funny business, as 22 West 26 Street loft sells at 17% discount to first ask

not funny ha-ha, funny peculiar
That the recent sale of the “1,910 sq ft” duplex loft #9H at 22 West 26 Street is dear to the Manhattan Loft Guy heart is obvious to anyone who has looked at this datum of the full recent listing history. That nugget is a strangely spare listing (no pix, no floor plan) from an agent you would think would know better than to market a loft without such basic details. The back story on that crummy campaign amounts to “guilty, with an explanation”, involving a rarely effective but (in this case) personally painful detail of the agreement among Real Estate Board of New York member firms about how to allocate fees.

Rise your hand if you know how the Six Names List works … (waiting)…. Seeing no hands, I will explain.

A standard term in the exclusive listing agreement of REBNY member firms provides that at the expiration of an exclusive listing agreement the firm with the expiring listing has 3 days to send the seller a list with up to 6 names on it; in the even that the seller signs a contract within 90 days with any buyer on that list the fee detailed in that (now expired) listing agreement is due to that firm when the transaction closes. As between REBNY member firms, if a new firm takes a new exclusive agreement that new firm’s right to be paid a fee is subject to the former firm’s Six Names rights. The idea, obviously, is to reward the old firm if the new deal is reached through that firm’s efforts, subject to limitations on scope (only 6 ‘protected’ buyers) and duration (contract signed within 90 days).

In practice, there can be a little awkwardness in relations among the successive exclusive listing firms if there are truly live potential buyers on the list. In practice, this provision rarely results in a fee being paid to the former firm, in my experience. Few old buyers turn into contract signers, and the pace of these things often dictates a time frame that (however unfairly) takes the contract out longer than three months after the old exclusive has expired.

With the background of that self-regulatory system in place by agreement of REBNY firms, here is an annotated* listing history for loft #9H:

Here’s the fun part: on the very day that the new listing agreement began an offer was made by a buyer who saw the loft during the BHS exclusive listing period, which the sellers (having waited so long for anyone to bid) accepted the next day. So that (unfortunate) Corcoran agent with the new listing began to show the loft with an accepted offer pending. At the suggestion of the sellers, the agent did not go to the expense of getting new photos taken, but held open houses and made appointments to see if a competing bid would surface before a fully negotiated contract were signed (it always being in the sellers’ interest to continue to encourage new buyer interest to (a) possibly generate a higher price and (b) in any event, to keep the buyer motivated to sign a contract promptly).

In this case, the contract was finally signed on October 6, beginning a time when the Corcoran listing was officially “temporarily off the market”, to be revived if that contract failed to close, and the BHS listing being “contract signed”. Deal closed on November 18, with sellers being very happy and the agreed-upon fee paid to BHS (and any cooperating brokerage that brought the buyer). Corcoran did not earn a fee, as Corcoran did not procure a buyer unprotected by a Six Names List. End of (that) story. (Sigh.)

is that a scissor in your duplex?
I cannot think of another Manhattan loft building with the type of floor plans of 22 West 26 Street. Lower floors have two units each, one in front and one in back; other than one huge combination (3 lofts to 1), the upper floors have duplexes with part of the space facing the front and part facing the back. In other words, the two levels of each duplex loft are not on top of each other, but sit on top of other lofts, as with the #9H floor plan, with the public space on the 9th floor facing south and the bedroom level on the 8th floor facing north.

The challenge with this footprint is not that it is duplexed, or scissored, but that it is awkwardly proportioned. Note the two “bedrooms” on the lower level: in fact, they are separated from each other by french doors, with the “master” being relatively small and entered either through the second bedroom or through the closet.

This array worked for these sellers, because the 2nd bedroom is an occasional guest room so the open french doors make the “master” much less claustrophobic. (Contrast that floor plan with that of #7H, where the entire lower level was a single bedroom (and, in fact, a small studio for a designer). Now note the alternative floor plan proposed for #9H: without suggesting changing the lower level, the alternative shows that an additional bedroom can be added to the upper level, at the formidable cost of moving the kitchen one window to the south.

For a buyer wanting two real bedrooms (proportionate to what you would expect in a loft of “1,910 sq ft”), this floor plan is very challenging. Add to this the fact that the upper level has only a half-bath and that (in my opinion) it is terribly difficult to expand it into a to-code full bath, there is more plumbing work to be done upstairs.

I will be curious to learn what the new buyers do to #9H. It really works best as a One Bed Wonder (with just the french doors separating the two “bedrooms” currently, it arguably is already a One Bed Wonder). The #9H kitchen was updated once in the last 20+ years (not fully renovated, just updated). Many buyers would plan a new kitchen, which would make it easier to slide the new kitchen south and install a second bedroom in that first window upstairs. Then you would either squeeze full bath fixtures into the half-bath space or make that half-bath a closet and find the stacks to put a full public bath on the upper floor, outside the (new) bedroom.

challenges are expensive, all the way around
The fact that the #9H footprint poses so many significant challenges thins the buyer pool, as this “1,910 sq ft” space just does not have the utility of most similar sized lofts, at least without substantial renovation expense. A thin buyer pool, of course, should reduce the market value of a loft. Not to mention, that buyers who are interested are doing the Reno Math and (likely) reducing their possible bids accordingly.

All of which is consistent with the difficulty sellers had finding the right price and with the eventual clearing price being $832/ft, in the bottom 10% of 168 downtown Manhattan lofts that have sold since August 1 (not all of the lofts on the Master List of Manhattan Lofts Sold Since November 2008 have size values, though nearly all do).

To take just two examples from blog pasts in the last few weeks, the “1,763 sq ft” loft that I hit in my December 8, another loft sale at 116 West 14 Street shows that TLC is cheaper than you’d think, is in no better condition than #9H and is smaller, but has significantly greater (and more easily accessible) utility. That loft, on oh-so-busy 14th Street, closed at $1,007/ft. And the “1,800 sq ft” loft that I hit in my November 18, high floor low ceiling loft at 25 West 15 Street closes on 2nd contract, 2nd price, is similar, with low ceilings. That loft closed at $928/ft.

paging Rik Smits
Add #9H to the lofts I hit in my November 21, cop loft sells at 240 Centre Street with challenging layout, off 46% from very first ask, and in my November 16, O’Neill loft at 655 Sixth Avenue closes resells at 21% loss over 2007. Lofts that play small, and pay a price for that.

consolation is real, but small
It is probably unseemly (if not ridiculous) to brag about professional failures, but indulge me for a moment. I pitched the #9H listing early in the year, losing the exclusive to the BHS team that has sold before in the building, more recently than I have. My (small) consolation is that the sellers acknowledged, when they called me to talk about taking over the listing when the BHS period was about to expire, that I originally suggested an asking price “no higher than $1.7mm”.

Note that (a) they went with the agents who suggested a higher price, as sellers often do (sometimes successfully), and (b) that the fourth ask of $1.695mm is the one that (finally!) generated a successful bid. In fact, the sellers told me that it was the first bid received. Sometimes, being right is its own reward. It certainly earned me no money in this case.

© Sandy Mattingly 2011