the perils in following Manhattan loft deed filings, unhappy family edition
not so much a diversion as a quick hit, this one of a Chelsea loft that did not “sell” as reported
Manhattan Loft Guy blog posts have been pretty infrequent of late (Note To Self …) so in the spirit of doing better I will not post a diversion that has nothing to do with lofts, as is typical for me on weekends. And in the spirit of getting out to today’s sunny crop of Manhattan loft open houses, this one will be short. It is a(nother) warning about the risk in taking deed filings at face value; in this case another easy one.
Even when I am back up to date with my Master List of Manhattan loft closings between $500,000 and $5,000,000 (sheesh … another Note To Self …) you won’t find the recent “sale” reported on StreetEasy of the “1,500 sq ft” Manhattan loft #3W at 40 West 24 Street. It is clearly not an arm’s length (market) transaction. The first hint is the price, $700,000, in a building in which there is no price this low on the StreetEasy building page’s Past Activity tab (going back to 2004). The second hint is that there is no indication the loft was publicly marketed.
The third hint is no mere hint: the “sellers” are a guy and a gal, and the “buyer” is that same guy. In other words, this was a family deal, most likely part of a larger breaking-up-the-family deal.
Without getting into too extensive a comps analysis for a loft in unknown condition that transferred at a clearly non-market value, it is interesting that this couple almost certainly did not arrive at their $700,000 deal from the assumption that the loft was worth $1.4mm. The loft directly above them
just sold a year go in “mint renovation” condition for $1.275mm. A look at those listing photos and the floor plan for the “W” line at this height will tell you why $850/ft is all you get here, even in the new just-down-the-block-from-Eataly Flatiron. The floor plan shows that there are windows only on the south wall, with that doorway hinting that there is a fire escape back there. You’ll also notice that you never see a direct window shot in the listing photos. If you know the area, you know that this coop on the south side of West 24 Street just east of Sixth Avenue is just north of the lovely (and massive) Masonic Temple on 23rd Street. That’s what those south windows “look” at. In other words, being in one of the interior rooms without windows in #4W can hardly be much darker than sitting in front of the windows. Hence, $850/ft for a mint renovation loft of “1,500 sq ft”.
Long story, slightly shorter: as part of a break-up-the-firm negotiation, the guy paid the gal $700,000 to get sole title to the loft. The break-up-the-firm negotiation almost certainly involved other considerations, other assets, other liabilities. Market watchers were fortunate in this case that he didn’t buy her out for a (still non-market) number that was actually much closer to the market (say, $1.1mm). That might look like a market transaction, without being an arm’s length valuation of this loft. And we are especially fortunate that the deed record reveals the names of the “sellers” and “buyer”, making the conclusion obvious. Not all couples break-up-the-firm so publicly; some of these property dispositions hide behind fake names. This one is easy, fans of the The Market. Just keep it in mind the next time you see a deed without a public marketing campaign. The comp you think is a comp might be the result of a break-up-the-firm negotiation that has little to do with the Manhattan residential real estate market.
Put another way, as Sergeant Phil Esterhaus used to put it, let’s be careful out there.