provocative price does its job: generates a feeding frenzy
Let’s start (uncharacteristically) with the main point: it’s not that the “2,500 sq ft” Manhattan loft on the 7th floor at 710 Broadway sold quickly for a lot of money, it’s that this Noho beauty sold for a great deal more than the ask. To market on July 11 at $2.15mm and in contract by August 15 at $2.8mm (closed on October 21, but the action was in Summer). As you know from the headline, or because you have a head for simple fractions, that’s 30% above the ask. Unlike the Chelsea loft in my November 20 post, lovely … but Chelsea loft at 236 West 26 Street sells TWENTY-FOUR PERCENT above ask, this one is easy to understand; at least in result.
There’s a lot to chew on with this lovely loft and its sale, but first let me tell you a story….
put yourself in this Manhattan loft buyer’s shoes … what would you do?
You know that aphorism about the bird-in-the-hand, and what it is worth? Imagine that you have been looking for a very loft-y downtown Manhattan loft, that you are somewhat flexible about neighborhood, that you have to have 2 bedrooms and that you really want at least 1,500 sq ft. Of course, you don’t have an unlimited budget (no one does) but imagine that you have the resources to react to constantly being disappointed by the available inventory to push your budget above $2mm. Imagine that you are lucky enough to work with an agent like Manhattan Loft Guy (if there is such an agent 😉 ) so that you have a very high level of confidence that you are well advised about The Market. After some months of not finding the loft, you drive a hard bargain for a space that meets nearly all of your criteria, with character, high ceilings, size, in decent (if not mint) condition. It’s been months of looking, involving some dozens of lofts seen in person between $1.5mm and $2.5mm, so you are elated to have found The Right Loft At The Right Price.
Then imagine that a few days into due diligence, a new listing hits that seems to be superior to TRLATRP in every way (a little bigger, a little more finished, a little more interesting) and is nearby. And is cheaper.
Of course you are inclined to panic! Of course you wonder if that hard bargain you made was tilted in favor of the TRLATRP seller. Perhaps you even wonder (gasp) if that very high level of confidence that you are well advised about The Market was misplaced.
That lucky-to-work-with-agent begs his way into the very first showing opportunity for the new listing, as your due diligence clock on TRLATRP continues to tick, and that agent and your lawyer are telling you that you have only a few days (at most) in which to sign the TRLATRP contract or risk losing that opportunity. You visit the new listing, and it looks in real life as it is presented on the web: a little bigger, a little more finished, a little more interesting than TRLATRP. And cheaper.
Of course you want to own the new listing instead of TRLATRP. But only if it can actually be purchased at the right price.
So you have the conversation with that agent about the bird-in-the-hand, and what it is worth, and you start thinking about exactly what risk of losing the TRLATRP you are willing to run in order to get what chance of owning the new listing at the right price.
First things, first: you immediately bid above the ask for the new listing (before anyone else has even seen the loft). If there’s any chance of this working out, you have to force the new listing to go quickly, if you have that leverage, so you show your motivation and explain your timing problem (that handy bird).
Stop there, folks. What would you do? How much risk would you run, and how might you assess the likelihood that you could buy the new listing at the right price, at the risk of losing the other place?
Let’s leave you in that state of uncertainty a bit, and return to that new listing, which is (d’oh) the 7th floor loft at 710 Broadway in what is technically Noho but can feel like NYU….
“The loft is attractively priced and will sell quickly.”
No ship, Sherlock. This is not quite true, however, at least not for me: “every element of your fantasy New York loft is found within”. No beams and no columns, so not “every element”; but I quibble. More quibbling …. The floor plan is both backwards (with the bedroom in front, over Broadway) and awkward (I said “the” bedroom because the “study / sleeping area” has no window; the inhabitants of the bedroom and sleep area probably share the first bathroom, otherwise it is borderline cruel to make the sleep area sleeper pass the bathroom immediately outside the sleep area to walk around the corner). I understand the logic of the layout, but I wonder if the new owners won’t erase all the lines and start over:
Still more quibbling …. You’ll not find any bragging about finishes (unless you consider “Viking and Jenn-Air appliances” to be bragging about finishes), for good reason. The beauty of the loft is partly in the bones (11 1/2 foot barrel-vaulted ceilings, massive windows), partly in the scale (a 600 sq ft bedroom and a 900 sq ft living room), but mostly in this number: $2.15mm. The genius of starting so far below market is that the specifics of the loft (all that Manhattan Loft Guy quibbling) are rendered irrelevant. Of course there are ‘issues’, says every informed buyer who ever visited the space … just look at the ask!
I shouldn’t overstate the ‘issues’ (hence, mere quibbling), as the loft as-is is in move-in condition and the layout is very workable for any buyers who don’t need two bedrooms with windows. (Such as my clients.) In fact, that makes it more attractive to some buyers, because the new owners don’t have to renovate, and when they decide to they can do it in stages if their lifestyle and/or financial resources make that a logical approach. (Again, folks with another $750,000 in cash might well do a gut renovation.)
how’s that conundrum going for you?
How much of a risk would you have run to take a shot at owning this 7th floor loft at 710 Broadway, knowing that you might lose the opportunity to buy (the loft formerly known to my clients as) The Right Loft At The Right Price? That’s going to depend on your budget, in part, but also on your assessment of what others in the market will pay for the 7th floor loft, once they are pushed to pay their maximum comfortable price.
In the event, the conundrum was easily (if a bit sadly) resolved for my clients, as the bird in that hand (TRLATRP) had been hard fought to get in hand and they (correctly) predicted that The Market would drive the 7th floor loft beyond the price at which it would still be less expensive than TRLATRP. (In other words, they realized they had little leverage to force the seller into a quick decision to sell to them at a reasonable price.) So they only had to agonize a few days over the possibilities, hardly causing a hiccup in the due diligence and contract term tinkering for TRLATRP.
I don’t think I’ve had a buyer client face this sort of conundrum before, quite so starkly. It was fascinating to watch them walk through it, ultimately coming to what we all agreed was their only logical decision.
In retrospect, the 7th floor at 710 Broadway was not really a competitive listing with TRLATRP, as the relative advantages of the 7th floor loft evaporated at $2.8mm (which was a number beyond which they wanted to pay, anyway). I’m not going to identify TRLATRP so as not to overshare about my clients, but they’ve long since closed on that loft, happily.
A Seller’s Market can be a terrible place to be for a buyer….