bass ackwards at 150 Nassau Street?? as lofts are sold low + bought high, with an agency twist
(doesn’t work in my spell check, either)
When I observed that the buyer of the Manhattan loft #9E at 150 Nassau Street on November 3 has a notice address of #9A at 150 Nassau Street I began to wonder. First I wondered if the “A” line and “E” line could be combined, but they can’t be (without buying other lofts). When I noticed that this #9E buyer on November 3 was the #9A seller on October 27 (note: 2 different links there) I really began to wonder (and not about where he slept during that week).
Why trade a “668 sq ft” loft at $585,000 for “606 sq ft” loft for $618,000? Who sells low to buy high??
same condition, same floor
This U-shaped former office building was converted to condos in 2003, and these two units look to be in their original as-converted condition. The Guy bought #9A in the conversion, paying about $370,000 in early 2003 (StreetEasy has the prior sale at $370,500 on March 31, 2003; Property Shark has it as $370,009 on May 6. 2003; why can’t we all just get along??). The folks down the hall from whom The Guy just bought #9E also were original purchasers in the conversion, but they paid $486,720 on May 23, 2003 (Property Shark and StreetEasy agree!).
does The Guy suffer from Seasonal Affective Disorder?
There are some small hints in the recent listing descriptions and photos, and that one very large hint in the 2003 sales. Seven years ago, The Market (and the sponsor) valued the smaller #9E at $803/ft and the larger #9A at $555/ft … a huge spread for two apparently similar units (45%).
Note the careful descriptions of light and view in the two recent listings: the smaller north-facing #9E claims “amazing light and open views over City Hall Park and beyond”, while the larger #9A has “a west-facing living room and a private, east-facing bedroom”, with a living room photo that clearly shows a beautiful building facade not too far away. Since the building faces City Hall Park to the west (i.e., there are no nearby neighbors to the west) that “beautiful building facade” in the #9A living room is the other side of the “U”. A west-facing 9th floor unit in a 23-story building with a U-shaped light well is not going to get any direct sunlight, is it?
The Guy would have gotten no direct sunlight in his old #9A, while he has moved to “amazing light and open views over City Hall Park and beyond” in his new #9E. The new views and light cost him $618,000 (with associated condo closing costs, with a mortgage, of about $15,000 – $20,000) compared to the $585,000 he got for selling #9A (with associated transfer taxes and a brokerage commission of about $45,000).
Yes, the transaction costs were likely as much as $65,000, and he paid $33,000 more than he sold for. But he ended up with a small loft (with “amazing light and open views over City Hall Park and beyond”) that was worth $126,000 more in 2003 than the small loft he sold to get it.
agency disclosures to make your head spin (for agency aficionados only)
The two sales seem both to have been arm’s length transactions, with both small lofts having been exposed to the market through the same agents before deals were struck. While one buyer is also one seller, the other sellers and the other buyer appear to be unrelated to him (or to each other).
The Guy brought his (old) #9A to market on May 22, before finding a contract by July 17. He signed a contract to buy #9E by July 7, after that unit had been offered for sale since May 7. He must have had a good idea on July 7 that he would soon sign a contract to sell on July 17.
Follow me into the rabbit hole of New York State agency disclosures for a while….
I am going to assume that the agents who represented both #9A and #9E for sale did everything right. Having secured the exclusive listing agreement to represent the #9E sale on May 7, these agents owed full fiduciary obligations to those sellers. Absent a written agreement to the contrary, they could not also “represent” a potential buyer of #9E. Yet they also formed a fiduciary relationship with The Guy as the seller of #9A by May 22, owing him (among other things) the duty of confidentiality, as they were likely to learn things about his financial condition, goals, and timing that no counter-party should have been entitled to know or to use against him.
Presumably there was some very fancy dancing here, in May, June and July. The agents were trying to get the best possible price from the most qualified buyer for both #9E and #9A, and at some point in June or July the #9A seller (a full fiduciary client) turned into a potential buyer of #9E, with a personal position as that potential buyer directly adverse to the personal position of the #9E sellers.
There must be a way to do this right, to fully disclose all potential problems and conflicts, to secure knowing waivers. Perhaps there is a way that has not occurred to me, but it seems that the #9E sellers had to have surrendered “client” (full fiduciary) status, as this entire scenario makes it unlikely that the #9E buyer used a different agent as a buyer than he used as the #9A seller. And the #9E buyer as buyer would have given up the opportunity to be represented in the #9E purchase by a full fiduciary agent.
Unless I am missing something, the agents in the #9E deal would have been mere messengers of offers and counters between the sellers and the eventual buyer. They should also have been following the instructions of the #9E sellers to continue to market #9E until a contract was fully signed.
They should not have been offering any advice to either the #9E sellers or the eventual #9E buyer about that negotiation, or interpreting what a proposal might mean about final positions, including specifically being prohibited form sharing with the #9E sellers anything about the potential buyer’s progress in selling #9A unless the #9A owner specifically agreed that it was in his interest to do so.
Fancy dancing indeed!
(My major treatise on agency disclosures and a new law requiring certain paperwork in all sales was my September 1, new real estate agency law disclosures coming to Manhattan in 2011. That post will walk you through these general issues at great length.)
© Sandy Mattingly 2010