how odd is this loft sale at 107 West 25 Street?

the arm might be a little short
I went back and forth about it, but decided to add the July 7 sale of the Manhattan loft #6C at 107 West 25 Street to the Master List of Manhattan Lofts Sold Since November 2008 even though it was not really publicly marketed and the seller was in distress, two typical indicia of a non-market transaction.

According to both StreetEasy and the inter-firm data-base, this loft went into contract on the same day that it was a new listing (April 30, per our data-base; May 1, per SE, though SE must have some sort of coding error from PruDE for the listing history to show "already sold" rather than "already in contract").

Obviously, there was a ‘soft marketing’ campaign without an official listing, without any description, and without a floor plan or pictures. Not a scenario likely to result in the best price, as there is no exposure to the broadest market. But if you are going to do that, why bother to "list" at all? (Maybe to assure the agent of being paid, but there are other ways to provide for that.)

The "listing" is about as bare bones as you can get:

Opportunity to create a two- or three-bedroom loft of your dreams with this open corner unit in one of Chelsea’s most sought-after buildings.

No floor plan. No interior pix, just one building facade photo and 3 of the common roof deck. The listing does not say, but we have this loft as "1,318 sq ft" in our data-base. Bare bones.

The inter-firm data-base has a tantalizing note in the Broker Remarks field that is absent form the public listing:

pre-foreclosure sale

So what happened with the sale? My best guess is that the seller faced a lot of pressure from his mortgage holder and was considering his options. Going into foreclosure was one (bad) option, listing the loft for sale was another option (not sure why he wouldn’t have done that), and asking his neighbor-the-agent to see what he could get for it was a third option. Presumably, he had a number in mind that (if he got) made it worthwhile to sell and deal with the bank, instead of facing foreclosure down the line. An observer might have said that he needed to sell, but apparently he thought there were other (theoretical?) choices.

hitting the number is not like winning the lottery
As it happened, he reached an agreement with somebody to pay $1.05mm for the coop shares and proprietary lease for #6C, and that was a satisfactory number for him.

There is another mystery: why they would "list" at $1.14mm if they had already reached a deal at $1.05mm? Best I can guess … they were hedging their bets in case the contract did not close (board problems, financing problem for the buyer, whatever) and they had to come back to the public market. Then, they would have a higher asking price to work from and a pre-existing "listing". But that’s just a theory.

I can’t see how big a mortgage is on #6C, but if I am reading Property Shark correctly, the only mortgage was put on when it was purchased in early 2002. Thus, that mortgage had to have been at some lesser amount than the purchase price of $650,000. Of course, there are Eight Million Stories In The Naked City, but this owner had enough trouble paying that mortgage that he was "pre-foreclosure" in April 2010.

what’s going on in this small loft building?
There are 24 units in this circa-1980 residential loft conversion. Unit 6C is the fifth to sell so far this year. I hit #3E on May 25, modesty pays as 107 West 25 street sells quickly, up a fraction since 2004. I hit #5D and #2C on March 7, 107 West 25 Street closes in six figures, tough comp for neighbors, and I hit #5B in my July 15, 2009 post, 107 West 25 Street buyer discerns deal 15% off list, sits in lap of luxury, so that is 6 of 24 lofts that have sold in the last year.

As they say on late-night television, but that’s not all!!! There are at last two more of the Eight Million Stories In The Naked City in this small building, as two units were actually scheduled for foreclosure sales (that never happened) in 2008 and 2006 (per Property Shark).

One day I will do a post about the kind of cash-flow burden that a couple of shareholders in a small coop put on their neighbors, and another post about why there is an advantage to a coop in having a bank mortgage instead of a buyer paying cash, but that day is not today.

24 lofts, now 4 Manhattan Loft Guy posts
Looking back, 107 West 25 Street has provided a lot of grist for the Manhattan Loft Guy mill. As I said in that March 7 post:

This small building now qualifies as a Manhattan Loft Guy fave, as I also hit on January 10, 2008, 107 W 25 goes over ask / back story to NY Times item. That post told the story of #4C and of a different market. #4C is said to be "1,300 sq ft" (including the sleep loft??) and was then newly renovated. Hard to believe that the above-ask October 2007 clearing price of $1.445mm was not the product of juicing on a Barry Bonds scale, given that narrow range of trades (of smaller lofts) more recently. Off the juice, that same loft sold in May 2005 at $1.225mm, still ITAL a hefty premium over the July 2004 price of #3E ($962,680).

circling back
Fascinating as all this history is (about #6C and about 107 West 25 Street) 😉 ITAL I remain conflicted about including this loft in The Master List. Provisionally, I have added two asterisks to this entry on the spreadsheet (unexplained on the spreadsheet, so I hope people read the darn blog). I guess my main excuse ITAL for doing that is that the buyer and seller seem to no connection to each other. So this is a private sale, but not a related party transaction, with the buyer trying to pay as little as possible and the seller trying to sell for as much as possible.

Yet the fact remains that the seller was under duress and this loft was not exposed to the full market. Depending on condition, the sale may or not be consistent with (for example) the sale of #3C on March 18 at $1.2mm. That "1,300 sq ft" loft was sold as a premium property:  "[n]o detail is overlooked in this sunny loft". That presents a stark contrast to the bare bones description of #6C ("1,318 sq ft"): "[o]pportunity to create a two- or three-bedroom loft of your dreams with this open corner unit".

So the difference between #3C in March and #6C in July is just over $100/ft. That seems like a more than reasonable value difference if #6C needs work, as the listing implies. I am going to leave the asterisks, but I feel better about the price for #6C as market-reflective, notwithstanding the stated caveats.(Note the contrast with the October 2007 above-ask sale of #4C at $1.445mm; in a different world, indeed.)

Thanks for sticking with me, through these twists and turns. Your reward is a set of links to other Manhattan Loft Guy posts about distinguishing true market transactions from "sales" at less than arm’s length, starting with my April 27, 48 Bond Street closes up 400% since 2008, but …  in which I observed:

Of course, I have fretted before over the difficulties in interpreting ‘comps’ in a world in which it can be hard to determine what is "arm’s length", particularly after my sabbatical when I had many, many loft closings to enter on the Master List of downtown Manhattan loft sales between $500k and $5mm. For more on the arm’s length conundrum, see:

© Sandy Mattingly 2010

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