4 prices, 12 months to contract for loft at 315 West 36 Street

contract = best birthday present ever
The “1,306 sq ft” Manhattan loft #14B at 315 West 36 Street came to market on October 19 and found a contract by October 14. Since you should assume that I type such dates carefully, you already know that those two things happened in separate years, in this case 2010 to begin marketing and 2011 to enter contract 361 days later. You do hate to see a lovely loft ‘celebrate’ a birthday. Perhaps they deferred the celebrations until the check was in hand at closing, in which case the major celebration would have been after the closing on December 15.

After a long marketing campaign, the clearing price of $1.5mm should have been more of a relief than a disappointment, considering that it is only 4% off the last ask, and 11% off the first. Indeed, many deals are done fairly quickly at a discount like 11%, if the seller has the right appetite for compromise. In this case, regular price drops suggest that this seller understood that compromise is a virtue (small compromise, at least):

where do you go to school?
The ‘largest’ price drop in this sequence was the first, at only 3.5%. There are two main schools of thought about price drops, and perhaps less popular variants. Either the #14B agent or the seller attended the Small Drop school, which looks like the above history when it works and gets Monday Quarterbacked by the likes of Manhattan Loft Guy as death by small price drops when it does not. The Small Drop approach works best in a stable market, such as prevailed from 2010 through 2011 (remember yesterday? January 11, loft lab at 161 Hudson Street, as loft takes 5 months to make a quick sale).

The contra school prefers a Big Drop, with “big” at this price level needing six figures. If the seller is sufficiently motivated and nimble, it works best in a declining market (otherwise, the listing is simply chasing the market down but never catching up) but also works well in a deep market (a market with significant buyer interest). The beauty of a Big Drop in a deep market is that bigger drops attract more buyer interest and more buyer interest can correct a drop that is ‘too big’ through a late-in-the-game bidding war.

Nearly all sellers went to the Small Drop school, perhaps because they view a price drop (of a listing price that has not yet generated any bid) as ‘taking money out of their pockets’. Some agents prefer Small Drops, some prefer Big Drops. I lean Big, myself. (Note that this theoretical discussion omits any context of the prices of competing listings because I am trying to make a general point; it does not matter what your price drop theory is if, at the end of your drops, you are still over-priced compared to buyers’ other choices.)

from white box to bed cabin
315 West 36 Street was converted to residential lofts during the golden age, though it did take a while to sell out (especially for a 20-unit building). The earliest sales closed in August 2003, with #14B being not quite the last sponsor sale in April 2005. I say “golden age” because loft conversions then could be sold as white boxes, with minimal plumbing to satisfy the New York City Building Code and few finishes or frills. Developers sold lofts as white boxes because it was less expensive (and quicker) to ‘finish’ lofts in that condition and because there were (or, they believed there were) enough buyers interested in finishing a loft to their own tastes and layout needs.

Every developer in the current environment would fully build out and finish a new development loft, and if using the size and shape of #14B would build two bedrooms on opposite wings. The white box permitted the original owner of #14B ot create a space with only 1 bedroom and no hard walls extending to the window wall, to maximize the sense of space and light. Instead of a second bedroom, there is that “bed cabin” in the extended living area. (I hope it shows better in real life than in the photos [see #6], but that is clearly the original owners’ approach to having an [occasional] second usable bed, while keeping the loft as open as possible.) “Bed cabin” is a new locution for me, by the way, though I have seen things like it before, in very small spaces or other spaces designed to maximize every cubic inch.

actually, much longer than a year, depending on how you count
Sometimes with StreetEasy it is easy to overlook important parts of a listing history, as I did in my first glance at the #14B history. Without abusing the metaphor, there are also different schools of thought for how to count days on the market. I will be uncharacteristically brief on this point at this point and merely note that for my purposes, as reflected in the Master List of Manhattan Lofts Sold Since November 2008, I start counting “on market” from the earliest date of active marketing that is not within 90 days of the prior active marketing.

In this case, I just changed the “on market” field on the Master List for #14B from October 19, 2010 to January 20, 2010 because that first marketing period ended on August 12, 2010, within 90 days of when it started. This example is, in fact, a good example of why I count this way: the seller used the same agent in October as in August, and (at 68 days ‘off market’) seems most fairly to have been simply taking a break from the market, rather than taking it ‘off’ the market — especially coming back to market at the same price as before.

With that new calendar context, it seems that this seller was also trained in a different school of pricing. Starting in January 2010 at $1.695mm and holding there into January 2011 (less the 68 days break, of course) reflects a certain dogmatism about the asking price. More pointed commentary would say it is “stubborn” to hold for 10 months at a price that The Market keeps rejecting.

What is especially interesting to me (with those 20-20 spectacles) is that the seller was not really wrong all that time, just unsuccessful. As I said up top when I was thinking of this marketing campaign as shorter and well charcterized as using Small Drops, the end result ($1.5mm, off an October 2011 contract)  was only 11% below the first asking price, and that many lofts sell quickly at such a discount without a price drop. This loft actively asked $1.695mm for 10 months without making a deal. With that longer (stubborn) pricing in mind, now I wonder if the seller was unwilling to negotiate (enough) in 2010.

did they do their View Diligence?
I don’t know if I have seen broker babble about views before that is so specific (and limited) about the time of the views:

Night views are spectacular with western sunsets and the changing colors of the NYTimes and BOA spires to the east.

The photos (seen better in Full Screen on the Stribling site than on StreetEasy) show how oblique the “spectacular” views are from #14B. Pic #1 is the direct view of the taller building just north; pic #2 looks north and west (the sunsets), and pic #3 north and east (the new and colorful icons). I wonder if the buyers wondered about how long they might enjoy those slices. And if their attorney used The Google in due diligence.

In my August 18, 2011, much diligence due over planned hotel in West 37 Street, I relied on an

item from DNAinfo: Garment District Parking Lot to Become Hotel (h/t TRD) with this as The Story:

The Albanese Organization and The Buccini/Polin Group have purchased the parking lot at 312-318 W. 37th St. for $20.8 million from a pair of families that owned it for nearly a century.

The developers say they plan to build a 300-room hotel on the lot.

…The Property Shark page for … 315 West 36 Street shows that much of this 140 foot wide 2006 [oops 2003] condo conversion is directly south of the planned hotel at 312-318 West 37 Street.

I bet that everyone on with north-facing windows at 315 West 36 Street has been (or will be) researching the zoning regs and the plans for the hotel. Depending on the size and shape of the hotel (if it is ever built, of course), the “B”, “C” and “D” lines are in danger of losing some or all of their open north exposures (some north-facing units here have lovely terraces). I hope that every one considering buying one of these north-facing units is diligent enough to know about the plans to build the hotel (which may never be built, of course).

is that www.coincidence.com or #Coincidence?
I raised this kind of issue as a due diligence concern more recently in my December 20, development watch: West 28 Street, between 6th & 7th Avenues about another potential north Chelsea development, and also then posed a question to real estate attorney Ron Gitter via @CoopAndCondo about attorney use of the inter-tubes in due diligence. In a bit of real estate blogging serendipity, independently of my plans to blog today about this Manhattan loft resale at 315 West 36 Street, Attorney Gitter blogged today about The Google and due diligence (in The Truth Factory: where buyers face facts).

He kindly attributed to me the locution ‘The Google’, which I am 97% sure is not my invention but something I have seen commonly on the inter-tubes, and made these points, among others:

Irrespective of what attorneys may or may not be doing to complete due diligence in connection with the purchase of an apartment, the consumer appears to be way ahead on using the Internet for real estate research.

***

Whenever information has no filter, there is always the possibility that the information is not accurate, no longer relevant or its truth exaggerated. Relying solely on the Internet, however, is not a great idea. That being said, it can be a valuable source of background information, and attorneys and buyers should be hitting the search button as early in the deal as possible.

If that hotel on West 37 Street ever gets built, I wonder if the new #14B owners will still enjoy both spectacular sunsets and colorful and iconic buildings. And I really hope that they will not be surprised if that hotel happens.

© Sandy Mattingly 2012