments are typically insufficient…that is, different starting points yield different estimates, which are biased toward the initial values.

 - “Judgment Under Uncertainty” by Kahneman, Slovic and Tversky

Or, a seller may (unintentionally) be anchored by the number she has to have in estimating what a buyer will rationally pay. Yes, that seller may say she is willing to make adjustments offered by a professional real estate agent based on the current market, but may be over-committed by her anchor to an unrealistic price for a "reason" she does not fully appreciate.

Fascinating stuff.

h/t
Andrew Sullivan

© Sandy Mattingly 2010



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Jul. 14, 2010 - Times article disconnect / why developers should build schools UPDATED


is it about the links?
Yesterday's NY Times article by Christine Haughney in The Appraisal feature, Parents’ Real Estate Strategy: Schools Come First, got a lot of attention in the blogosphere, and probably in the real world, also (of course, the article got linked on Curbed and many other sites; The Google returned 2,630 results, using the exact title of the article; it also got a discussion thread on StreetEasy).

Did anyone else think that the middle of the article got left out?

The pretty explicit headline was followed by a great lede:

When [the featured family] started shopping for an apartment in Manhattan in 2007, their first call was not to a real estate broker. Instead, they hired an education consultant...

From there, it was a short distance to discussion that the public school this family paid a premium to be zoned for is overcrowded, thence to a

struggle on the Upper West Side between parents like [this family] who want more classrooms — many more — and the developer of a new project who is offering to build a school that some say is not big enough [and]

[while] Extell Development has already offered to build a 75,000-square-foot school for 480 students for children in kindergarten through eighth grade, ***

[but] Parents say that is not big enough. They want Extell to build a school that accommodates six classes per grade or roughly 1,250 students, and they want Extell to pay for more of it.

In support of this viewpoint, the Times offers the:

co-president of the P.S. 87 Parents Association, [who] said that at her school the number of incoming kindergartners more than doubled, to 241 in 2010 from 93 in 2007. She added that these numbers were only going to grow, based on the growing presence of Gymborees and baby stores in the neighborhood.

 

the missing middle
Here is what I expected to see in the article, but did not:

Since 2005 [or, insert your preferred date], PS 87 enrolled [pick a number] new students from new condominium developments.

Or at least something like:

Along Riverside Boulevard, new developments since 2005 have added xx apartments to the PS 87 zone, about [80%??] of which have 2 or more bedrooms. While it is impossible to say how many of these apartments contain families with small children, [some expert] estimated that yy% is a reasonable guesstimate, of which more than [half?] are likely to send their children to private schools instead of public schools.

The best that Haughney can do is a vague statement by someone who may (or may not) know what he is talking about. Maybe the president of District 3’s Community Education Council has data to support this statement, but he didn't share:

“This overcrowding has been caused to a fair extent by overbuilding,” [he] said .... “This school [the proposed Riverside Center school] has got to be big,” he said. “It’s got to be paid for by the developer and it’s got to be among the first buildings built.”

who goes to public schools?
Certainly there are some families who pay many millions of dollars to buy apartments who send their children to public schools; I just don't know how many. But I would be surprised if overcrowding at PS 87 "has been caused to a fair extent by overbuilding”, if by "to a fair extent" the guy means "to a significant extent". You would think there are experts who have a pretty good idea about that, but I am not one of those experts.

I do know that the median price of the 34 apartments 2 bedrooms or larger sold at The Rushmore, 80 Riverside Boulevard (the poster child for Upper West Side over-development, I would say) so far in 2010 is $2.5mm. I could be wrong, but I just don't see a lot of PS 87 kids coming out of this building.

another (more fair) cause of over-crowding in schools?
I would love to have a data source from which to estimate how many small prewar apartments have been combined into "family-sized" units. That's what that featured family from the Times article did, in fact. (Not that there's anything wrong with that.)

They bought what had been originally a studio and a one-bedroom. No children were likely to go to PS 87 from either of those apartments before they were combined, but now they have a 2nd grader. It looks as though there were 109 units in the building when it was converted to a coop in 1965, but Property Shark thinks there are only 65 residential units currently. That is a lot of combinations. I bet there are more than a few PS 87 students from that building's combined apartments.

There is another example of where (some) school overcrowding can come from. The Times article closes with a (rather entitled) father who thinks he made a "pact" with the City. That guy is doing what many in my parents generation did: cramming a family into a small rental apartment. That guy is living with a 4-year old, a 2-year old (and a wife?) in a rented 900 sq ft apartment across the street from their preferred public school.

He thinks that is a sacrifice, and that the City owes him:

“Has my family sacrificed to stay in this zone? Absolutely,” [the (entitled) dad] said. “When we made the decision to stay in the city, we entered into a pact with the city. That pact was that my child would go to his or her zoned school.”

I don't think he read the fine print about what it means to be zoned for a particular school.

Both of these families are doing what they think is best for themselves, by buying or renting in a school zone they prefer. One family is not happy with the staggered schedule for their daughter when she was in first grade; the other will not be happy unless both their kids get into PS 199 from a waiting list.

the cause
The same dynamic that caused these families to make these sacrifices has caused developers to increase the number and proportion of "family-sized" apartments in new developments: that fact that the City is seen as a viable alternative to the suburbs because it is thought to be a safe environment and/or because some families have boatloads of money to throw at private schools. I am not going now to track down the many, many articles in the Real Estate Industrial Complex discussing this phenomenon, in part because this post is already too long (and taking too long) and in part because regular Manhattan Loft Guy readers are probably well familiar with the topic.

Whether you think the trend started in 1987, 1995 or 2002, I am confident that demographers could prove to you that more families stayed in the City after that first or second child than in previous generations, which would have fled to the 'burbs by the second birth (if not before). One result was that families combined two smaller apartments (like the featured family); another result was that families squeezed into rental spaces near 'good' public schools rather than having more room near a not-so-good school (like the entitled family); yet another result was that developers added 3-bedroom, 4-bedroom and gazillion-bedroom units to their new development floor plans.

But I am skeptical about how many of those families in ultra-large new development apartments are using public schools. (I am also not going to track to link to the articles about the explosive growth in private school applications and enrollment, but I am highly confident that that "has been caused to a fair extent by overbuilding".)

circling back
I have gone a long way from where I started this post; let's tie some things up.

The Times article faked me out because I thought they were doing a hot-PS-zone-drives-Manhattan-real-estate-prices article. The quotes from the featured family line up perfectly with such an article (especially about how they "stretched financially" and put “[a]ll of our money ... in our little two-bedroom apartment”).

There are at least two great articles to be written that extend these two paragraphs (but Haughney did not do either one):

Families like the [featured family] helped raise the tide of New York real estate prices in recent years by bypassing the suburbs and, instead, paying premium prices for apartments near high-performing public schools in places like TriBeCa and the Upper West Side in Manhattan, and Park Slope in Brooklyn. Developers, in turn, built costly family-size apartments near the same schools, knowing they would draw parents hoping to avoid the cost of a private education.

But there were never any guarantees. Schools fill up. Zones are altered by the Department of Education, which sometimes switches the blocks that each zone comprises. Children in New York City, after all, are guaranteed a public education, but not necessarily in the school that their parents want, or in the one that is closest.

Instead, she doffed her NY Times cap at these topics, without substantiating the assertion that new developments, per se, "cause" overcrowding (as I addressed above). But she also did not consider whether developers were really focused on good public school districts when they decided where to develop (she seems to assume that this is obvious), as opposed to considerations such as (a) ease of lot assembly, (b) a big enough zoning / FAR 'envelope', (c) river or other views. I am almost certain that public schools were irrelevant to developer thoughts about the Time Warner Center or 15 Central Park West.

Getting closer to real Manhattan loft concerns, is PS 234 a more decisive consideration for new development decisions in that funny triangle south of Canal Street, or is that Tribeca is Tribeca is Tribeca (with PS 234 as only one element of what makes that triangle Tribeca)? Rhetorical device be damned ... the MLG answer is no.

[UPDATE 7.15: I probably bit off here more than I could comfortably chew in one post, but let me at least include what should have been an obvious factual reference in any discussion of Tribeca and public schools: the recent controversy over the boundaries for PS 234 in Tribeca, covered extensively by The Downtown Express (for example, here, with maps). The very newsworthy angle to this story of course involves a major new development, 101 Warren St, which is in the PS 234 zone under either plan then under consideration, while the 'affordfable housing' compenent of that same overall project (89 Murray St) would be out of the PS 234 zone under one proposed map.

I continue to think that 101 Warren Street is where it is because it was one of the last substantially empty really large development sites in Tribeca, and not because it is down the block (and zoned for) PS 234. But that point may require more analysis to be persuasive to some readers. Not gonna go there now, as this post has really gone too long, and perhaps too far afield. i still would like to see data in these articles....]

psyching out the Old Grey Lady
Maybe my NY Times expectations are just too high, but I am prone to disappointment when the Lady carries an article with holes. You can do better! I wish they had fleshed out more the central (assumed) point: that the kids from the new developments are the ones causing the (unnatural) crowding in top public schools.

But maybe some of the fuzziness is because Hauhgney had terrific quotes from two very quotable families. The piece starts and ends strong, with these two families as anchors. But there's much more sizzle than steak (block that metaphor??) between the appetizer and the dessert.

I hate when that happens....

© Sandy Mattingly 2010

 

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Mar. 21, 2010 - today's Manhattan loft poster child: the audacity of hope


only my copy identifies this child

You know that I can't identify this relatively "new" listing, but it is another poster child for me. Yesterday I identified a newly developed Manhattan loft building as my poster child for valuing a view (March 20, a $2 million view on Madison Square? comping at 15 East 26 Street); today it is a loft in a prime location in a classic loft neighborhood that is back on the market at a price point that has not worked in the past. My mind's eye gives it a Shepard Fairey treatment.

how audacious is this?
This loft came to market in the Summer of 2008 and lasted into the Spring of 2009, so it was well exposed to the market, and was offered by very experienced loft agents who have been very successful in selling lofts in this long-established coop. They started at $1,148/ft and by the end had come down all the way to $814/ft, with four intermediate asking prices between these poles. This is a pretty big loft, so this swing from top to bottom pricing is almost $1,000,000.

I suppose the theory is that was then, this is now, as I don't see any other theory to account for the fact that it is back on the market, asking about $960/ft, in the same condition, with the same agents.

As before, the marketing text hints that a buyer will want to renovate. I heard enough reports from people who had seen it the last time that the amount of work likely to be done is more extensive than is hinted at, which leads me to wonder if they are still not managing buyer expectations well enough to avoid people being disappointed rather than energized by the prospect of improving this large space.

a new poster, perhaps
Of course, if they succeed at this new price -- nearly 20% higher than the last unsuccessful asking price -- the Manhattan Loft Guy poster collection will use this loft for that was then, this is now, instead of the audacity of hope. Stay tuned. Updates as they occur.

 

© Sandy Mattingly 2010

 

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Aug. 30, 2009 - quote for the day / NYT The Hunt

 

who is out of touch now?
The Sunday Real Estate section of the New York Times regular feature by Joyce Cohen, The Hunt, today profiles a woman who seems to have spent much of the last 18 months looking for a 2 bedroom with light on a narrow slice of the Upper West Side. She eventually found her light slice of Manhattan (as always happens in this feature) and closed last month.

Among various other adventures, she made a bid on another apartment that also closed last month. The article implies that the offer was made when the apartment was asking $1.6mm, which helps narrow the time frame considerably (below). The fun stuff is in bold.

Nearby, on West 111th, was a beautiful three-bedroom co-op on sale for $1.6 million. Ms. Gooding offered $1.05 million. Her only concern was the possibility of construction nearby.

When she finally heard back, the agent said the offer was so low as to be “out of touch.” The apartment sat on the market for a year and finally sold this summer for $1.075 million.

 

a better quote that I'd like to have overheard
Zing! That out of touch” is a good quote, but the conversation I would like to see reported is the one between that agent and that seller. Maybe the seller agreed about the touchiness of the $1.05mm offer (which presumably would have been raised); but maybe not. I sure hope the seller knew about the offer.

on further review
I dislike short posts (I need to get over that), so -- having written this much -- it took only a little digging to find the apartment, which was offered for $1.6mm for only a short while. I will not identify the unit because this is a snarky post, but here is the listing history:

May 3, 2008 $1.6mm
June 20 $1.495mm
October 18 $1.395mm
December 11 $1.25mm
March 27, 2009 contract
June 2009 closed $1.075mm

In defense of the agent, the real story is not quite what the NYT story implies -- though The Quote is priceless. In reality, agent and seller recognized in 6 weeks that they were at the wrong price, although it did take six months to get to a price that would generate a (deeply discounted) contract. I wonder at what point they tried to find Ms. Gooding and her $1.05mm ....

If the oh-so-quotable listing agent has half a brain, she will refrain from defending herself publicly.

 

© Sandy Mattingly 2009

 

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Aug. 21, 2009 - risk, revisited / I am still a coward, but the 'brave' did not sell (yet)


checking back on the Spring
I recently had a conversation with a former shareholder in one of the Manhattan loft buildings that I visited in my March 25 lengthy rumination, am I a coward? assessing + bearing risk in a risky world, as she was curious about how her former neighbor's loft was (was not) selling. So I went back to look at the listing history of the three lofts I used as the specific scenarios that generated this conclusion:
 

whose risk is it anyway?
Agents are supposed to explain risk; sellers bear nearly all the risk. If courage is measured by the potential consequences one is willing to (knowingly) assume, these sellers are more brave than most. In addition, these agents are more brave than I am, as I would be very afraid of wasting my time with a listing at a price with a small prospect of finding 'the' buyer -- unless I had a firm commitment to 'take a shot' then address the price 'accordingly'. So there's risk all around.

More for the seller, no?


bravery is not rewarded
None of the three lofts has sold, but each has reacted to The Market a little differently.

One took one (very mild) shot at a price drop, reducing the asking price by 3% after 2 months. It went off the market "temporarily" a few weeks later. Perhaps it will come back after Labor Day. My guess is that it won't be back any time soon, or (if it does come back) that it will come back at a much sharper discount. This seller does not look like someone who really wants to sell.

That one appears to fit this profile, as they have made no serious effort to 'catch up to the active market':

 

To be even more pedantic about it, the law of supply and demand requires that some of these lofts priced above The Market will never sell -- not just that they will sell for fewer dollars. The ones that are over-priced today may be nimble enough to catch up to the active market, but they will be competing with an increasing number of new-to-market lofts. Some will simply never catch up.

 

The second one has tried, and tried, and tried. In fact, that one nearly fits one projection I offered on March 25:

 

Again, I assume that the sellers mentioned here have discussed all this with their experienced and professional agents and that the sellers have decided to run the risk that their unique lofts will do better than The Market would indicate generally, because their lofts are better than the general lofts. But if these sellers really want to sell, I assume that they have a plan in mind to adjust their prices if (when) they learn that The Market disagrees.

To me, if they have a $2mm listing, that means I expect them to be prepared to drop the price every month or so by six figures until they at least reach a point of serious interest from buyers. I hope they would consider a 'ridiculous' low ball offer if one came in early in the listing, but I suspect we will not see an immediate negotiation to a clearing price 25% off the ask. [Emphasis added]

 

That one started a bit under $2mm and dropped the price 3 times, changing the second digit each time. Problem (for them) is that they have dropped 20%+ and they have a 'tired' listing (about half-way to a birthday, so far). They may yet be willing to negotiate to a deal, but they have yet to attract a serious bidder. That female dog -- Hindsight, here, Hindsight -- is barking that if they had started in February where they are now they would probably have struck a deal long since.

The third has taken yet another tack, sort of / kind of midway between the other two. That one has dropped twice, but mildly (about 7%, total), in nearly 6 months, with no price change in about 2 months. Manifestly, they have not found the part of The Market where the buyers are (i.e., they have not been able [willing?] to 'catch up to the active market').

These sellers have seriously upgraded the loft since they bought it some years ago. Perhaps they are overmuch in love with their renovation, fitting this profile in my March 25 rumination:

 

Yet these well-served sellers decided to start marketing their lofts as if some serious buyers would be attracted by a price that most buyers would see as too high. Perhaps because their lofts are "unique"....

Loft snob that I am, I am ready to believe that many lofts are "unique", at least as that tired word is used in the real estate industrial complex, and certainly as compared to "apartments". So the temptation is for a seller to think that -- since "it only takes one" (buyer) to make a sale -- someone will agree with the seller that this loft, with this dazzling light, in this beyond triple mint condition, with landmark (protected!) views, with a gracious layout and spacious feel, on the best block in [insert nabe here], and that that someone has the means to buy the darn thing today, near the asking price.

 

Their problem -- to date -- is that no one else provably loves their loft as much as they do. Thus, no one has bought it out from under them. Even at the current price (down 7% in nearly 6 months) no one is likely to. Perhaps they plan to drop again after Labor Day, in a more significant way. If they really want to sell (like the second loft mentioned, but unlike the first), I can only hope that my assumption is correct that they have fully understood what they have been doing here:

 

As I said, I assume that these sellers understand the risk in asking these prices in these times. But I will be explicit, because readers who have not had to do this analysis may not -- and because Manhattan Loft Guy is just ... wordy (repentant, but wordy). Of course there is a risk that these sellers will end up selling for fewer dollars after a longer time than if they had priced closer to The Market to begin with, and that the number of dollars and additional months will be determined by their speed in dropping the price when they are unsuccessful. Of course, if current trends continue in the near term, the more months it takes, the fewer dollars there will be. But (in the immortal) words of late night television, that's not all!

I assume that these sellers also understand that there is a serious risk that their pricing will prevent them from getting any dollars for these lofts, not merely fewer dollars.

 

My guess is that they have gotten similar advice from their agent that the second loft owners got, but have been too stubborn to take it (so far). Absent a more aggressive price, I see this one as lingering on The Market until the listing expires.


more brave than I
In the first case, the more-brave-than-I agent made a 2-month investment of time and effort. In the second case, the more-brave-than-I agent had a seller with a Plan B, but has invested a lot with no return (yet). In the third case, the more-brave-than-I agent has (perhaps) been sucked into a great deal of effort and no reasonable expectation of making a sale until (unless) the sellers change their approach.

To repeat (again!):

these agents are more brave than I am, as I would be very afraid of wasting my time with a listing at a price with a small prospect of finding 'the' buyer -- unless I had a firm commitment to 'take a shot' then address the price 'accordingly'. So there's risk all around.

More for the seller, no?

 

I just hope the sellers understood what they were doing, way back when they started these marketing campaigns.

COUNTDOWN: 10 ... 9 ... 8 ... 7 ... 6 ... 5 [oops] ... 4 ... 3 ... 2 ... 1 ...




© Sandy Mattingly 2009

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May. 29, 2009 - 644 Broadway loved that first bidder: sells within 15 weeks, contract in 6, 1 price, 14% discount

 

[update: apologies for the weird formatting; I think I fixed most of it]

yes, "museum quality" around $1,000/ft, but there's a larger point, + 2 bromides
When I hit the Manhattan loft #2E at 644 Broadway on April 27 (price of 'museum quality' in Noho = $1,000/ft / 644 Broadway closes quickly), the focus (and snark) was on the difference between "museum quality" and "triple mint" in broker-babble. (And I had some snark about consistency in sizing.) I did mention the quick deal, and commended the sellers for being negotiable:
 

The goal in setting the asking price is to attract serious bidders with whom one negotiates the best deal available. In this case, that worked, as the seller got a contract within a 40 day period that included Christmas and New Year's. But the price worked because the seller was negotiable, ending 14% off that asking price, at $3.45mm.

 

Following on yesterday's post about a quick sale at 155 Hudson (how to get cash in 10 weeks / negotiating to close at 155 Hudson Street), I want to re-visit 644 Broadway as #2E is another instance of sellers proving they really wanted to sell.  In contrast to the 10-weeks-all-done experience at 155 Hudson Street (6% drop after 30 days, contract 2 weeks later 13% off that price), the #2E sellers needed only one price to get a contract (also within 6 weeks), by negotiating to 'only' a 14% discount.

A tip of the Manhattan Loft Guy hat to these sellers, and to their Corcoran agents Lauren Muss and Michael Orme.


the First Bidder bromide prevails
Agents often tell sellers "your first buyer may be your best" -- I certainly have told Manhattan loft sellers that. It is one of those pieces of accepted wisdom (at least among agents) that seems to me both valid and impossible to prove. (We are never likely to get a perfectly matched pair of for-sale lofts to test the hypothesis with.)

Even though I can't prove it, the logic of The First Bidder Bromide is -- to me -- compelling. It starts from the premise that there is a pool of potential buyers for a given unit that is (a) limited, (b) ready, and (c) informed.

That pool is the largest and most likely source of a buyer, because other buyers will either dribble onto the market as new buyers and/or are not ready (qualified) and/or have not been paying attention. If the logic holds, that initial pool is the pool a seller wants to attract, by setting an asking price that (as I said in my original post about #2E at 644 Broadway, quoted above) will "attract serious bidders with whom one negotiates the best deal available ".

In the case of #2E that was a two-step process: they set an asking price of $3.995mm that attracted a sufficiently interested buyer that within 40 days they negotiated to a contract at $3.45mm. In the case of

#4N at 155 Hudson (yesterday's post), they needed the third step of an intermediate price reduction from $2.395mm to $2.25mm to provoke the contract at $1.95mm that closed ten weeks after they started.

if a seller is motivated, and confident

In order for a seller to take advantage of The First Bidder Bromide, the seller must be both really interested in selling, and willing to trust the market response the initial marketing generates. In other words, the seller has to be confident in the agent's judgment.

Of course, I know nothing about the actual negotiations for either #2E at 644 Broadway or #4N at 155 Hudson Street, but I will use them as examples of what may occur, based on their brief histories. In a scenario like #2E, the sellers were likely to have had only one expression of significant interest between the December 20 launch and the January 30 contract. Given that they ended up nearly 14% off where they started, they were likely to have been

very disappointed at the offer made by the only interested person with real money. But they were very motivated to sell, so they sucked it up and fought for a deal. Perhaps the bid started at $3mm and they essentially split the difference; perhaps it started at $3.3mm and they were only able to force another $145k out of the bidder. Wherever it started, this negotiation could have been a long one. (Many are, these days, as buyers can credibly play the I-have-other-choices card and sellers are loathe to accept deep discounts.)

The #4N 155 Hudson Street scenario implies a different sequence. Based on the price drop followed quickly by a contract, it is likely there was no interest at the original price (no bidding at all, and anemic showings or inquiries). The price drop after 30 days of 6% was modest, but it did the job: it probably generated an offer that was disappointing but the trigger for the sellers to lower their expectations to accept about 20% off their starting point.

In both cases, the sellers must have been peppering their agents with questions, and relying upon the answers and analysis. In both cases, the sellers accepted much less than they had asked for, and possibly much less than they were prepared to accept when they started marketing their lofts. But they came to conclusion that their respective (solitary?) bidders presented their best opportunities to sell, and they capitalized on those opportunities.

While these scenarios seem simple -- perhaps even obvious, in retrospect -- it does not always work this way. Indeed, these days I suspect it does not often work this way (which is one reason I highlight these quickly-discounted-sales when I notice them). The opposite end of the spectrum from The First Bidder Bromide is inhabited by seller who follow the It Only Takes One Bromide. The "logic" here is that only one person needs to buy the loft for the seller to be happy, so the seller is tempted to wait for that buyer to show up. That seller may start at a price little different from #2E and #4N, but because they are waiting for One Buyer rather than responding to the First Bidder they are (typically) not flexible at the time it would do the most good.

There is another bromide for that. (This one is easier to prove.)


if you (over) think that "it only takes one"
Chasing The Market Down, is the timely bromide for sellers who set prices like the #2E and #4N sellers, but who don't trust the market data (or their agents) the way the successful early negotiators did. One could say, as I did on May 3, that such "sellers" are a day late and a dollar short (recidivist edition). #4N shows that a seller can strike a quick deal even starting at a price 20% above the market. But the key is to respond when The Market ignores you and to strike when The Market offers a positive response. In The Market of the last 12 months (and the next ?? months) not being flexible and responsive can be fatal.
 


© Sandy Mattingly 2009
 

 

 

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Mar. 25, 2009 - am I a coward? assessing + bearing risk in a risky world


a rumination (bear with me)
I tell owners in this market that my job is to protect their equity and get them on their way (to whatever is next in their lives) with as much money in their pocket as possible. I tell them I do not determine The Market price for their loft (nor do they).  I give them my best professional judgment as to the asking price that will attract the best price available in The Market in the time frame they want. I believe that (nearly) all sellers in (nearly) all markets are afraid of 'leaving money on the table', so they are (sorely!) tempted to price high 'to see how that works', but many sellers in The (current) Market are at least as afraid of bleeding equity, by being one of the Manhattan lofts that does not sell, even after serial price drops.

not my call
Of course, it is the owner's assessment of risk that determines where a loft is priced. An owner who is more afraid of leaving money on the table than of lingering unsold in a declining market is free to make that choice (though I may choose not to work with an owner with a different assessment than I have).

brass tacks
What am I talking about?? I noticed a Manhattan loft recently to market that (a) is a pretty spectacular loft, (b) in a building I am pretty familiar with, (c) in which there is a fairly timely and extensive set of market inputs (i.e., closed sales), (d) that is offered through a very experienced and professional agent, and (e) that is priced well above where I think The Market for that building is in March 2009. I then noticed two other lofts in buildings I am well familiar with, also with fairly timely and extensive sales history, also offered through experienced and professional agents. Yes, also priced well above where I think The Market is today.

temptation is ... tempting
I assume that these experienced and professional agents have as much information about The Market as I do, so that their sellers were well informed about recent activity and -- more importantly today -- recent inactivity. I hope that they understand that (to put it softly) there is a good chance that their lofts will be perceived as outliers by potential buyers, if they are seen at all. I assume they know that many buyers will demand that these lofts demonstrate some significant plus factor (view, condition, light), beyond what is described in the listing in order to be credibly priced. Yet these well-served sellers decided to start marketing their lofts as if some serious buyers would be attracted by a price that most buyers would see as too high. Perhaps because their lofts are "unique"....
 

Loft snob that I am, I am ready to believe that many lofts are "unique", at least as that tired word is used in the real estate industrial complex, and certainly as compared to "apartments". So the temptation is for a seller to think that -- since "it only takes one" (buyer) to make a sale -- someone will agree with the seller that this loft, with this dazzling light, in this beyond triple mint condition, with landmark (protected!) views, with a gracious layout and spacious feel, on the best block in [insert nabe here], and that that someone has the means to buy the darn thing today, near the asking price.

Maybe.

They might be right.

I can't prove them wrong (at this point).

the risk is not just in dollars
As I said, I assume that these sellers understand the risk in asking these prices in these times. But I will be explicit, because readers who have not had to do this analysis may not -- and because Manhattan Loft Guy is just ... wordy (repentant, but wordy). Of course there is a risk that these sellers will end up selling for fewer dollars after a longer time than if they had priced closer to The Market to begin with, and that the number of dollars and additional months will be determined by their speed in dropping the price when they are unsuccessful. Of course, if current trends continue in the near term, the more months it takes, the fewer dollars there will be. But (in the immortal) words of late night television, that's not all!

I assume that these sellers also understand that there is a serious risk that their pricing will prevent them from getting any dollars for these lofts, not merely fewer dollars. How can that be? Because it is the law.

 

Back in the day, Supply and Demand got along well enough for their [there] to be a broad and deep Market. Back in the day, Demand was sufficiently robust that even an over-priced loft would sell eventually, because the seller would have the time to adjust and still "do well", or because the rising tide floated that boat eventually. Back in the day, time was not an enemy of above-market property the way it is today.

I fought the law and the law won
As I noted yesterday , there were 973 lofts offered for sale in Manhattan between $500k and $10mm as of Sunday, which is 293 more lofts than have been offered at any time since I started counting in June 2008 (the low was reached in mid-August). Since I started counting Manhattan lofts reported as new to market and as sold in October 2007, there have been 18 weeks in which the number of lofts reported as sold was in single digits; five of those weeks were spread from Halloween 2007 to Thanksgiving 2008, but since then thirteen weeks have shown single digit sales (and only four weeks have ten or more). I have every reason to believe that the overall Manhattan real estate market will show similar trends and similar scale when the market reports for the first quarter of 2009 come out in a couple of weeks.

To be even more pedantic about it, the law of supply and demand requires that some of these lofts priced above The Market will never sell -- not just that they will sell for fewer dollars. The ones that are over-priced today may be nimble enough to catch up to the active market, but they will be competing with an increasing number of new-to-market lofts. Some will simply never catch up.

Again, I assume that the sellers mentioned here have discussed all this with their experienced and professional agents and that the sellers have decided to run the risk that their unique lofts will do better than The Market would indicate generally, because their lofts are better than the general lofts. But if these sellers really want to sell, I assume that they have a plan in mind to adjust their prices if (when) they learn that The Market disagrees.

To me, if they have a $2mm listing, that means I expect them to be prepared to drop the price every month or so by six figures until they at least reach a point of serious interest from buyers. I hope they would consider a 'ridiculous' low ball offer if one came in early in the listing, but I suspect we will not see an immediate negotiation to a clearing price 25% off the ask.

whose risk is it anyway?
Agents are supposed to explain risk; sellers bear nearly all the risk. If courage is measured by the potential consequences one is willing to (knowingly) assume, these sellers are more brave than most. In addition, these agents are more brave than I am, as I would be very afraid of wasting my time with a listing at a price with a small prospect of finding 'the' buyer -- unless I had a firm commitment to 'take a shot' then address the price 'accordingly'. So there's risk all around.

More for the seller, no?


© Sandy Mattingly 2009  

 
 
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Mar. 18, 2009 - why be that negotiable in secret? 25 Ann Street closed nearly 25% off ask

 

 
what if they had advertised a willingness to deal?
There must have been some epiphany on the 4th floor of 25 Ann Street in August: the owner tried to sell this "2,300 sq ft" loft for $2.5mm starting in June (for two months and one price drop to $2.35mm with a firm I have never heard of), then switched to Corcoran at $2.35mm until finding a contract just before Labor Day. That contract price was revealed after it closed in November (though it took quite a while to hit the public air) as $1.8mm -- 23% off the last asking price.
 
Maybe the owner's attitude changed overnight from not-a-penny-less-than-$2mm to will-take-any-offer, but it seems more likely that the owner took enough time in this dramatic change of heart to update the agent community that low-ball offers would be entertained (hell -- not just entertained -- that they'd be put up at the Waldorf). I have no idea why they did not; it probably cost them some money.

broader point about psychology
Using this painful Manhattan loft story as a jumping off point, this scenario shows the danger of coming to market at a price far removed from where buyers are: you don't get any offers and you probably get little or no open house traffic or phone call inquiries. Then a low-ball offer comes in and a (now, very motivated) seller deals with the only person willing to pay any money for the loft. The owner then runs the risk of losing this low-ball-bidder if they publicly adjust the price and continue marketing, so the temptation is to simply strike the best deal possible with the only one interested.

Had the owner priced closer to The Market, there might well have been other bidders (even if throwing low balls); had the owner priced at The Market, there might well have been higher bids than the solo low ball.

Manifestly, if a low ball bidder was willing to pay $1.8mm (off an ask of $2.35mm), that bidder started even lower ... maybe $1.65mm. Other people who may have been interested in the loft if they knew the owner would entertain around $2mm would probably have emerged if only they had been aware. This kind of a spread between Bid, Ask and Clearing is very dangerous to sellers.


© Sandy Mattingly 2009  

 
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Dec. 26, 2008 - bringing (a lot of) cash to closing / news from the top of the market at "Madison Square North"


waiting to close, not for contract
I realized when I did my post of 30 days of actual loft sales on December 18 that 15 East 26 Street (15 Madison Square North) was a very successful new Manhattan loft development, with many contracts signed quickly in 2006, some of which are just closing now. Last week PH-B was reported as closed there off the $9.6mm asking price (dded was filed dated December 9 for the full asking price, typical of this building's sales). While the contract was signed on November 21, 2006 (after 4 months on the market), it is now somewhat newsworthy when a big one like this actually closes.

In fact, when I confirmed some details about PH-B in our listings data-base I noticed that PH-D also closed recently (with a December 9 deed, for $5.8mm). That listing history is a little weird: offered at $5.5mm on February 14, 2007, we show an accepted offer off an asking price of $5.8mm on April 7 but no contract signed until November 21, 2007 (just a delay in reporting, most likely). Again, they got the full ask (apparently enhanced) here, as is true of all the 15 Madison Square North sales that i have noticed. This unit is "3,402 sq ft" plus a terrace, with only north views (from the 20th floor); #PH-B is "4,766 sq ft" with north, south and east views but no terrace (alas).
 

 

© Sandy Mattingly 2008  

 

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Dec. 15, 2008 - my job does not include magic tricks / pondering pricing puzzles

 

sometimes "impossible" means just that

I stumbled across a NY Magazine piece today that compared Manhattan coop listing prices in 2007 to Manhattan coop listing prices in 2008 to assess how optimistic sellers are now. There's a table, but here's the overview (with a comparison to a similar condo seller asking price analysis two weeks ago, which I missed, and have not located):

 

Co-ops’ asking prices are down slightly, too, but the drops are generally a little smaller than among condos. The only marked decrease is in Upper Manhattan, where asking prices fell 6.31 percent. ... In traditionally high-demand downtown areas, the prices are even up a bit, by 1.36 percent [my bold].

 

Yes, using average listing prices is a gross measurement, but the implication of this gross comparison is that sellers and agents have not adjusted their approach to the single most important factor in marketing a Manhattan apartment -- the asking price. That's a real head-scratcher for me, unless I am the only one who has noticed a drumbeat of news (not just articles, but some actual facts) indicating that the Manhattan real estate sales market has ... how to put this delicately?? -- changed since 2007 ....

 

The head-scratching caused me to ponder what sellers think the job of their agent is. Do they think we can do magic tricks? Do they think we can cause an apartment to be sold above its fair market value? Yes, when we do well we help a seller get the best price available in The Market. But more than that is (almost always) impossible.

 

One more question along these lines that is painfully relevant to the sale of Manhattan lofts and other apartments: If a seller really really really wants a price that is impossible to get in The Market, does that seller think the agent's job is to tell the seller that the price is unachievable?? (I have no doubt that the seller expects the agent to know whether a price is possible, or not.)

 

does this look impossible to you?

Having begun to ponder, I was truly puzzled about pricing when I saw a new re-sale listing in an all-but-brand-new Manhattan loft condo conversion. I don't want to get too specific about which building, and I will use round numbers in discussing that new listing and other units in that building, but The One I am talking about is a 1-bedroom unit asking roughly a million bucks (roughly $1,200/ft).

 

People who really like the view, the amenities, the finishes and the layout might also consider buying the unit immediately below this one, or the same unit a few floors higher up, each of which has been available for sale for some weeks for $50k less than The One. The only difference among these three units (apart from how high in the building they are) is that The One has higher ceilings than the other two, but that difference did not persuade the developer to sell The One originally for more than the higher floor unit also now available as a re-sale.

 

(some [numbing?] detail)

People who like the amenities and the finishes might also consider other 1-bedroom layouts in the building. There are five different 1-bedroom layouts available in this building for less than The One, all of which are on higher floors, all of which are larger than The One. These obvious competitors range in size advantage over The One from 50 sq ft, 100 sq ft, up to 250 sq ft; they range in asking price advantage over The One from $175k to $120k to $100k to $50k to trivia; and they range in price advantage over The One on a dollar-per-foot basis of $225/ft to $175/ft to $125/ft.

 

In short, all three sellers in this line think this smaller line commands a premium over the larger lines but neither of the other two think the premium is quite as large as for The One. And these five larger units on higher floors are all offered at prices below The One -- some rather significantly lower. The other five 1-bedroom sellers are probably very pleased that buyers will see this more expensive trio.

 

magic required, not optional

Regular readers know I almost always temporize (he said, temporizing) but I must say that it will prove to be impossible to sell The One so long as two others in that line are available for $50k less. I would not (yet) say that it would be impossible to sell The One while all the larger units on higher floors are available at the same or lower prices, but I might conclude that after studying the different views and layouts. In other words, I do not believe that any rational buyer would prefer The One to these various alternatives, so much so that I don't see why a rational buyer in The (current) Market would even bid on The One until all other alternatives were exhausted.

 

full circle

Why would a seller hire an agent to "sell" an apartment at a price that is impossible to sell? If the asking price for The One succeeds in causing anything to sell, it will be another unit in the building. Why would an agent (or firm) expend any energy or expense promoting a listing that cannot sell until the others do?

 

What am I missing here? (Yes, I will add this building to my too pushy thread tracking....)

 


© Sandy Mattingly 2008  

 

 

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Dec. 12, 2007 - 18 E 12 St so hot it is going best & final today


going, going, gone
I noticed #6A at 18 East 12 Street when it came to market a week ago, but did not comment on it. They held a barn burner of an open house this past Sunday and should be done today when Best & Final bids are due at 5 PM.

90 minutes = 60+ people
I was speaking yesterday to an agent at another firm with whom I am doing a deal about everybody's favorite question (what is The Market doing now?) and he mentioned taking a buyer to see this loft on Sunday. By his estimation, there were more than 60 people at the open house (which only lasted 90 minutes). He reports that Best & Final bids are due today by 5 PM.

At this trajectory, it is reasonable to assume the loft will sell above ask.

At this trajectory, it is reasonable to assume there is a great deal of pent-up buyer demand for a 1 bedroom Village condo in move-in condition.

meticulous loft?
I guess they mean it has been "meticulous[ly]" renovated, as the Smiling Blumsteins describe this as "meticulous, quiet, sunny" with "flowing southwestern light". The loft is only "969 sq ft", which is small for a loft but large for a straight 1 bedroom. The asking price is $1.1mm with $1,171/mo monthly (condo).

anecdote can be datum, not data
It is tempting to consider facts such as this oh-so-brief-oh-so-successful marketing campaign as indicative of strength in The Market (at least, of this segment). (One of my favorite comments from Curbed may not have been original to the Anon who posted it: "the plural of anecdote is not data".) But until we get hard real-time data about what is going on in the market, data points like this one will stick out for me, and suggest directionality.

well-priced lofts sell, as before
The last unit in this line in the building sold 26 months ago; #4A took less than four months to sell in 2005, clearing at $1,087,500 off an asking price of $1.16mm (and an original price of $1.299mm). The most recent sale in the building was #6B next door, which traded on July 30 at $1.95mm for "1,700 sq ft", off the ask of $2.195mm. (#6B had been marketed from January until its April contract also as a potential combination with #6A.)

not-too-greedy as a marketing plan
With the 2 year old history of #4A selling at $1,122/ft and the recent history of #6B selling at $1,147/ft, it is no wonder that bringing #6A to market at $1,135/ft would attract attention. Without intending to jinx the deal. congratulations to the Realistic (motivated!) Owner and to the Smiling Blumsteins.

I wonder if they ran out of show sheets on Sunday....

(THX Matt!)

(C) Sandy Mattingly 2007

 

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Dec. 11, 2007 - making sense is hard / NYT vs WSJ on The Manhattan Market


people are asking
Many, many, many people are asking what is The Market doing? and are as frustrated as I am that the 'answers' involve more anecdotes than data. Two major media pieces stoked that conversation recently.

The Wall Street Journal's November 30 article They'll Take Manhattan - For Less and the New York Times December 2 article Between Buyers and Selelrs, A Staltemate have gotten a lot of play in the blogosphere, as if they were drawing opposite conclusions about the current state of the Manhattan residential real estate market. In the first case, the headline suggests falling prices; in the second, aborted deals. And that is what people seem to have taken from these two articles, which is odd if you read the articles.

I'm flogging here
I am going to flog these articles to within an inch of their lives, which will take me a while and -- ultimately -- will not get me closer to answering The Question. In the next day or two I will try to find actual data that bears on The Question. But, for now, the flogging….

Two early quotes from the WSJ are (1) "
So far, fall sales data in Manhattan suggest a flattening out of the market more than a sharp decline." (2) "Prices remain near record levels."

Data is (a) hard to get and (b) easily misconstrued.

Here's what the WSJ did:

To get a better sense of how prices are changing, many experts recommend focusing on existing-home sales. In New York, that means looking at the co-op market, which includes few new buildings. The average sales price of a co-op fell 2.8% to $1.12 million in third quarter of 2007, compared with the second quarter, according to Radar Logic. Even when condos are included, prices vary widely in different parts of the island; so far this quarter, the average price on the Upper East Side has risen 11% to $1.7 million, compared with the previous quarter, but prices downtown have fallen 18%, to $1.1 million, according to Terra Holdings.

I am not sure why looking at re-sales provides more insight about prices than looking at new developments and I think that looking at longitudinal data for resales of the same apartment would provide really interesting data - but no one has that data and apartments don't turn over often enough. And the WSJ did not read enough of the Miller Samuel / Radar Logic report about 3rd Quarter coop sales to get the point.

At page 2 of 4 of the 3Q07 report, there is that 2.8% decline in average coop price sale from the 2nd Quarter to the 3rd Quarter, but the explanation follows within the same paragraph: the size distribution of coop apartments sold in the 3rd Quarter was different than in the prior year 3rd Quarter, as 1 BR coops went from 35% to 42% of coop sales, and 2 BR coop sales fell from 39% of all coop sales to 33%. Meanwhile, the price per foot for all coop sales in the 3rd Quarter was up 3.9% over the 2nd Quarter. I.e., proportionately more smaller (less expensive) coops were sold, so the average coop price was down. No biggie.

But the WSJ also talked about price cuts, which have less to do with declines in value than they do with mistakes about value. They used one example of an apartment that had no solid offers despite dropping the price from $2.095mm to $1.995mm to $1.799mm.

The number of price cuts, at all levels of the market, is also growing. Blair MacInnes is handling the sale of her 85-year-old mother's Upper East Side apartment; she listed the two-bedroom co-op in September for $2,095,000, the price recommended by her broker, Dorry Swope of Halstead Property. "We were very worried about putting the apartment on the market," Ms. MacInnes says, "but we had been told by any number of people that the exception to the housing crisis had been Manhattan." The apartment drew little interest, however, and Ms. MacInnes and her mother agreed to cut the price, first to $1,995,000 and then again a few days later to $1,779,000 -- a total cut of more than 15%. Although the new price has generated more interest but no solid offers, Ms. MacInnes says she and her mother aren't in a rush to sell.

no rush = no sale
No offense intended to anyone involved in this sale, but the past sales data in the building suggests that it may still be priced too high. Checking the agent's listings, it is clear that the MacInnes apartment is 116 East 66 Street #11D, which has maintenance of $2,865/mo and a 22 foot terrace; the description and photos (only 2 interior pix) give no hint of any recent renovation (consistent with occupancy by an 85 year old). What should that apartment be worth, with the plus factor of the terrace and the minus of (likely) renovation needed, compared to the identical floor plan above, without the terrace but fully renovated??

Unless you are a huge fan of terraces, I don't see much reason to pay much more than the closing price for fully renovated #12D -- $1.4mm 2 months ago. Nor do I see why there'd be a huge premium for #11D over the (slightly larger, with a "stunning" renovation, but no terrace) #10B, which sold in May for $1.45mm. Whether the terrace is worth more than a triple mint renovation doesn't matter to me, as I am certain the terrace is not worth $300k more, plus the cost of a renovation.

Maybe if they were in more of a rush to sell they would price it a price in line with last sales in the building….

I think the WSJ used a bad example to suggest that "price cuts = falling prices".

NYT stalemate = good headline but article? not so much
I don't think the NYT anecdotes support their "stalemate" headline any more than the WSJ found evidence of declining values. They talked about the experience of Mr./ Epstein, the Davis-Wang couple, the Brodskys, and the Nelson-Onofrey couple.

Mr. Epstein and the "unrealistic seller" who took more money from someone else

So he offered the seller of a one-bedroom apartment nearby [nearly?] the asking price of $699,000, and then raised it to $745,000, even though the unit had no proper stove and only a half-size refrigerator. But the seller turned him down for a buyer paying $750,000 in cash.

After experiencing these and other setbacks in the Manhattan real estate market, Mr. Epstein has told his broker, Catherine Holmes of Barak Realty, that he might simply rent after he closes in February on the sale of his $1.1 million town house in Park Slope.
He said he would buy in Manhattan when sellers cut their prices. "Some of the sellers have to be a little bit more realistic," he said. "I would be happy with any percentage decrease."

Why would Mr. Epstein expect the seller to care about his $745k if he had another buyer willing to pay $750k in cash? Who is being unrealistic? Perhaps Mr. Epstein would feel better if the seller had started at $800k, there had been no cash buyer to out-bid, and Mr. Epstein could have gotten the same apartment with a 7% discount from the $800k asking price….

Davis-Wang remain cramped renters, for lack of 3-6% more money

Jeffrey Davis, a lodging industry consultant, and his wife, Betty Wang, who works in fashion, have been trying to find an apartment of at least 1,200 square feet before their first child is born this month. For the past year, they have worked with Nora Ariffin, a broker at Halstead Property, to find a two-bedroom condo south of 30th Street for $1.7 million. The only amenities they required were a doorman and an elevator.

The couple visited 30 apartments in Chelsea, the Flatiron District and the Gramercy Park area, but the bids they made on five different apartments were rejected. Mr. Davis said he thought prices were $50,000 to $100,000 too high.

The couple are staying in their one-bedroom rental for now. "I have plenty of space for an infant for at least a couple of months," he said.

If the Davis-Wang couple (soon to be a triple!) did not know what The Market was after looking at 30 (30!) apartments, they should have figured it out after making five unsuccessful bids. The article does not say whether the five apartments they bid on were sold to people who bid more or not (that would be interesting to know), but the implication is that if they were wiling to spend about 5% more they could have gotten one of them.

Instead, they choose to remain in a 1 BR rental because (says the Totally Clueless [For Now] Dad-To-Be): "I have plenty of space for an infant for at least a couple of months." It is a free country, and these folks are grown-ups.

I wonder if the Times will check in with them in 6 months, after the baby is born. They won't have gotten any sleep yet, but may have some regrets about not buying now - even if the market drops by 5% or more in that time.

Where's the market 'stalemate' here??

Brodskys gotta have 25% appreciation or …

Arthur and Lisa Brodsky have spent the last year looking for a two-bedroom apartment on the Upper East Side or Upper West Side with their agent, Jason Haber of Prudential Douglas Elliman, and a maximum budget of $1.2 million. Mr. Brodsky, 30, who works in private equity, and Ms. Brodsky, 30, who works in marketing for magazines, want to buy something large enough to accommodate the family they hope to start within the next couple of years.

They also want to make sure their apartment will appreciate 20 to 25 percent during that time so they could cover their costs of buying and selling if they decide to move to the suburbs as their children grow older.

These folks seem to be able to buy 2 BRs on the Upper East or Upper West Sides for $1.2mm, as there should be enough inventory at this level in those areas. (After all, they've been looking for a year!) But the sticking point is Market Risk. They don't seem willing to buy because they have a short time horizon ("next couple of years"), which leads them to the unrealistic requirement that the apartment they buy now will appreciate 20-25% in the next couple of years.

Where's the market 'stalemate' here??

Nelson-Onofreys add money, find groove

Meaghan Nelson and Nicolas Onofrey spent the last six months looking for a prewar two-bedroom co-op on the Upper West Side for about $1.1 million.

Ms. Nelson, who works for a health-care market research company, and Mr. Onofrey, who manages the information technology group for a Midtown hedge fund, looked at about 140 apartments with their broker, Jessica Cohen of Prudential Douglas Elliman. They bid on four properties and were turned down.

So they increased their budget, and found a $1.4 million two-bedroom co-op at 514 West End Avenue, whose sellers had grown weary after three contracts with buyers had fallen through. Both sides signed the contract within 24 hours.

What do these folks tell us about a stalemate? They looked at 140 apartments (one hundred and forty apartments?!?), made four unsuccessful bids, raised their budget and immediately made a deal with a seller who had earlier been willing to deal with 3 other sets of buyers.

Where's the market 'stalemate' here??


© Sandy Mattingly 2007


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Aug. 14, 2007 - jittery = word for the day

 
bring down the duck
The really old among you will remember that Groucho Marx TV show from about (forty-five?) years ago (and the really old without CRS will remember the name of it – You Bet Your Life), in which one segment featured Groucho attempting to get an (innocent) interview subject to say The Word of The Day. When the Word was uttered, down came a quacking duck.
 
I heard a lot of quacking yesterday involving “jittery”. I had conversations or email dialogue yesterday with three sets of buyers, all of whom were somewhat ‘anxious’ about the “jittery” financial markets, all of whom asked “what does it mean for Manhattan real estate?” (Actually, they all asked “what does it mean for MY [Manhattan] real estate?”)
 
Judging from the news and blogosphere, these are not the only three people out there asking these questions.
 
my (unhelpful) answer
I tend to answer such questions in a way that sounds (at first) unhelpful: “it depends”. Because whether the immediate environment is going to lead to something else depends (d’oh!) on what happens next.
 
If mortgage rates rise precipitously or significantly, or if Wall Street heads towards lay-offs, there will have to be a negative impact. If the ‘only’ thing that happens is a continued tightening of lending standards, there will have to be some impact.
 
Since all three buyers are financial sector professionals, I tell them that they have better access than I do to professional data and interpretations about each of those macro factors. But Manhattan is clearly a different real estate animal than the rest of the country, driven much more by the cycles of “Wall St” than by the cycles of the national economy. (I tell them “we will have our market slump in real estate when Wall St drops”, but the national drivers are not as significant to us.)
 
buyer psychology
For our incredibly local real estate market I see the currently most risky factor as the ever elusive Buyer Psychology. If buyers get too jittery, they will put their wallets back in their pockets, the number of transactions will drop, and sellers will react by either taking the best price available in that market (a lower price than is available now) or by holding firm and not selling for a while. What happens after that ‘while’ depends on … what happens after that while (in psychology, and in the economy).
 
I believe we saw an instance of this in 2006, in the run-up to the Congressional elections. I am pretty sure the number of transactions in Manhattan were down (I will check Miller Samuel [later]) and prices were more or less flat. The smart people’s commentary after the fact was that buyers were nervous about the effects of a change in party control in Congress. Once it happened, it turned out not to roil the financial markets and Manhattan buyers took their wallets out of their pockets in greater numbers, leading to two quarters beginning 2007 with huge numbers of transactions.
 
telling stories, hidden numbers
One of the problems with assessing buyer psychology is that there is no direct and hard data – nobody surveys or indexes Manhattan Buyer Confidence. So we are left with anecdotes and happy talk (or gloomy talk) from Talking Heads who (a) all have an agenda and (b) have very little direct information themselves.
 
What is really happening in the market now is impossible to know broadly because the only public information (closed sale data) has such a long lag time. (Lofts that close this week probably went into contract in May or June.) No one has valid data about the number of Manhattan coop or condo contracts signed this week.
 
indirect data
But mortgage lenders and brokers have data about whether their mortgage applications are up, flat or down, which is some indication of the level of market activity – though not about the direction of prices. Unfortunately, this information tends to come out unsystematically and anecdotally.
 
best direct data
The best direct data about the level of market activity is from appraisal firms, as they should get a call within a week of a new Manhattan coop or condo contract for sale. Which is one reason I rely on Jonathan Miller of Miller Samuel and his Matrix blog. But if each appraisal firm only sees their firm’s business, there is the uncertainty of market share (are they seeing more business because they are taking it away from competitors, or because there is more activity in the Manhattan market generally?).I see that Miller Samuel’s business is up this August (“my own appraisal company set a record for sales in our first half of August”; from his blog yesterday), but is that because Jonathan does a great job marketing??
 
I follow Miller’s blog and Noah Rosenblatt on UrbanDigs for economic analysis relevant to real estate. They are both more interested and more competent than I am with the data. Check out Noah’s A Marketplace With Vulturesfrom yesterday for his analysis of the strength factors in Manhattan real estate and how they may weaken. He starts with these factors (a pretty good blogging summary, IMO), then considers what may happen if they weaken:
 
Fundamentals I see that are crucial in maintaining the NYC housing market RIGHT NOW include:
1. Very Tight Inventory
2. Strong Jobs
3. High Salary's & Bonuses
4. Weak Dollar Increasing Foreign Buyer Demand
5. Rental Vacancy Rates Below 1%
6. Skyrocketing Rental Rates
7. Trend To Live Closer To Where You Work
8. Urban Lifestyle Demand Very High
 
an impertinent question: so what?
One thing that freezes some buyers is that they are reluctant to buy an asset that may decline in value (even if they put money in “growth” stocks). Periods of uncertainty make them … uncertain.
 
I ask about their time horizon for buying (or continuing to own) an apartment. For anyone with a moderate term time horizon (five years or more), I don’t think it matters much when they buy if they have made a decision that – in general – buying is better than renting for them. Timing the market is hard (or, impossible).
 
But the really impertinent question to ask “buyers” who say they won’t buy because the Manhattan real estate market is due for a fall is “if the real estate market here falls, what will happen to the rest of your assets?” So long as one buys with a stable cost structure (fixed rate for a long enough period) and one’s income remains stable, an affordable apartment that declines in value near-term is as affordable after the decline as when it was purchased. And is likely to recover value if one’s time horizon is long enough.
 
I suppose that if we are in a global liquidity crisis and Wall Street deal-making dries up, the impact may be limited to (a) lower compensation and bonuses for that industry’s workers, (b) even lay-offs restricted to that industry, and (c) a drop in Manhattan real estate values as The Engine dries up. But if that global liquidity crisis bleeds into the stock market generally, what then?
 
It is hard to see how national economic factors that might impact Manhattan real estate values won’t also impact stocks or other asset classes. Recession? Unemployment spikes?
 
Such a long meditation, so meandering. Well, that’s blogging for you! I will try to come back to this and add links to relevant articles and blog posts. But I wanted to get this off my chest this morning, so I could go to work!
 
© Sandy Mattingly 2007
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Nov. 11, 2006 - (no irritating Ps but) more seller psychology / are loft-sellers more prone to ego errors?

 
the Lake Wobegon effect?
My P-filled post about sellers not adjusting to the current market (pseller psychology pstuck pso psales psuffer?) leads to wondering about Manhattan loft sellers.
 
Although my prior post talked a lot about ego-driven decisions for sellers, I am not suggesting that loft owners are more ego-driven than other Manhattan apartment sellers (really – I am not). But I think that Manhattan loft sellers (and Manhattan loft owners in general) are more likely to think of their lofts as “unique” or at least “special” that apartment owners who can see that the genius of their apartments is in the decoration (their personal taste is sublime) rather than in the four walls and floors.
 
all lofts are above average…
At least that’s my theory. And it is related to the reasons that I think it is harder with lofts than with apartments to get true ‘comps’.
 
Because apartment owners are much more likely to believe that they live in an apartment that is “just like” their neighbors’ apartments in the same building, except for the personal touches that make it uniquely theirs – most of which they will take with them when they move.
 
… or at least unique
Loft owners are more likely to live in Garrison Keilor’s Lake Wobegon, where all children are above average. In Manhattan, most lofts are “unique”, so loft owners are tempted to believe that the “general” market trends (flat or down, of late) simply do not apply to their above-average lofts.
 
Indeed, they may derive perverse pleasure in thinking that their loft is so special that only special people will appreciate its charms, and the longer it stays on the market the more they are convinced that it is more and more special. Perverse, as I say.
 
the longer it takes to sell, the more special it is (maybe)
With that mind-set, the data about greater inventory and longer days on the market can be rationalized as “problems” only for apartments that are not so special.
 
I will have to start paying more attention to lofts that have been on the market for quite a while without a single price change. Those may be examples of loft-sellers-with-ego (not that there is anything wrong with that). Or loft sellers who are waiting for the right buyer to pay the right place.
 
So long as their agent is patient – and they are patient with their agent – everyone will stay happy….
 
© Sandy Mattingly 2006
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Nov. 10, 2006 - pseller psychology pstuck pso psales psuffer?

 
Sellers are slow to adapt to current conditions, say some
Jonathan Miller on Matrix started a chat about seller psychology, expressing the view that (in general) sellers have not accepted the current market facts.
 
One of the interesting points he makes is that his experience is that it used to take sellers three calendar quarters to adjust to a weakening market, but this time it is taking five quarters (and counting, for some stubborn sellers).
 
Then, setting prices involves more ego than greed for sellers, which can explain why appeals to pure logic don’t work so well. The Washington Post article he cites says:
 
Economic researchers have found that emotions are a bigger influence than was previously believed in how people make financial decisions. For a long time, economists believed that human beings made decisions like robots, that people applied simple logic in making financial choices. But a body of research developed over the past two decades, known as neuroeconomics or behavioral economics, has shed light on how powerful a role the unconscious mind plays. New imaging technology, meanwhile, is allowing scientists to peer inside people's brains while they wrestle with financial decisions.
 
These studies have illuminated a few key concepts: Many people will pass up sure profits for illusory ones. Some will turn down profits if they believe someone else is unfairly profiting more. Some will even refuse to sell if they believe they may come to regret it, because fear of future regret can be as powerful a motivator as money in the pocket today.
 
In other words, people will cling to prices they recall from a brighter day, even when market conditions have changed; they will walk away from a sale if they feel the buyer is getting too good a deal at their expense; and they are terrified that [if they sell now] the market will rebound and they will feel like fools.
 
Miller’s “solution”?
 
Brokers need to continue to educate the sellers on the accurate value of their property and simply don’t take the listing if its not priced within the realm of reasonableness.
 
Easier said than done, especially in a market in which some agents will “buy” listings by over-promising on price, in ways that support sellers’ natural inclinations to be optimistic (as Miller’s comment from blogger Urban Digs illustrates).
 
But essential. Otherwise, why should they pay us the big bucks?
 
© Sandy Mattingly 2006
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Nov. 6, 2006 - NAR pumps up the volume / the politics of boosterism

 
The National Association of Realtors® ran the first of six full page large newspaper ads last week about now being a great time to buy or sell real estate, which has generated a lot of commentary.
 
I have previously posted about the NAR’s superficial boosterism and the tendency of many on the Real Estate Industrial Complex to use happy-talk, so I get what the critics are saying (See Matrix for the ad copy and a typical discussion, and a spoof.)
 
“we’re sorry we’ve worn rose-colored glasses” (not)
I don’t expect the NAR to take out an ad that says “we’ve been too bullish”, but there are other ways for NAR to boost business for its members.
 
The first thing to realize about NAR, however, is that it is looking out for me and the other 1 million+ members (errr, thx but…). I suspect that the primary motivation for this ad campaign is that the members are so frustrated with the national media and have complained to NAR to do something!
 
I think it has had that morale boosting effect for many Realtors®, but at too great a cost.
 
hum along with Bernstein
I used the term “Pollyanna” in the Matrix thread, but I think a better reference is to Dr. Pangloss of Candide (“this is the best of all possible times in the best of all possible worlds”). NAR risks insulting everyone’s intelligence by insisting that one is a great time for all buyers and all sellers in all local markets.
 
If I were running the show I would (1) talk about some favorable data/trends, but (2) drive people to their local Realtor® for advice about determining whether this is the best time for them to buy or to sell given their local market conditions.
 
you need an expert in perilous times dadgummit!
Pump up the need for expert advice, rather than insist that everything is wonderful for everyone (why can’t we all just get along?). Something that says (1) the market has changed in most of the country over the last year or so, (2) conditions are favorable for many buyers and for many sellers in many places, (3) call 1-800-REALTOR to get the kind of expert help you need about an important decision in a complicated world.
 
Fact is, in every set of market conditions in every local market, the times and circumstances are right for some buyers and some sellers. But you gotta know what you are doing.
 
© Sandy Mattingly 2006
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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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