104 Charlton Street loft takes 18% hit to close

mind the gap
Those of us ‘brave’ enough to second-guess pricing strategy from the safety of past sales data for Manhattan lofts are intrigued by the history of a loft like #6W at 104 Charlton Street. It started at $2.55mm and dropped twice in 3 months (to $2.375mm) before finding a deal after another 3 months well off that last price. True to their word (the listing description notes [begs?] “[p]lease bring offers and all would be considered”), the clearing price of $1.95mm on February 14 was a hit of 18%. One wonders where that negotiation started….

Obviously, they were overly enthusiastic about the price asked for this “2,185 sq ft” loft with original maple floors and new double casement windows. The broker babble has the ring of a loft that has had some upgrades in its life, but has not been renovated in a while. The kitchen has “top end appliances and a custom stainless steel island”, the baths “are outfitted with Waterworks fixtures and honed Italian marble”, and there’s a nook-filled built-in near the entry. Otherwise, there is the pregnant hint that there are “over 2000 s.f. to leave as is or create your own home”. (What’s to create?? With a classic Long-and-Narrow footprint and plumbing on both long sides, the floor plan is logical and efficient; even creating additional interior rooms would be a challenge at these proportions.)

The price history reflects a desire to sell: the original price of $2.55mm on June 2, 2010 was knocked back by July 19 to $2.475mm and then to $2.375mm soon after the summer (September 17). You don’t often see a listing description with that request (“[p]lease bring offers and all would be considered”), which is one way to signal a willingness to negotiate. Another is to continue to drop the price. Having chosen the former course, the second guesser in me wonders if the eventual buyer had an easier time of it because the others who recognized that the loft was over-priced were unwilling even to make a bid.

taking the wrong lesson from the neighbor’s sale
104 Charlton Street sits in a micro-nabe that is hard to find comps for, being in that part of “Soho’s west side” that is not really part of Soho (except on a map), and hard by the UPS superblock. The last sale in the building was pretty fresh when #6W came to market last June, but proved to have been a difficult comp to learn from.

The market conditions through which #3E eventually sold a year ago were much more challenging than those facing #6W in June. #3E came out in the depths of the nuclear winter (on February 27, 2009) at a price the market did not like, $2.888mm. With “2,385 sq ft”, #3E was marketed as ‘done’, with none of this “create your own home” business. With the advantage of windows on the east long wall, this Long-and-Narrow footprint easily supports 3 real bedrooms, and the level of finishes here were very enthusiastically babbled (from proper proper names and materials, to a built-in sound and huge video screen, the gushing supports the claim that this loft “was remodeled with amazing care and thought”).

Despite coming out too high in a terribly thin market, #3E eventually sold at $2.4mm ($1,006/ft) after a mild discount (4%) off the second of two price drops. From coming out on February 27, 2009 to finding a contract by December 6, 2009, #3E was exposed to the market for a long time.

Apparently, the #6W sellers saw that sale at $1,006/ft as a base from which to adjust up to reflect the stronger and deeper market in June 2010, even though #3E was done and #6W invited a buyer to “create your own home”. How else to explain the original #6W asking price of $1,167/ft? Even #6W’s last asking price of $1,087/ft sought a significant premium over #3E … a premium the market rejected.

hindsight, that female dog
As I said up top, second-guessing Manhattan loft pricing strategies is a safe hobby. #6W over-corrected for a deeper market in June, and under-appreciated the difference in value for #3E’s better condition.

I am tempted to suggest that #6W would have done better than $1.95mm had it come out at exactly #3E’s clearing price-per-foot instead of starting at a 16% premium. That would have opened #6W at $2.2mm ($2,191,555, for the anal among you) in June. Any negotiation could start from the sellers saying yes, #3E was in better condition but in a weaker market, so let’s start at the same place it ended. There’s no guarantee that would have netted more than $1.95mm, but it would have encouraged more interest.

Fact is, there were more buyers out in Summer 2010 than a year earlier. Fact is, #3E sold at $1,006/ft despite having been marketed from one end of 2009 to the other, and despite starting 15% too high. Fact is, #3E with 3 bedrooms and side windows has greater utility than #6W with that max of 2 bedrooms and windows only front and back.

Fact is, the negotiation over #6W ended up at a discount from ask of 18%. A reasonable guess is that it started at 25% or higher, or an opening bid of about $1.8mm. You can’t prove it either, but I am convinced a lower ask would have netted a higher trade. Imagine the frustration of having to fight so hard after finally getting an offer.

Selling lofts is not for the faint-hearted.

© Sandy Mattingly 2011