courage punished, not rewarded, as 22 West 26 Street closes off 36% from first ask

4 price drops, 49 weeks, blood on the tracks
The Manhattan loft #7H at 22 West 26 Street closed on February 2 at $1.215mm after a rather long slog and a pointed slap from The Market: it was first offered on February 27, 2009 at $1.895mm. There’s a pretty good Manhattan Loft Guy back story on this sale, as I hit it twice (anonymously) during the campaign.

One of my favorite Manhattan Loft Guy posts of 2009 (what was yours??) was the March 25, 2009 am I a coward? assessing + bearing risk in a risky world, in which I addressed three then-new-to-market Manhattan lofts that were priced (to me) well above where The Market was then. It is a wordy post (even by MLG standards!) but here is the thrust:

I hit the three lofts again on August 21, 2009, risk, revisited / I am still a coward, but the ‘brave’ did not sell (yet), where I noted that one of the three had already fled the market, one had a series of price drops, and one had been more stubborn. In each case, I said in the original post that there was (a) a "fairly timely and extensive sales history, (b) each was "offered through experienced and professional agents" and (c) "Yes, [each was] also priced well above where I think The Market is today".

one of three, so far
The only one of these three lofts to close in the last year was #7H at 22 West 26 Street, said to be "1,910 sq ft" (in an unusual scissor-duplex arrangement) and had not been upgraded in quite a while (the seller may have been an original owner). At the time this seller was brave enough to ask nearly $1,000/ft last February, the four prior sales were all in 2007, in the run-up to The Top of The Market. One was #5C at $1,067/ft, with a "stunning kitchen’ and "spa-like" baths; one was #12B (aka PHB) at $1,043/ft, with a recent gut renovation and phenomenal light; one was #2B at $844/ft, which was not only a spectacular minimalist gut build-out but which was my original One Bed Wonder; the fourth was #2A at $750/ft, which was in much better shape, with better quality finishes than #7H.

Yet the #7H seller and his experienced agents selected an initial price of $1.895mm ($992/ft) a year after The Top of The Market.

In that March 25, 2009 post I said

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.

I wondered whether the three sellers in my original post had a back-up plan in the event that The Market did not love their lofts they way they did. As we will see, #7H had such a plan (to a degree) but that it did not work (to a degree, and for a long time). I said in March:

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.

Plan B, in action
The asking price for #7H followed this Plan B almost exactly, but only for four months. These drops would have been more painful if they were unanticipated; less painful if the February Plan A ($1.895mm) had the serial price drop Plan B in mind, if necessary. It looks as though they lost their nerve, or took the Summer off, as there were no more price drops until a small one in the Fall, which lead to a still-significant haircut to reach the contract that closed two weeks ago.

Remember those 2007 closed sales in the building? The #7H clearing price of $636/ft does not look good in that array:

bravery is not blind, but can be expensive
Again, I assume everyone had their eyes open here, meaning that the agents informed the seller about The Market and the seller chose this approach. (I know these agents.) That’s why I call them brave: they saw the risk and rolled the dice.

You can’t help but wonder where this would have cleared had they started in February 2009 at $1.6mm, dropped to $1.5mm in March (if necessary), and to $1.45mm in April (again, if necessary). You have to think that The Market penalized #7H for being so far off at the start and still around 9 months later.

These folks are all more brave than I am.

© Sandy Mattingly 2010