loft at 27 N. Moore Street sells a tad low after public auction

a difficult data point as a comp
My first thought on seeing that the notorious “2,300 sq ft” Manhattan loft #3C at 27 N. Moore Street (the Ice House; not the other [first] Ice House) has closed after that public auction was as stated in my headline: that the recorded price of $3.15mm is a bit low. After all, the same loft one floor below (#2C) sold for $3.3mm on September 27, 2010. On reflection, it gets more complicated, and I am thinking hard about putting this into the Master List of Manhattan Lofts Sold Since November 2008 as a sale at $3.465mm.

That will take some ‘splainin, but first the loft and the sale….

probably comparable in condition to #2C
The broker babble and photos for loft #2C in 2010 are fairly restrained, with the big bragging reserved for the kitchen (“granite counters, cherry cabinets and stainless steel appliances including a Viking range and Subzero fridge”), and even that is modest bragging. The only description of #3C that I see is from a rental listing in 2008, which has this unfortunate Rental Speak: “Modern Ktche & Baths … Custom Doors, 6 plank oak wood floors, solar protected shades”. Kinda sorta sounds like #2C, doesn’t it?

not a real market transaction
Loft #3C was exposed to the full market only in the sense that there were public notices about a public auction ot be held on June 28, which was picked up in sites such as master-auction-blogger Malcolm Carter  and then Curbed on June 11. (By the way, I can see the past sales data that Curbed notes [prior sale in 1999 at $774,000] but not that presented by Carter.)

Auctions are not for the faint-hearted, of course. And, as stated in Malcolm’s post, require a 10% certified check (the minimum here was $3mm, so $300,000) in order to participate, with the winner having a short time to sign the contract and close, with no assurance there would be enough time to get a mortgage. (In this case, the sale was August 15, 48 days after the auction if the auction was actually held on June 28.)

Auctions work for the benefit of sellers like the “owner’s” bank. which was owed only $1.9mm on loft #3C. With a $3mm minimum set (coincidence or not, 90% of the last comparable sale; #2C), all it takes, as they say, is one, to conclude the auction, pay the bank lien, pay the sales fee, and return a hefty amount to the “owner’s” estate. And with more than one bidder, the estate (and the auctioneer) stand to make more. In this case, there must have been at least two bidders, ending at $3.15mm.

While a lot of $3mm lofts these days seem to sell to cash buyers, that is not true of all such deals. Even some people who can pay cash prefer to borrow at least part of the sales price, even at this price range. None of those people would participate in an auction like that for #3C.

The timing is also very specific, and limited. Only buyers ready to commit to buying on June 28 would participate, not those who might come across the listing for #3C in July or August or later, if there were a conventional marketing campaign for #3C starting in June but continuing until a deal was reached.

For all these reasons, Streeteasy puts a little bug at the bottom of building pages like this one: “Non-market sales (sales between related parties, auctions, foreclosures and income restricted sales) are excluded from building statistics”. I assume that the assumption is that such sales should be excluded because they are likely to be below market sales, or, at least, not obviously verifiable as market-level sales.

exceptions are messy, but sometimes worth it
But in this case, we have the #2C sale at $3.3mm from September 2010. [Update 9.7.12: note Malcolm’s comment below, correcting my factual errors, which I will note in the etxt at vaious points, then sum up at the end, rather than use the (in this case, cumbersome) strike-through and edit.] And we have the fact that the #3C buyer actually paid the 10% sales fee on top of the winning bid of $3.15mm, or $3.465mm in total. [wrong; only the $3.15mm].

That’s not what the deed record says, of course, but I wonder if it should. If you are an ACRIS nerd you will remember that at some point the City started recording new development sales prices to include the city and state transfer taxes if the buyer paid them (which is why you see successful new development condo sales recorded at above asking prices, 1.825% above for a full price deal). The city’s theory is that the full consideration actually paid by the buyer was the contract price plus the fees. I get it.

By the same logic, auction sale prices should be recorded at 110% (assuming that 10% is the standard; can anyone confirm? Malcolm? Buehler?). [per Malcolm’s comment: not for Public Auctions]

Long story, not so much short as finally ended: I am going to put this sale on the Master List at all, and at $3.465mm [nope: at $3.15mm], because (a) it seems like a market-level sale instead of something to be ignored, like an inter-family transfer, and (b) at that price rather than the deed record price to reflect what the buyer paid.

If it can be used as a comp at all, $3.15mm is the wrong [right!] price. People who look to the this blog or to the Master List as an aid in comp analysis will either find this post or note the discrepancy between recorded price and the MLG value. At that future time, I would listen to an argument that the sales around $1,600/ft in the building between the #2C sale and the #3C auction (some of which I at least touched on, as below) are more relevant than the #2C sale, but I am not going to get that granular now.

[with thanks to Malcolm, I am back to considering this a (slightly, at least) below market sale, not only 5% below #2C in September 2010, but well below the intervening building sales; an auction really does shrink the buyer pool.]

(Really ending now …) These are the past Manhattan Loft Guy posts about the building:

• October 24, 2011, turn of the century Tribeca at $1,600/ft, again at 27 N. Moore Street
• May 26, 2010, 27 N. Moore St + 71 Warren St party like its 1999 (and sell)

© Sandy Mattingly 2012