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Manhattan Loft Guy

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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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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