644 Broadway loved that first bidder: sells within 15 weeks, contract in 6, 1 price, 14% discount

[update: apologies for the weird formatting; I think I fixed most of it]

yes, "museum quality" around $1,000/ft, but there’s a larger point, + 2 bromides
When I hit the Manhattan loft #2E at 644 Broadway on April 27 (price of ‘museum quality’ in Noho = $1,000/ft / 644 Broadway closes quickly), the focus (and snark) was on the difference between "museum quality" and "triple mint" in broker-babble. (And I had some snark about consistency in sizing.) I did mention the quick deal, and commended the sellers for being negotiable:
 

Following on yesterday’s post about a quick sale at 155 Hudson (how to get cash in 10 weeks / negotiating to close at 155 Hudson Street), I want to re-visit 644 Broadway as #2E is another instance of sellers proving they really wanted to sell.  In contrast to the 10-weeks-all-done experience at 155 Hudson Street (6% drop after 30 days, contract 2 weeks later 13% off that price), the #2E sellers needed only one price to get a contract (also within 6 weeks), by negotiating to ‘only’ a 14% discount.

A tip of the Manhattan Loft Guy hat to these sellers, and to their Corcoran agents Lauren Muss and Michael Orme.

the First Bidder bromide prevails
Agents often tell sellers "your first buyer may be your best" — I certainly have told Manhattan loft sellers that. It is one of those pieces of accepted wisdom (at least among agents) that seems to me both valid and impossible to prove. (We are never likely to get a perfectly matched pair of for-sale lofts to test the hypothesis with.)

Even though I can’t prove it, the logic of The First Bidder Bromide is — to me — compelling. It starts from the premise that there is a pool of potential buyers for a given unit that is (a) limited, (b) ready, and (c) informed.

That pool is the largest and most likely source of a buyer, because other buyers will either dribble onto the market as new buyers and/or are not ready (qualified) and/or have not been paying attention. If the logic holds, that initial pool is the pool a seller wants to attract, by setting an asking price that (as I said in my original post about #2E at 644 Broadway, quoted above) will "attract serious bidders with whom one negotiates the best deal available ".

In the case of #2E that was a two-step process: they set an asking price of $3.995mm that attracted a sufficiently interested buyer that within 40 days they negotiated to a contract at $3.45mm. In the case of

#4N at 155 Hudson (yesterday’s post), they needed the third step of an intermediate price reduction from $2.395mm to $2.25mm to provoke the contract at $1.95mm that closed ten weeks after they started.

if a seller is motivated, and confident

In order for a seller to take advantage of The First Bidder Bromide, the seller must be both really interested in selling, and willing to trust the market response the initial marketing generates. In other words, the seller has to be confident in the agent’s judgment.

Of course, I know nothing about the actual negotiations for either #2E at 644 Broadway or #4N at 155 Hudson Street, but I will use them as examples of what may occur, based on their brief histories. In a scenario like #2E, the sellers were likely to have had only one expression of significant interest between the December 20 launch and the January 30 contract. Given that they ended up nearly 14% off where they started, they were likely to have been

very disappointed at the offer made by the only interested person with real money. But they were very motivated to sell, so they sucked it up and fought for a deal. Perhaps the bid started at $3mm and they essentially split the difference; perhaps it started at $3.3mm and they were only able to force another $145k out of the bidder. Wherever it started, this negotiation could have been a long one. (Many are, these days, as buyers can credibly play the I-have-other-choices card and sellers are loathe to accept deep discounts.)

The #4N 155 Hudson Street scenario implies a different sequence. Based on the price drop followed quickly by a contract, it is likely there was no interest at the original price (no bidding at all, and anemic showings or inquiries). The price drop after 30 days of 6% was modest, but it did the job: it probably generated an offer that was disappointing but the trigger for the sellers to lower their expectations to accept about 20% off their starting point.

In both cases, the sellers must have been peppering their agents with questions, and relying upon the answers and analysis. In both cases, the sellers accepted much less than they had asked for, and possibly much less than they were prepared to accept when they started marketing their lofts. But they came to conclusion that their respective (solitary?) bidders presented their best opportunities to sell, and they capitalized on those opportunities.

While these scenarios seem simple — perhaps even obvious, in retrospect — it does not always work this way. Indeed, these days I suspect it does not often work this way (which is one reason I highlight these quickly-discounted-sales when I notice them). The opposite end of the spectrum from The First Bidder Bromide is inhabited by seller who follow the It Only Takes One Bromide. The "logic" here is that only one person needs to buy the loft for the seller to be happy, so the seller is tempted to wait for that buyer to show up. That seller may start at a price little different from #2E and #4N, but because they are waiting for One Buyer rather than responding to the First Bidder they are (typically) not flexible at the time it would do the most good.

There is another bromide for that. (This one is easier to prove.)

if you (over) think that "it only takes one"
Chasing The Market Down, is the timely bromide for sellers who set prices like the #2E and #4N sellers, but who don’t trust the market data (or their agents) the way the successful early negotiators did. One could say, as I did on May 3, that such "sellers" are a day late and a dollar short (recidivist edition). #4N shows that a seller can strike a quick deal even starting at a price 20% above the market. But the key is to respond when The Market ignores you and to strike when The Market offers a positive response. In The Market of the last 12 months (and the next ?? months) not being flexible and responsive can be fatal.