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Manhattan Loft Guy

Feb. 9, 2011 - how to read past sale data / one Flatiron loft laboratory


hint: comping is hard
There’s a fascinating discussion thread going on over at StreetEasy, started by a potential buyer who said “I'm beyon[d] confused with pricing” and then asked that community for advice about bidding on a specific loft in Flatiron. I am going to use that thread as the jumping off point for discussing some things about valuing Manhattan lofts in light of actual facts in a building and in light of general market trends. I am not going to mention the building (it is obvious from the link, d’oh!), but I will use specific facts from that building as the scaffold for discussing questions such as the relevance of past sales of the same loft in different market conditions, assessing recent sales and unsuccessful marketing in the same building, and how general market statistics are (or are not) helpful.

Note that this obviously relates to a current listing of another agent (who happens to be from my firm, and a friend) and I am NOT offering advice as to what that loft is “worth” or advice on what to bid. Again: I am just using this discussion thread to talk about how to talk about this.

Note that this is a really long post, but I want to address all the things below that I talk about. And this is just a blog, though if I had more time, I would make it shorter (a comment variously attributed to Twain, Thoreau, Pascal, Du Perron). Your choice to heed the warning, or to read on....

past sales of The Loft
The Loft was bought from the sponsor in March 2005 for $1,338,998, or $916/ft for “1,461 sq ft”, so one tempting way to look at current value would be to compare building sales from that initial offering in the first quarter of 2005 and at the very end of 2004 to more recent sales.

But those original buyers sold in October 2009, so there is more recent data for The Loft. That sale was at $1.4mm ($958/ft), an appreciation of only 4.6% (without considering expenses), so one is tempted to look at the change in the market over the last 16 months to estimate current value of The Loft.

past sales in the building
The building has only 43 units, so it is not surprising that there were only 2 sales in 2010, 4 in 2009 (one of which was The Loft, another of which was a private sale to a neighbor), only 4 sales in 2008, and only 2 sales in 2007. Despite this thin data, the good news for comping purposes is that these sales were in essentially the same condition, given this was a new development in late 2004. More good news: all these lofts are in a narrow range of size, from ”1,208 sq ft” to “1,461 sq ft”, and nearly all are 2 bedrooms and 2 baths (only 2 sales since 2007 have 1 bedroom and 2 bath layouts). These lofts will vary for light and views, based mainly on how high the unit is (whether you clear adjoining buildings).

One temptation is to extrapolate from the two 2010 sales, on October 29, 2010 at $1,219/ft, and on July 20 at $1,309/ft, after making any light or view adjustments. There is also a very recent comp: one loft on StreetEasy has a recent closed history without a price yet; our data-base shows that it closed on February 1, 2011 at $1.42mm or $1,085/ft.

Another temptation is to extend beyond only 3 sales in the building since last year to look at the 3 market sales in 2009. They were The Loft at $958/ft on October 1, 2009, a 1 bedroom on August 25, 2009 at $993/ft, and the other 1 bedroom on February 26, 2009, also at $993/ft.

If one were tempted to go back and look at Peak pricing as a potential ceiling on current valuations, you’d consider the 3 public 2008 sales (Aug 13 at $1,206/ft; June 18 at $1,215/ft; and Jan 24 at $1,265mm) and the December 17, 2007 sale at $1,357/ft.

past non-sales in the building
In addition to the 2 sales in the building in 2010, 3 lofts were offered for sale for at least a month last year but did not sell. If you are tempted to use these unsuccessful prices as a ceiling, they were at $1,345/ft, $1,250/ft, and $1,026/ft.

temptations and questions
To recap, the temptations are to consider these elements in estimating a current market value for The Loft:

  • The Loft sold for $958/ft 16 months ago, so just extrapolate from that market to this
  • The Loft sold for $916/ft almost 5 years ago, so just extrapolate from that market to this
  • the 3 sales in this building since July 2010 were at $1,219/ft, $1,309/ft and $1,085/ft (use an average, or use as brackets for value, or adjust for light, views and ???)
  • the 3 sales in the building in 2009 were The Loft at $958/ft and 2 1-bedroom lofts at $993/ft (perhaps adjust those 2 up for being only 1 bedroom), then extrapolate from that market to this
  • the 4 sales at or near The Peak were at $1,206/ft, $1,215/ft, $1,265mm, and $1,357/ft, so average or bracket them as a ceiling
  • 3 unsuccessful asking prices last year were $1,345/ft, $1,250/ft, and $1,026/ft might build a ceiling

Of course, this is just data, not judgment. Which of these you view as most important, or how you weight them, must come down to opinion. Different people looking at the same data will form different opinions about the conclusions to be drawn.

the (short) answer to temptation
Sometimes the best response to temptation is to surrender to it, which in this instance means consider all of the above, but weight them as you will.

The principal positive indicators of value for The Loft are the 3 sales since July at $1,219/ft, $1,309/ft and $1,085/ft. The average of these values (a crude instrument) is $1,204/ft; the median (another crude instrument in a set of 3) is $1,219/ft. The average yields a current implied value for The (“1,461 sq ft”) Loft of $1.759mm; the median implies $1.78mm.

If you believe that the sponsor had an accurate sense of the differences in value between units, you could look at how these 3 recent resales did in comparison to their original sales price on a $/ft basis. 

resale original change
$1,085 $845 28%
$1,219 $930 31%
$1,309 $933 40%

Applying the low figure of 28% appreciation to the original sale of The Loft at $916/ft implies a current value of $1,172/ft, or roughly $1.7mm; using the average appreciation of 33% implies $1,221/ft, or roughly $1.78mm.

on the other hand
There are 3 data sets that seem to me to be the strongest in implying a lower value for The Loft in the current market: it sold for only $958/ft 16 months ago; Peak pricing in the building should be a ceiling; and the unsuccessful asking prices last year should also be a ceiling. How strong are these considerations?

Personally, I have little trouble in discounting the October 1, 2009 resale of The Loft at $958/ft as a significant predictive factor of current value. Long-time Manhattan Loft Guy readers will remember a long series of posts in 2010 about lofts that sold in 2010 at prices that were unavailable in 2009. (To cite one example, my July 8 post, another sign that 2010 is not 2009, as 60 West 15 Street loft sells.) Especially because the appreciation from March 2005 to October 2010 was only 4.6%, compared to the 28%, 31% and 40% gains noted for the 3 lofts that sold here since July, compared to their sponsor sales.

If you take the average of the 4 building sale that were close to Peak ($1,206/ft, $1,215/ft, $1,265mm, and $1,357/ft), you get a ceiling of $1,261/ft, or roughly $1.84mm. If you believe that current prices are down 10% from The Peak, you get roughly $1.66mm; if 15% you get about $1.57mm. But there is one interesting (complicating) building-specific data point here: the same “1,308 sq ft” loft that sold just after The Peak at $1.59mm on June 18, 2008 is the loft that sold on October 29, 2010 for … (wait for it) … $1.595mm. If that data pair is applied more generally, Peak-as-ceiling analysis here is not so useful.

The 3 recently unsuccessful sales prices were $1,345/ft, $1,250/ft, and $1,026/ft; shouldn’t they also be a ceiling? It depends …. That top one at $1,345/ft was asking $110,000 more than at The Peak (it last sold on January 24, 2008; one could argue that it never really tested the market by asking a premium over Peak and not adjusting the ask from July into last month). Similarly, the one asking $1,250/ft without success never dropped the price for nearly a full year into last month, and was asking a 40% premium over its original sale price in December 2004, apparently pushing (exceeding) the market’s tolerance for gain for this loft. That last loft with a 2010 unsuccessful ask of $1,045/ft is on the second floor; arguably the market has always discounted in this building for low floors.

You might disagree, but do you see how this can go? On the one hand, on the other hand … Particularly if you get out of the same-building stuff and bring in macro-level analysis.

how different was 2009?
Again, that October 2009 sale of The Loft at $958/ft is an important data point that must be addressed, not ignored. I think it suffered from being exposed to the nuclear winter that covered the overall Manhattan real estate market after the Fall of Lehman, as it came to market on February 11, 2009, starting at $1.7mm ($1,164/ft)  and dropped twice before finding a contract on August 13 and closing on October 1, 2009 at $1.4mm (the now-familiar $958/ft). Granted, I have noted other lofts that closed that Fall at prices indicating the nuclear winter was in the process of thawing, but this one looks to me as it got chilled by those brutal winter conditions. Your Mileage May Vary.

Looking at The Miller’s numbers for median prices overall it is hard to see any great difference in the overall Manhattan market from mid 2009 to late 2010 in these numbers. The Miller numbers are here, with the low in the last two years being $810,000 in 4Q09 compared to $845,000 a year later. I don’t think this proves very much, and it certainly does not help make a case that the October 2009 clearing price of $958/ft can safely be discounted. Yet that is my belief.

If you look not at prices but transaction volume, there is a different story in The Miller’s numbers. Again, regular readers of Manhattan Loft Guy know that I often say that a thin market is a dangerous market for sellers. I am not going to put my finger (mouse) on one right now, but they will remember the same posts that I do that suggest that there was a single buyer in a building for competing lofts, such that after that buyer bought the left-over loft suffered significantly. Looking at quarterly data for Manhattan overall from 2008 to 2010 (here), it is obvious that the first two quarters of 2009 were a very very thin market, in which transactions were off roughly 50% and 30% from average volume.

Yes, there is an argument to be made that the 3 2009 loft sales in the building under $1,000/ft are a significant down-market indicator for The Loft. But two were not very comparable to The Loft because they were on the 2nd and 3rd floors and only 1-bedroom layouts. So you’d have to adjust those for low floor (less light, no view) and utility (1-bedroom vs. 2) and time (chilly 2009 market vs. now). Could those adjustments add as much as $175/ft in implied value to The Loft in the current market? Maybe, but it depends on your judgment (opinion). And I have already talked about the October 1, 2009 sale of The Loft.

too much data? depends on how you mix it
The judgment comes in determining what factors you think are most relevant, and which are more likely to be noise. Something like that October 2009 sale of The Loft can be distracting (noise) or most relevant, depending on your sense of the market.

Any examples used to prove a point can be over-stated, as there are often contrary examples. For instance, I am sure there are some lofts that closed around mid-2009 at (to me) surprisingly strong prices. I just don’t think The Loft was like that. While I don’t think it was quite the roller coaster of the loft that I hit in my January 6, 345 West 13 Street loft is candidate for sale of the year, but the year was 2009 ($3.875mm in December 2005, $3mm in June 2009, $4.4mm in December 2010), I think the same dynamic was at play. Again: Your Mileage May Vary.

unique value to each unique buyer
It is a truism (and not just a cop-out!) to say that a particular loft is worth what a buyer and the seller decide it is, because that is true. It is also unhelpful to someone thinking about bidding, which was the question that launched the StreetEasy thread.

At the end of the day (and at the beginning and end of the bidding) any potential buyer is going to compare the available lofts for sale against each other to determine which best suits her needs, and to try to find out whether that loft can be purchased within her means and goals. She can always wait (something better / cheaper might come to market), but if she wants to actually buy, she has to persuade the seller of a loft actively for sale to sell it a price that works for her.

Of course, all the stuff discussed here provides a critical factual context for that negotiation, but none of it will determine the result. The result will flow from each party’s willingness to make a deal within the apparent bounds of the other party. The seller may be concerned that there might not be very many buyers interested in his loft; the buyer might be concerned that there are not many lofts that could actually work for her at any reasonable price. If the seller really really wants to sell, he will, and if the buyer really really wants to buy, she will; but if one of them doesn’t, they won’t do a deal.

© Sandy Mattingly 2011
 

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Apr. 23, 2010 - bank error in your favor, collect $200 [$17,000] / the new Good Faith Estimate for mortgages


one happy surprise at closing (for buyer)
Let's go into the weeds a bit, into the minutia of mortgage lending, a trip occasioned by a note I received from a Manhattan mortgage broker about a client whose lender had to pay the borrower $17,000 at a closing.

Long story, short: the lender forgot to include the "mansion tax" on the Good Faith Estimate of closing costs and fees provided by the lender to the borrower so the lender wrote a check to the borrower to pay this tax.

long story, long
The Good Faith Estimate is a HUD form that is intended to permit borrowers to compare total costs when they shop for a mortgage (click here for the official form). Lenders are to provide it within 3 days of a loan application and are bound to this estimate for many of the closing costs that a buyer will pay at closing.

The GFE must be 100% accurate for bank fees and transfer taxes, there is a variance of 10% permitted for "required services" (such as title expenses) if the borrower uses the company the lender recommends, and the lender is not responsible at all if certain other closing costs change (see page 3 of 3 of the HUD GFE).

So, if the lender's "estimate" of transfer taxes is low by a dollar (or more), the lender pays the borrower the difference, 100 cents on the dollar. Once issued, the GFE is in effect until it expires, unless there are certain "changed circumstances".

In the case addressed, the lender's mistake in omitting the "mansion tax" from the GFE cost the lender $17,000 at a closing last week. OUCH

Whether or not the lender figured this out before closing, there is a 99.99% likelihood that the buyer and buyer's counsel knew, as everyone knows about the "mansion tax" (except for the gremlin (human) or machine (wrong spreadsheet?) that generated that particular GFE).

I imagine (100% certainty) that this lender has already implemented procedures to prevent a category error like this from happening again. That buyer is happy about the windfall.

unintended consequences?
The new GFE rules are intended to make it easier for borrowers to compare the real dollar differences between loan and fee quotes from bank to bank. My mortgage broker source makes the argument that these rules will -- in fact -- cause banks to be so conservative about the GFEs that they will not be very useful. (I.e., that banks will over-estimate costs to avoid liability at closing.) In the case of an omiited cost (as with the "mansion tax" in this April closing) this motivation simply isn't there, but I get his point.

If this mortgage broker is right about likely bank behavior, everyone will present high-side estimates (there is no rule-based penalty if closing costs are lower than predicted), will use "worksheets" for categories of closing costs (with no guarantee about accuracy on "worksheets" under the rules), and will charge higher fees to offset the risk that they will get slammed for mistakes. If so, ultimate costs will be higher and GFEs will all be 'rounded up' comfortably, so will be less useful for comparison shoppers.

It will be interesting to see if he is right. Certainly, banks should compete on their fees (which must be "estimated" accurately). In addition, banks that estimate other costs artificially high might (should) be punished in the marketplace if (only if) other banks try to get closer to 'real' estimates.

Of course, HUD (and the Justice Department) might not be happy if banks appear to collude by universally presenting squishy GFEs. That is an even weedier thicket.

credit where credit is due
My thanks to Bruce Maasbach of Luxury Mortgage for the anecdote and for his analysis.

© Sandy Mattingly 2010

 

 

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Aug. 22, 2008 - paralyzed by history? another buyer dilemma


information overload?
I am working with a motivated, smart and analytic buyer who wants to know as much as possible about one particular Manhattan loft and its competitors before making a bid. This current experience points up an issue with smart buyers and one particular fact pattern: the loft has had three accepted offers in six months but is still available at roughly its original asking price. (The balance of the discussion is not about That Buyer; it's just General Stuff That Could Happen To Anyone.)

The problem is that not all interesting information is useful information.

what does it mean that 3 people decided not to buy?
It is easy to be distracted by a listing history that has been dutifully updated each time an offer is accepted, then again when it is back on the market. Some people step up and bid to compete with an accepted offer; others are morephilosophical and remain on the fence to see how it all works out. For those fence-sitters, the news that a deal has not been struck sometimes launches questions about what isknowable or not knowable, relevant or not relevant.

With 3 accepted offers but no contract in six months, one naturally wonders if there is something wrong with the loft or the building that is discovered in due diligence. While one can wonder, one can never know this until actually going to the effort of a negotiation and the expense of lawyerly Due Diligence. (Of course if there were some about-to-be-discovered Bad News, my opinion is that it should be disclosed by the seller's agent before or during negotiations, but that's another topic.)

On the other hand, if there had been no offers in six months, one might wonder if The Market perceives that there is something wrong with the loft at the price offered, leading one to question whether a loft that (a) you like and (b) can afford, is really worth it.

what can we know (that is useful or important)?
I tell my buyers that there are limits to what they can know about a loft or building during negotiations, that much more can be revealed during Due Diligence before they sign a contract, but that what other people think about that loft or have done in bidding or negotiating is usually only distracting or irrelevant.

Any buyer should be as knowledgeable about The Market and how a particular loft fits in The Market as the seller is. If a buyer thinks that  a loft is over-priced because another one down the street is better / cheaper / larger, then that buyer will use that information (opinion) in a negotiation with the seller. If the seller is motivated enough -- and if there is no competing buyer present -- then maybe a deal can be reached. If a recent past sale in the same building implies a lower value than theasking price, the seller will know that and the buyer will too (most often).
 
Of course a buyer would love to know how much of a discount a seller has already agreed once to take, but -- unless the seller deems it in his/her interest to reveal it in negotiations -- the next buyer will not know.
 
reading tea leaves is hard
The best reason for not worrying about a fact such as prior accepted offers without contracts is that you don't know what it means and should not expect to find out. While it could indicate problems discovered in Due Diligence, it could just as easily indicate a seller being very negotiable with buyers who turned out not to be motivated or qualified.

If the (potential) problem is one that will come out only in Due Diligence, it will come out. The buyer may be upset with the seller and agent for sitting on something like that (I would be), but at least a buyer can be confident that it will come out before the contract is signed.
 
If the fear is that someone-knows-something-that-I-don't-know that is other than a Due Diligence fact, the only response is that (a) you can and should know anything that any other buyer could know and (b) no other buyer will have exactly your set of needs, goals and financial resources.

some people just like to sit on fences
Some people get it that there is risk in any loft purchase and move on to buy the most suitable loft. Other folks find a reason not to buy. Some of those other folks eventually figure it out, but some of them never do.

'tis a puzzlement.

 

© Sandy Mattingly 2008

 

 

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Jan. 20, 2008 - not lofty enough in Manhattan, smiling at Manhattan from DUMBO


poignant search profiled in NY Times
“Poignant” must be in the eyes of the beholder … as in whose buttons are being pushed. Today’s Joyce Cohen The Hunt feature in the NY Times pushed my buttons, very well.

Starting a New Life in Brooklyn outlines the search that a 72 year old artist started as her husband of nearly 50 years was dying, when she realized she could not bear to live in their
2 Fifth Avenue home of 20 years after his death. She


wished to find, for $2 million to $3 million, a big, bright, high-ceilinged place that could include an art studio for Ms. Alper’s painting and sculpture [and she] began hunting in SoHo and TriBeCa, two neighborhoods that Ms. Alper liked.

Sounds like a do-able proposition, doesn’t it?

light and views surprisingly hard to find in
SoHo or TriBeCa lofts
It is ironic – but not surprising -- that this artist was not able to find enough light and space in the original artist loft neighborhood (SoHo) or its younger sibling (Tribeca).

“lofts” that are too much “apartment”
She rejected 53
Murray as “too apaprtmentlike” despite its provenance as a former lamp business. She was most likely looking at the penthouse unit here (#6), a 1,719 sq ft duplex with 2 terraces that closed in August at $2.35mm. Ceilings are 20 feet in the front and must be 10 feet where the upstairs master bedroom and main floor 2 other bedrooms are. The 25 foot wide space is not so Long-and-Narrow, but there may not be much wall space for hanging art and using one of the bedrooms as a studio would not work for someone looking for a studio with high ceilings. Kind of a typical Long-and-Narrow layout, nonetheless.

Similarly, 124
Hudson was “too apaprtmentlike”, not surprising for a “loft-like” building built in 2001 on a Tribeca parking lot. She probably looked at #4B, which was offered at $2.65mm for “2,110 sq ft” that is arrayed in exactly the same footprint that would be at home on the Upper East or Upper West Sides, but for the open kitchen (a “problem” easily fixed). (It closed in April juts under $2.5mm.) ‘Only’ 10 foot ceilings here, and not a lot of light from the 4th floor, looking west across Hudson Street, with ‘only’ 25 feet of windows in the public space (living room).

typical = boring
As her agent said
Anything that had the typical apartment, she found boring”. She also crossed off several unidentified downtown luxury buildings. “We were excited, but they looked like they were for people who wanted apartments, and I wanted more of an open space,” Ms. Alper said. “They were very elegant, and I realized I didn’t want such elegance. But I didn’t want raw space because I wasn’t going to have my husband to design it for me.”

Mick Jagger is smiling (pausing at “seemed right”)
Remember
Jagger's Law of Imperfect Lofts / life is compromise (sigh)?

A $2.5 million duplex at 80 Warren Street, a co-op building once occupied by dairy wholesalers and then by employment agencies, had everything Ms. Alper wanted. She would put her art studio on the top floor. “I liked it so much, and it just seemed right,” she said.
But a relative who is an architect said they would need to remove a wall so the studio could overlook the terrace. Besides, surrounding neighbors could look right at her when she was outside. That gave her pause.

That listing is not on the web any longer, but it was a duplex with “1,750 sq ft” and those two terraces (“1,450 sq ft”) into which the pesky neighbors could look.

over the river we go
So she crossed over the river, after seeing pictures of the
Manhattan views from DUMBO. But the real loft building at 70 Washington Street did not work for her either, as the light was not very good there (interior rooms without windows).

She ended up on the 32nd floor of the J Condo, a new 33-story tower next to the
ManhattanBridge (she’s on the other side, facing Manhattan, of course). She found that looking at the city, you feel you are in the city more than when you are in the city.” She even finds the BQE traffic 300 feet below her to be “cute”.

peace upon you, Ms. Alper!
As I said, this story pushes a lot of my buttons – not least the
Manhattan loft angle.

May all of her surprises be pleasant. She’s paid some dues, no?


“It is really fun. It is a different Brooklyn than I remember. The neighborhood is full of surprises. That’s what I think my life should be. Lots of surprises.”


© Sandy Mattingly 2008


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Nov. 16, 2007 - a reader writes / how to keep on top of buying opportunities in a specific building


great question
I had an off-line email dialogue with a reader of this blog the other day, who really wants to be able to buy in one particular building, and who asked this question.

I like the building,I saw a great apartment there a couple of years ago,I wish I had bought, but now I'm going to start looking again. What is the best way to get a really EARLY indicator when one comes up on the market in this building? … Is there one particular realtor or a coop board member or someone I should stay in touch with?

short answer
I promised to amplify on this blog, but my quick response was:

The short answer is that *if* (1) you really are patient, (2) you really want to live in one specific building, (3) you really are familiar with values in the building, and (4) you really are prepared to pay a fair price (as opposed to looking for a 'deal'), the best thing to do is probably to call and/or write to each owner of a unit you might be interested in.
Anything else you could do probably won't give you any market advantage as opposed to waiting for a listing in that building to hit the web (Street Easy, NY Times, etc).

why the "really's"?
The numbered conditions in my answer are really important if someone really wants to live in a specific building and wants the earliest opportunity to do so.

patience, Prudence, patience (and preparation)
This reader's building-of-interest is relatively large for a loft building and units of the preferred size have come to market at least two or three times a year for the last several years, so in this case it may be more of matter of preparation than patience. But the right unit for this reader is not now offered for sale.

So get all your ducks in a row - especially about your ability to qualify for a mortgage of the appropriate amount - so that when The Right One is available, you can act immediately.

gotta have it (really)
Seems simple, but you must be 100% certain that you want this building if you are (a) going to take the steps needed to maximize your chances and (b) be able to jump ASAP when necessary. So you should truly and realistically consider all the possible alternatives, by neighborhood, by price range, by services.

You don't want to go down this path and actually have a shot at The Right One, and then have second thoughts about how 'right' it is.

research, research, research
If you want to be in a position to jump at The Right One, you must know what the values are in the building so you can be confident that The Right One should be available at The Right Price. You should also know which units have the right floor plan or exposure for you.
If you love a building so much that you will bid no the next one in the "X" line that comes to market, you better be prepared to pay $1.2mm if that is where past sales indicate the current value would be. If you have $1.2mm taste but a $900k budget, drop the dream if you can't print some more money.

fair price, no chiseling
The implication in the question (as we'll get to below) is that he reader wants to buy a unit before it comes to the general market if possible - or at least to buy The Right One as quickly as possible after it becomes available. That is not the time to make a low-ball offer.

In the best case, the reader will have a head start on the rest of the market and will be able to strike a deal quickly. You simply can't be looking for a 'bargain' in this scenario. The reader should be prepared at any given point to make a fair offer to a unit owner based no past sales in the building and the then-current market (subject only to adjustments for the condition of the unit) and to be able to demonstrate to the owner why that offer is fair.

agent might not hurt
In this specific building (as with many) there are several agents who have sold more than one unit in the last few years, but no one agent who dominates the building sales. In buildings in which one or two agents get most of the listings, there can be an advantage of reaching out to that agent in advance, but it comes with a potential disadvantage.

The advantage is if the agent has good connections with unit owners and can encourage the owner of The Right One to sell if that owner has been considering it. The potential disadvantage is that the agent will (almost certainly) want to be the seller's agent in that setting (so, will owe full fiduciary duties to the seller, not the buyer) or will act as a dual agent (being a fiduciary to neither side).
That can get tricky, and either scenario removes the agent's ability to work for the buyer to the best of her/his ability. Depending on how well the buyer knows the values, this may or may not be significant to that buyer.

board member can't hurt, probably
Making contact with a member of the board of the building is almost always a good idea, but very hard to do unless you have a personal connection to a shareholder or condo owner in the building (otherwise, they will ignore you, most likely).

A board member who knows you are a potential buyer might be able to communicate that to relevant owners, but that is a bit of a crap shoot. But having a relationship with a board member can be a wonderful resource about the building.

why not wait?
It might make sense for the buyer to simply monitor the building (for example, through NY Times.com or Street Easy) and be prepared to jump when necessary, rather than reaching out to an agent or board member.

In many cases, this is sensible, as many sellers want the benefit of some marketing to be confident they are getting a fair price, so they will be unwilling to take the short cut of a direct deal away from the market.

with luck, you can make it happen
But for the buyer who really wants this unit in this building at the earliest possible moment (without full market competition, if possible), reaching out to all the relevant unit owners just might work.

On your own, a buyer is not (I don't think) precluded by the Do Not call lists the way an agent would be, so the buyer could call the owners directly and explore the possibility of the owner selling in the near term. (Be careful what you say here!)

Alternatively, an agent representing you as buyer could make any calls permitted under the DNC rules and write letters to all the relevant owners.

creating a 'seller'
While you might think that anyone who would sell will put their loft on the market, the fact is that some loft owners have sold only when they knew a particular buyer was interested (and fair). Sometimes, in other words, you can convert someone to being a seller.

Remember the importance of patience? If you are trying to convert an owner-with-no-plans-to-sell into a Seller, it helps if you can be patient, as the owner-turned-Seller will ask "but where am I going to go?". So you will have an advantage if you can give that owner time to make the next move. In fact, this flexibility can be a serious benefit to persuade an owner not to put it on the market generally, but to strike a fair deal with a patient buyer.

This extended discussion probably raises more questions. Feel free to ask away….

THX for the inspiration for the post Reader D!


© Sandy Mattingly 2007

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Jun. 15, 2007 - recycling week / buyers running the emotional mine field with little external help

 
(I am still in France; you are still in Manhattan Loft Guy’s week of recycling.)
 
I addressed the mental gymnastics that buyers can go through in the March 31
buyer’s tango for one: buy it, but without overpaying. That post addresses the buyer conundrum that the only way to know The Market value for a loft is to let someone else buy it. Buyers tend not to think that their notion of worth is as valued as the opinions of another (“objective”) bidder, so they worry about setting a price that is too high.
 
As I said, it is hard being a buyer.
 
© Sandy Mattingly 2007
 
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Jun. 12, 2007 - recycling week / my favorite post to date on Jagger, MICs and imperfect lofts

 
(I am still in France; you are still in Manhattan Loft Guy’s week of recycling.)
 
One of these days I may edit my March 15 post Jagger’s Law of Imperfect Lofts / life is compromise (sigh) because it is my (current) favorite posting. Not so much for the writing, as for the concept: there are no “perfect” lofts at any price. And I sued the (overly long?) real-life examples of lofts considered by one lovely pair of buyers who had a (relatively) lot of money to spend ($3mm).
 
Working with them over the course of some months and being in and out of many, many lofts with them generated Jagger’s Law, which is as valid at $1mm as at $3mm, and probably as valid for “apartments” as for Manhattan lofts.
 
© Sandy Mattingly 2007
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May. 28, 2007 - identity theft, anyone? / what really happens to confidential purchase applications?

 
why are 6 copies of my tax returns in the trash at my new building?
One of yesterday’s Real Estate Q + As In the NY Times (How Confidential Are Applications?) deals with one of those dirty little secrets in the Manhattan purchase process: buyers who submit multiple copies of tax returns, employment information, and copies of investment account statements rely on the focused good faith of coop and condo boards about disposition of all of that highly confidential paperwork.
 
Jay Romano of the NY Times quotes a Manhattan coop lawyer to the effect that there are no laws that protect buyers here, but that boards should act wisely:
 
Eva Talel, a Manhattan co-op lawyer, said there are no New York laws that specify how a co-op board treats information it receives from prospective purchasers, nor are there any laws limiting the locations at which purchasers’ applications can be reviewed.
But Ms. Talel said that as a matter of good practice, board members should maintain the confidentiality of application packages, regardless of where that information is reviewed.
“With regard to the disposition of application packages, management may wish to retain one copy of the package in a secure location, but the remaining copies should either be destroyed or returned to the applicant,” she said.
 
If Ms. Talel represents coop boards, I wonder how many boards she has advised to appropriately destroy or return copies of application materials….
 
this is a job for REBNY
I don’t have any doubt about the good faith of coop or condo boards, but I do worry about the focus of these people after they have reviewed a purchase application. And I wonder why REBNY has not addressed this in the standards of practice that it establishes for its managing agent member (who usually control such mundane processes as the handling of purchase applications).
 
I have yet to see a single purchase application that describes what happens to the application materials. The managing agent and the real estate agents involved in the purchase have implicit duties of confidentiality, I would think. Board members do, as well, but I suspect that they are not specifically aware of this (or, at least, that they don’t act consistently with purchase applications as if they do).
 
I know of some board members who are very diligent and very anal about retaining documents. But when it comes time for them to purge themselves of boxes and boxes of documents from their board service, I am not sure that they all use shredders.
 
a modest suggestion
When an application is finally approved, managing agents should collect all the material from board members and should either (a) shred it or (b) (more likely to occur) make it available for pick up by the applicants, to dispose of as they wish. I suspect there are arguments to be made that managing agents should securely retain one set, on the theory that you-never-know-when-it-might-be-relevant (even though it won’t be).
 
If the managing agent has a copy, there is simply no reason for any other sets to remain with board members or the Department of Sanitation.
 
© Sandy Mattingly 2007
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May. 21, 2007 - NYT on Condo Rules bury the lead but generate fear

 
hysteria sells old grey newspapers?
The NY Times piece yesterday about a trend in which some Manhattan condominium boards behave like coop boards (Condo Boards Tighten the Rules) is an unfortunate load of fluff on its most essential point. Yes, I agree that some condo purchase procedures resemble strict coop purchase requirements, but the most important practical consideration was not mentioned until the middle of the article, and even then not really addressed.
 
The “strict” condo purchase applications are only disclosure (more onerous, yes), but they are extremely unlikely to result in a purchaser failing to purchase.
 
Here is the key paragraph deep in the middle of the article.
 
While condo boards cannot stop an owner from selling an apartment, they are given the right of first refusal to buy the apartment back at the price that the owner has negotiated with the prospective buyer. But condos very rarely exercise that right since it would require the board to raise enough money to cover the transaction. And before exercising the right of first refusal, most condos also require the board to get approval from two-thirds of the unit owners, another daunting task.
 
In other words, condo boards can ask a lot of questions (and many are asking more questions), but at the end of the day all they can do to prevent an “undesirable” purchaser from buying is to buy it instead.
 
In the unlikely event that a condo board does exercise that right, the seller gets out of the building on the same terms negotiated with the buyer, but the condo board steps into the buyer’s shoes.
 
is it an urban myth if it happened (a few times, long ago)?
Until reading in this article about the “few times” the board at the St. Tropez at 340 East 64 St exercise the right of first refusal more than twenty years ago, I had never heard of an actual instance of a board doing this.
 
As stated in the buried NY Times paragraph above, if a board is going to use this extraordinary power (a) it needs to raise a lot of money and (b) it needs to persuade the condo owners to agree that the prospective buyer is a threat that warrants raising a lot of money to buy out that buyer’s right to buy.
 
And it has to do this within 30 days.
 
how would it play on Page Six?
Consider what the campaign would have to look like, what the condo board would have to tell the unit owners about the risk that the objectionable buyer presented. Absent a slam dunk issue such as the convicted child molester example, it seems to me essentially impossible for a board to be both specific enough and sufficiently well-substantiated to make a reasonable case to persuade a super-majority of the emergency. Especially with lawyers hovering over potential defamation claims.
 
Especially as the board would probably be asking the unit owners for an immediate assessment to cover the negotiated purchase price. (It is not likely the condo could finance the purchase price, as it all it has to offer as security is the stream of common charges.) In a 100 unit building and a $1.5mm purchase, they need agreement for everyone to write a $15,000 check now.
 
yes, condo boards can be a pain
The real change in condo board behavior is more irritating than fatal for transactions, and is accurately reflected in the NY Times. Boards are making it more difficult for people who own to do whatever they want with the units, both as far as renting and using (pet policies and onerous rental approval packages and fees).
 
That is a topic for another day (for me).
 
© Sandy Mattingly 2007
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Mar. 31, 2007 - buyers tango for one: buy it, but without overpaying

 
what’s The Market Price if you set the market?
The dialogue with Larry this week in Jagger’s Law of Imperfect Lofts / life is compromise (sigh) and a buyer’s experience this week got me to thinking about buyer behavior in a Manhattan real estate world in which no one (a) wants to pay more than they ‘have to’ to have an offer accepted, or (b) likes bidding wars. (Can the real estate world in America be any different? nahhhh)
 
The problem, of course, is that buyers don’t know what the seller really wants (will take) and it can be difficult to determine if other buyers are really interested (and at what prices). When I get to the point of having a good rapport with buyers I will tell them that the only way to be sure what the market price is for a loft they want is to have someone else buy it. (It takes a moment for that to sink in, most times.) So they know that when they get to an apartment they want to own, they have to trust me to interpret the market data and the mumbles of the seller’s agent, and then do the best they can within whatever needs, resources, options and limits they have.
 
My buyers this week had bid unsuccessfully on a couple of places, then saw two new places at Sunday open houses that were similarly attractive in terms of location, size, condition and (more or less) cost. With disclosure in both places, they bid The Full Ask on both, as both seemed to be pretty popular on Sunday and had prices that were reasonable based on the comps. One immediately had other similar bids (and would likely get more), while the other wasn’t nearly as hot (and was financially more practical for them).
 
They bid on Monday, putting as much pressure on the seller as we could (“we have another bid out there”) and got an accepted offer on the second one late that same night. Small hiccup on Tuesday when the seller re-opened the business terms (asking for no mortgage contingency; no surprise there), which the buyers swallowed.
 
even decisive people can have second thoughts
Bigger hiccup on Wednesday, when the seller’s agent called with the dreaded “we had two offers above ask last night” phone call. Here’s where it got interesting.
 
The seller, bless his heart, was not interested in a bidding war so long as my buyers matched the slightly-higher-than-ask new price. Agent, bless her heart, had an acceptably calm answer to my question “what do I tell my buyers if you come back to me tomorrow night with yet another higher offer?” (“he wants to do the deal with your people; have them sign in a hurry”).
 
My buyers, bless their hearts, recognized that this is the way it can go sometimes and stepped up to the additional cost. They also said “now we don’t have to worry that we paid more than anyone else would have”. Bingo.
 
We kind of lucked into a situation in which they got to buy the apartment without a full-fledged bidding war, yet they have the outside comfort that the price reflects the market.
 
bidding has a strong emotional aspect / needing a Walk Number
It is mere Negotiations 101 that any party in a negotiation has to have a Walk Number and to be prepared to act on it. It is the rare buyer (or seller) who can actually do that, however.
 
Going back to Larry’s comment on Jagger’s Law of Imperfect Lofts / life is compromise (sigh), in that instance those buyers got out-bid by $175,000 long after their offer had been accepted, long after they had done their green-eye-shade work on Cost + Needed Renovations. They were also dealing with a loft that had been on the market long enough for us to believe that the market did not think it was worth as much as the asking price. (With the eternal and repeated proviso that “you never know when another buyer will come out of the woodwork”.)
 
So when it because apparent that they would be fighting for the loft at at least $200k more than they had figured (in great detail), those buyers walked away. I think they emotionally set the value for them at their Cost + Renovation, and had the resources to keep looking – no matter that the market price for that loft demonstrably changed.
 
Had they started their bidding in a competition, they might have proceeded differently, but they were not overtly in a competition from the start. They accepted that they would let someone else ‘overpay’ for that loft. They stuck to their Walk Number, bless their hearts.
 
Being a buyer is hard….
 
© Sandy Mattingly 2007
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Mar. 15, 2007 - Jagger's Law of Imperfect Lofts / life is compromise (sigh)

 

 
Mick Jagger was uncharacteristically understated back in the day:
You can’t always get what you want/
but if you try – sometimes /
you just might find /
you get what you need
 
I don’t think he was singing about Manhattan lofts, or whether he has been a Manhattan loft buyer since 1969. But if he were, he would probably delete the word “always” in the first line quoted above. Which is a roundabout way of saying that all buyers I have ever worked with have had a different Learning Reality Curve than they anticipated.
 
gotta get those MICKs
All well-prepared buyers have a sense of the market, usually derived from some period of watching listings, focusing on neighborhoods, features and prices they think they prefer. For loft buyers in Manhattan the key variables are often location, size, light and/or views, amenities, level of finishes, and price (not necessarily in that order, of course). You could call these the Most Important Criteria, or MICKs for short.
 
It is my belief that the way buyers look at listings contributes to Jagger’s Law of Imperfect Lofts. And it is my belief that this Law is valid at any price point -- $3mm buyers are as likely to be as frustrated by Jagger’s Law as $1mm buyers – as no one will get all of their MICKs. (Though they just might find that they get what they need.)
 
Even sophisticated and knowledgeable buyers need some awkward collisions with the reality of what is actually for sale in order to give up on the mythical perfect loft.
 
I will illustrate with real buyers who are recently in contract for a loft at a price point that is beyond what a lot of loft buyers are looking to spend. I will keep them anonymous, so they should quibble with me in private emails (if they must) to preserve their anonymity.
 
This history will take a long while to relate, because I want to be specific (and I am pretty wordy in general). But if you want to skip to the bottom line it is this: buyers need not be picky, cheap or indecisive to fall prey to Jagger’s Law of Imperfect Lofts because all lofts are imperfect.
 
why imperfect?
Informed and reasonable buyers will see lofts that are at some (or even many) of the right values (the right price, size, location, finishes, light, space, location) but they are simply not going to see a loft that hits on all of those criteria – it’s The Law. Because if a loft has great light, and large space, and high finishes, and good location – compared to other lofts that are candidates – it is going to be priced higher. Usually, priced out of the comfort zone.
 
Informed and reasonable buyers see lofts they can afford in person or on the web with great light and views; they want that. But they don’t want it in that building, or in that layout, or with those finishes, or at that price. Then they keep that light and views in mind in the mental file labeled What We Like And Can Afford. That is human nature.
 
Informed and reasonable buyers see lofts they can afford in person or on the web with great space and layout; they want that. Into the file, without the limitations.
 
Informed and reasonable buyers see lofts they can afford in person or on the web with great baths and kitchen; they want that. Into the file, without the limitations.
 
Informed and reasonable buyers see lofts they can afford in person or on the web in a great light location; they want that. Into the file, without the limitations.
 
If you doubt this, follow my buyers….
First off, these buyers have been in Manhattan long enough to know loft neighborhoods (they have lived in several). They were flexible about neighborhoods and significantly more flexible about buying a ‘fixer-upper’ than most loft buyers. And they did not need to have the level of services and amenities in the newer loft developments (i.e., they did not have to have a concierge, or a pool, or a lobby cold room, or a business center). But they wanted “a lot of room” (2,500 sq ft, at the start) and lots of light, and they wanted something that is already (or can be turned into) beautiful space.
 
They were willing to spend up to $3mm to get it. If you think that someone should be able to find the perfect loft at this price, you are like them. And you will share their frustrations in that search.
 
the MICKs for these buyers
  • space (2,500 sq ft more or less)
  • very good light (views would be a plus)
  • high level of finishes (or the reduced price to renovate to get it)
  • ‘nice’ neighborhood (a slippery concept)
  • some loft-y ‘character’
  • under $3mm
 
dollars short, days late (or, too early) at The Capitol
The first loft listing they got serious about was #701 at 236 W 26 St, but it had a layout that would have to be re-figured for them and it was just too early for them to commit to anything that was not ‘perfect’. It was certainly big enough at 2,717 sq ft, had terrific light with huge windows and three exposures (the longest being dazzling south), and it had a high level of finishes throughout. The asking price was in their range at $2.56mm, though maintenance was a bit high for a non-doorman building, at $2,680/mo.
 
But the loft was set up so beautifully as a one bedroom (a One Bed Wonder!), though with the capacity to be two or three bedrooms without a lot of work (some but not a lot). When we saw it it had been on the market almost two months, without having gotten an offer. While they were considering making the proverbial low-ball offer and discussing between them the pros and cons, the market caught up to them. In a few days, there were multiple offers and the loft seemed destined to go well above the asking price (it hasn’t closed yet). This activity both energized them (“other people like it too”) and enervated them (“we don’t want to get in a bidding war”).
 
At the end of the day, the space was great, the size was adequate, the light fantastic, the price was do-able, the location was okay (but do-able), the level of finishes was quite high enough and the ‘feel’ was terrific. But there was just a little too much work to be considered quickly and they were not quite ready to make the compromises necessary to act quickly to see if it could be bought within their comfort zone.
 
They never bid here, but I wish I had a dollar for every time one of them later said to me “if we could only have gotten 26th St….”
 
OK layouts + light at 15 W 17 St
The floor-through lofts being converted to condominiums at 15 West 17 Street presented at least two possibilities. These Long-and-Narrow layouts had at least a few windows along one long side on the upper floors and the convenience of being so close to Union Square.
 
The penthouse had the best light (though more sky than ‘views’), a fireplace, an efficient layout (2 bedrooms plus an office or guest sleeping area) and private outdoor space on the roof. The finishes, kitchen and baths were more “okay” (according to their tastes) than ‘wow’, but that was a workable element. At $2.975mm for 2,221 sq ft, this was just within the dollar comfort zone – though they expected to pay less if they were to bid.
 
The 10th floor unit presented a fascinating set of possibilities. It had nearly as good light as the penthouse just above it and could be sold raw (not just unfinished, but exposed wiring, gouged concrete floors, and plumbing risers without any plumbing raw).
 
But the light on both 10 and 11 just wasn’t good enough to overcome a merely “okay” layout on 11 or the possibility of creating something wonderful from scratch on 10.
 
light and more light at The Glass Farmhouse, but remote
I always think of the West 30s for people who say they want light, so I took one of them to see an absolutely remarkable (but odd – there’s always a catch) concrete floor and minimalist look duplex loft at the Glass Farmhouse, unit 9G – 10G at 448 W 37 St (no longer on the market, no web listing to view). Big windows with 13 foot ceilings and three exposures, showcasing the Empire State Building and the Hudson River (how’s this for beautiful marketing: “180 degree views allowing you to watch the sunrise behind the Empire State Building in the morning and set over the Hudson in the evening”), and a well-executed minimalist vibe could have overcome the need to replace the circular stair with a real stair, and the money was again right ($2.495mm for 2,638 sq ft), but it was clear that one of them would never live in that neighborhood. Alas.
 
views but dark bedrooms on Lafayette, if they’ll sell
The other one and I went to a candidate for gut renovation at 237 Lafayette – a neighborhood they both love. Unit 8W had very good light and big Soho views, but with only one and half exposures, would only make sense if the bedrooms were interior. A major stumbling block, but one that might have been resolved, as the space had sufficient potential otherwise and the neighborhood was prime. Price ($2.575mm for 2,200 sq ft) was high compared to the work to be done, but the real problem was that the “seller” was ambivalent (or worse) about selling (one of those “they don’t really have to sell” nightmares). Indeed, before it was finally crossed of the list, it went off the market.
 
very promising over Great Jones St, but …
They found “it” at 684 Broadway, Unit 5E, which led to three very frustrating weeks. The unit was a very primitive loft (probably ‘renovated’ last about 25 years ago), so was a good candidate for a gut renovation, and priced accordingly. It has a long run of very cool pivoting windows along Great Jones Street, just about clearing the low rise buildings to the south and giving very good light. With 3,000 sq ft there was quite enough space, with a reasonable asking price of $2.5mm as a place to start negotiating.
 
The problem was that they would want to put the kitchen on a wall that had no obvious plumbing lines in it, though the agent “believed” that it could be done. Indeed, the agent quoted the managing agent as saying it could definitely be done. But the managing agent could not confirm that when I asked directly.
 
They bid on the basis of needing a “reasonable assurance” that the kitchen could be moved to that wall and their lawyer commenced due diligence while we attacked the kitchen location problem by getting a plumber to visit and (literally) drill holes in the wall. (The seller was very accommodating, obviously.) The plumbers were unable to be definitive without opening up a much larger part of the wall – despite the fact that two floors below had a kitchen on that wall -- but the buyers were willing to chance it (with a back-up renovation layout in mind) so they signed the contract. At which point the seller got an offer that was sufficiently higher ($195,000) that the buyers withdrew.
 
At which point we realized that #3E -- the same unit two floors below (with the kitchen in the ‘right’ place) -- was available for sale at $3.1mm. More than they wanted to spend, but possibly 'done'.
 
Did I mention that nothing is ever perfect? The change in altitude from 5th floor to 3rd eliminated the rooftop views, but not so much light; the original pivot windows on 5 were not available on 3 (but were replaced by quiet City Windows); sellers in #3E put in a sauna (who needs -- or wants to pay for -- a sauna?); the bedroom array was not quite as they would have built it in #5E; and there was some (not-very-usable) essentially dead space. But the owners had done a nice renovation, the kitchen was in the right place, their lawyer had already done the due diligence, and the buyers had already made a certain emotional connection with the building and neighborhood.
 
Having done the math on what it would have cost to buy and build out #5E, they bid on #3E, prepared to raise. And within a few days were not only out-bid but out bid at a level that did not mesh with their own financial calculations of value.
 
beautiful in beautiful downtown Soho
The buyers licked their wounds, took their learnings, and went soon afterwards to #4W at 46 Mercer St, a loft they had seen on line but which went off the market, then came back. It is just big enough, with 2,500 sq ft (the 14 ft ceilings help a lot), the Soho location is prime, the kitchen and baths looked plenty good enough on the web, and the asking price of $2.9mm was (barely) within their comfort zone, though reasonable compared to the local market.
 
They liked it enough to see it three times, and to linger each time. But at the end of the day the lack of light in the bedrooms (in the back) was a deal-killer for these buyers. They could have lived with the somewhat tweak-able kitchen and 2d bath, and they loved the front room with the huge Soho-outside-the-window windows (the fireplace was a nice touch). But they would not compromise on light for the bedrooms in this package. That one is still on the market.
 
Laight has light, but issues
The 7th floor at 68 Laight St did not suffer from a lack of light in any corner. 2,400 sq ft with four exposures, 14 windows, and 2 skylights full of the some of the best light Tribeca has to offer. Plus, some definitive loft ‘character’ and the possibility of private use of the roof. But the ask was a bit high at $3.075mm; there would be at least some ‘issues’ associated with improving and using the roof; the building is very self-managed; and the purchase cost plus renovation calculation was a little out of whack. They agonized, they dithered. They passed. That one is also still on the market.
 
is NoMo perfect?
When the asking price for the three week old listing at 20 North Moore St #8E dropped from $3.4mm to $3.2mm I thought it was worth a suggestion. For these buyers, this address is about as good as it gets. The headline of the web description (“breathes with light and clarity”) spoke to these buyers immediately. The finishes suggested by the photos and web copy sounded more than sufficient.
 
We arrived at 10:50 for a Thursday 11 – 1 open house with both buyers (despite the promise from one of being unavailable due to work pressure). At ‘only’ 2,400 sq ft, it did not quite meet their MICK on space, but the space had enough of the feel of ‘space’ due to the light, windows, and elevation. All other MICKs were hit as well -- except the price was still ‘too high’ for what they wanted to spend.
 
But that price limitation had been set before they had seen everything in the market that might have fit them. So they made a very strong bid at 4:30 that same afternoon, strong enough to be accepted that evening. Having once been burned by an owner receiving a better offer after they signed the contract, they moved heaven and earth (and lawyers) to sign the contract on Monday. Done deal, awaiting closing.
 
An almost perfect loft. Sigh.
 
so what about a $1mm buyer?
If you are still with me yet doubt that buyers at $1mm will have a different experience, I have not made myself clear. Bounce me here, and let’s talk about that.
 
Jagger’s Law of Imperfect Lofts has not been repealed. No sympathy here.
 
© Sandy Mattingly 2007
 
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Jun. 5, 2006 - Good Article, Terrible Headline (NYT on coop apartment letters of recommendation)

A Sunday NY Times article about letters of recommendation in cooperative apartment purchase applications has a lot of good content – but a terrible headline. Mightier than the Board is bass-ackwards, as the text of the article demonstrates that The Board has all the power in reviewing an application, not the letter writers or the purchasers.

 

And some Boards are far more willing than others to use (abuse?) that power.

 

Perfunctory letters (“I have known John Smith and Mary Jones since college and they will make great neighbors”) never help a purchase application, but ‘reasonable’ Boards will look positively on any detailed letters from people who know the applicants well that speak to the applicants’ relevant qualities as potential neighbors and shareholders. Other Boards (be they unreasonable or downright snooty) require letters from “people like us”, which can be other captains of Industry, society dames, or people who belong to the right clubs. Indeed, in the most extreme cases, if your grandfather did not go to church with their grandfathers, forget it.

 

I worked on a purchase application last year for an established and financially secure 60-something couple seeking to buy in a not-quite-snooty building. At the suggestion of the listing agent, they provided biographical material about their parents and their adult children. The word is that the Board was pleased to see that one set of parents of this mature couple had owned a coop nearby (a similarly snooty building it seems). Would they have been approved without that ‘connection’? No need to find out, but that was the report.

 

Letter writing is a lost art, and coop reference letter writing is a most arcane skill that few people have. That is why I do a lot of coaching for letter-writing (which I tell my buyers to blame on their anal agent) and why I suggest they get one more letter than they need (which I tell my buyers not to tell their letter writing friends and associates).

 

Tough town. Tough business. Mistakes here are very painful!

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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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the MLG Master List of loft sales, to Nov 2008
Tribeca Citizen
Malcolm Carter
Brick Underground, "vertical living demystified"
Daytonian In Manhattan a tourist's wonder with a local's eye
Urban Digs (numbers, graphs & charts, oh my)
True Gotham (very) occasional front-line dispatches
DNA Info, local news via the inter-tubes
The Real Deal, our industry rag
Coop and Condo (a lawyer writes with a funny pen)
Crain's New York real estate
Tom Fletcher’s NYC Architecture
Jeremiah’s Vanishing New York
Architakes, one guy's take
Scouting New York (location guy with camera)
Forgotten NY
Soho Alliance
Soho Journal
Chelsea Now (area news)
the essential. if ephemeral, New York
The Broadsheet Daily (especially for BPC, FiDi and Tribeca residents)
The Atlantic Cities

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