what is your loft worth after a major FIRE? 12 East 12 Street loft goes for more than you'd think

20% off peak pricing??
The Manhattan loft 12 East 12 Street #7NE sold on April 8, 2008, almost exactly at The Peak of the overall Manhattan real estate market, and then again on September 24. Conventional wisdom might be that the very recent sale would be about 15% off peak pricing, which looks roughly predictive of the actual sale prices:

April 8, 2008 $999,000
September 24, 2010 $800,000

But here’s the kicker: between 2008 and 2010 this loft was totally destroyed by a fire, and just sold in that condition. Based strictly on overall market trends, there is almost no discount for this loft having been destroyed by fire. That’s weird.

not damaged, but destroyed
The loft was not marketed as being in need of repair; rather, it was “in need of a total gut renovation due to a fire” when it was offered for $850,000 on April 22.

Another bit of conventional wisdom is that in the current market and with prevailing bank lending limitations, two kinds of listings have sufficiently reduced markets that fewer qualified buyers mean longer marketing time and less competition (i.e., lower prices): (1) lofts needing gut renovations (generally to be paid for in cash), and (2) purchases that can’t be financed. This loft? Check (you already know it is a gut job). And check (“Cash buyers only!”).

Notwithstanding two significant market deficits, this burnt offering found a contract within 6 weeks (June 14) at a mere $50,000 discount from the $850,00 asking price (a reasonable 6%) … fairly flying off the shelf. That’s also weird.

© Sandy Mattingly 2010


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