motivated Chelsea House seller holds firm after 10 prices in 4 months

every Manhattan loft seller has a limit

One way to determine if an-owner-with-a-listing really really really wants to be a “seller” is the degree to which the seller owner is willing to drop the asking price in response to market indifference. By that measure, the woman who just sold the “1,250 sq ft” Manhattan loft #7F at 130 West 19 Street (Chelsea House) was a very motivated owner, as she averaged one price change every two weeks in the 19 weeks it took to find her buyers. Many of these drops were borderline trivial, but she went from $2.25mm to $1.825mm in those 19 weeks, or a 19% drop overall. Her first two drops lopped a cool quarter-million off the ask, not that they did her any good.

The last drop seems to have established a matter of principle for the seller, as she refused to negotiate even a dollar off her final ask of $1.825mm, probably to the surprise and consternation of her buyers. I wasn’t going to table the whole history, but the momentum at the end of her campaign, and her apparent resistance point, is easier to see in numbers than in prose:

Mar 27 new to market $2.25mm
April 13 $2.125mm
May 6 $1.999mm
May 28 $1.985mm
June 10 $1.975mm
June 16 $1.9mm
June 27 $1.875mm
July 3 $1.85mm
July 9 $1.845mm
July 14 $1.825mm
Aug 8 contract
Sept 11 sold $1.825mm

Okay … more words … see those last six weeks? $1.875mm for 6 days, $1.85mm for 6 days, then $1.845mm (a truly trivial change, indicative of some pain, no?) for 5 days, then $1.825mm and she was done. Holding there, against all apparent likelihood for the 25 days it took to get a contract at the asking price. Wow….

an excellent bit of babbling

The broker babble is properly enthusiastic and very specific, largely telling the story of a well done (but not super deluxe) ground-up new development, circa 2006. There’s ample opportunity to drop proper proper names and materials, but these two snippets are my favorites: “motivated seller!” (you bet!!); and

This unit does NOT have great views but gets beautiful Southern light and is very quiet.

That first bit was unnecessary for anyone with access to the price history, but it was certainly true. That last bit is a graceful way to manage expectations, preventing folks from being disappointed when they see it in real life. I don’t understand why more agents don’t deal with potential negatives as directly as this agent did, but there’s a lot I don’t understand about the Residential Sales Division of the Manhattan Real Estate Industrial Complex….

obviously, an aggressive pricing strategy, that ‘worked’ only eventually

There’s one common approach by agents who work with an-owner-with-a-listing when that OWAL has an inflated sense of the value of her loft: we’ll try at ‘your’ price for a short while, but I [agent] need you [OWAL] to agree now that we’ll drop the price aggressively and quickly if (as I [agent] suspect) The Market doesn’t bite. The marketing history of #7F is perfectly consistent with that scenario.

Here’s why a professional agent might insist on that kind of understanding with an OWAL who insisted on coming to market with a number starting with a “2” at the end of March this year: the “1,388 sq ft” down-the-hall neighboring Chelsea House loft #7D had just tried that. And failed:

Feb 13 new to market $2.25mm
Mar 6 $2.095mm
Mar 20 contract
May 13 sold $1.999mmm

Chances are very good that the #7F listing agent was given a pretty good idea of the contract price by the #7D listing agent (or the owners spoke directly), so that it is very likely that the #7F listing agent strongly suspected that “2” wasn’t going to fly. One could argue (the #7F OWAL probably argued) that the ‘extra’ space in #7D is wasted, and that buyers might prefer the (slightly smaller) floor plan of #7F over that of #7D. The argument is reasonable, but turned out not to predict how The Market would respond to #7F after just having generated a buyer for #7D at $1.999mm.

It can be hard to swim upstream.

your price doesn’t exist in a vacuum

There’s another common approach by agents who work with an-owner-with-a-listing when that OWAL has an inflated sense of the value of her loft: if you [the OWAL] come out too high, you run the risk of not only not selling your loft, but helping to sell a neighbor’s loft. That may be what happened with the Chelsea House neighbor in the “1,100 sq ft” loft #8B. When dealing with lofts of this scale in similar shape, the “150 sq ft” difference between #7F should be significant.

this proposed #7F floor plan is a rational 2BR set-up, with a reasonably sized second BR + surviving LR

 

#8B: this is a tough layout on which to squeeze a second bedroom: the new room can’t block the MBR door

 

For a buyer who does not need to plan a second bedroom, the two lofts are roughly of equal utility, such that the relative costs are very relevant to a buyer who considers them apples-to-apples. (A buyer who really wanted a second bedroom should much prefer #7F to #8B, as the above floor plans should easily illustrate.) The smaller loft came out at $1.78mm when #7F was asking $2.125mm and I will bet you a quarter that the reason that #7F dropped to $1.999mm the next day was because #8B was seen as a threat. I can’t tell when #8B went to the full-ask contract that closed on July 2, even in our listings system (sheesh … REBNY is supposed to have rules about such information being shared on a timely and accurate basis), but chances are that it was about halfway between the beginning (May 5) and end (July 2) of the process. If I am right about that (reasonable) assumption, any part of the buyer pool for #8B that was also interested in #7F would have seen them as about $200,000 apart. That’s a dramatic difference at this scale.

Loft #8B cleared at $1,618/ft on July 2 The larger #7F at that same rate would have been worth just over $2mm (a) in a rational and efficient market, (b) more or less. Do you see why I think that the #7F prices got #8B sold?

And do you see why the #7F OWAL got stubborn in the low $1.8s? That last asking price was $1,460/ft … a 10% discount to #8B on a dollar-per-foot basis. Ouch.

Very. Big. Ouch.

the obvious disclaimer…

… is that I don’t know what any of the selling agents and sellers were thinking (or saying to each other) and I don’t know what buyers actually considered in making the individual but interrelated decisions to buy #7D for $1.999mm, #8B for $1.78mm, and #7F for (only) $1.825mm.

If what I described above is not what actually motivated and informed the various individual actors, I think it is fair to use these 3 sales in the same building over a short period of recent history as illustrative of how The Market operates in real life.

From the perspective of a fan of an efficient or rational market, the #7D sale determined strongly predicted that #7F would not sell above $2mm, and that #7F should sell for more than $45,000 above #8B. Those fans were right 50% of the time. The #7F seller? O for 2, in a punishing market.

I just hope she did it with her eyes open.

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