6 Remaining m127 Condos Auctioned Off
A: Hat tip to Curbed.com and Malcolm Carter's Blog on this one. All winning bids had a 5% buyers premium and the average sale was $840/sft.
*image from ServiceYouCanTrust.com
From Curbed.com, "m127 Auction Sells Six Luxury Condos in 20 Minutes":
Over 400 hundred people showed up, and in less than 20 minutes, the six remaining units in Cardinal Investments-developed m127, the building creatively named for the city's bus signage, were sold and it was all over.According to the WSJ article, only 100 people were registered to bid on this auction - so that should be your buyer pool for this event. The apartments were originally on the market for "several years" and 5 of the 6 units auctioned off had no preset reserve or contingencies. This proves one thing:
Here's the slate of winning bids, each of which had a 5 percent bidder's premium:
1) Penthouse B: a 2,225 square-foot (with 338 square-foot terrace) 3BR,
2.5BA was originally listed at $3,400,000, got a highest bid of $1,950,000 and with the buyer’s premium comes to $2,047,000. This was the only unit to have a reserve bid, and the developer could not confirm whether it was met.
2) Unit 8: this 1,554 square-foot 2BR, 2BA was originally asking $1,900,000, got a highest bid of $1,350,000, and with the buyer’s premium sold for $1,417,500.
3) Unit 7: this 1,577 square foot 2BR, 2BA was originally asking $1,850,000, got a highest bid of $1,250,000, and with the buyer’s premium sold for $1,312,500.
4) Unit 6: this 1,577 square foot 2BR, 2BA was originally asking $1,775,000, got a highest bid of $1,175,000, and with the buyer’s premium sold for $1,233,750.
5) Unit 5: this 1,577 square foot 2BR, 2BA was originally asking $1,725,000, got a highest bid of $1,185,000, and with the buyer’s premium sold for $1,244,250.
6) Unit 2: this 1,550 square foot 2BR 2BA was originally asking $1,600,000 got a highest bid of $1,170,000 and with the buyer’s premium sold for $1,228,500.
Everything came out to a grand total of $8,484,000 and an average price of $840/square foot.
THERE IS A PRICE FOR EVERYTHING AND THE MARKET, NOT THE BROKERS, DICTATE THAT PRICE!When will developers learn that significantly overpriced listings that can't sell over a period of 2+ years is likely not the fault of the marketing team hired. Simply switching brokers is not the answer. Granted there are developers that have deeper pockets than others and construction terms vary from one project to another. But more often than not, the price was set too far above what the market was willing to absorb and aggressive cuts were nowhere to be found. Adjust the price, and properties should sell. Of course, it helps to know what the market is doing to stay ahead of your competition too!
Posted by Malcolm Carter
Mon Jun 28th, 2010 01:00 PM
Thanks for the mention, Noah. But regarding an auction's ability to establish market value, I'm having doubts. Yes, they do for those units at a moment in time, but I now believe that auctions carry with them a variety of anomalous considerations that may warp prices in a way that day-to-day transactions do not.
Posted by Fred
Mon Jun 28th, 2010 01:01 PM
Thanks Noah - This is such a great comp. The lower floor went for $754/sf and the PH at $920/sf (originally asking $1550/sf). I would like to know what the sales terms were - specifically if buyers had any time to arrange financing? Theoretically, getting 750k of debt lined up would be done quickly.
This is the point I've been making though: that until we know what the new inventory is going to price at, we don't know what the impact is on the older stock? Imagine if you own an older unit, same size on the same block? You'd have to whack it at least 20% for comparison purposes.
I really wonder what Extel or Related's nicer stuff would auction for today on, say, the UWS? I just don't see why well-located, new projects aren't heading for $900/sf on average as well, which means those dark, mice-ridden pre-war converted 2/3 beds with 1.5 bathrooms, would get to the $500/sf range.
From the investment perspective, new rentals are going for $60/sf, backing out $18/sf for OPEX and capping at 5%, you get to $840/sf.
Posted by Malcolm Carter
Mon Jun 28th, 2010 01:54 PM
Fred, buyers have 30 days to close if their deposit is 10 percent. With another 5 percent and 7 days notice, they can extend closing by 30 days. As for the penthouse, that sale remains subject to seller confirmation, as opposed to the others sold without a reserve, so would not be a good comp yet.
Posted by Noah
Mon Jun 28th, 2010 02:15 PM
Malcolm - I agree. Auctions rarely, if ever, get the same upside potential as it would marketed to the full buyer pool in the open marketplace. This buyer pool was constrained to 100 interested buyers only - as many buyers are simple scared of the auction process.
Plus, the seller pays a price for instant liquidity that the auction price brings in. These sales should be expected to be lower than current market trends for exact comparables where the seller:
1. may not be as pressured to liquidate
2. has market forces on their side, with time - can experience the good/bad waves of traffic
3. much wider buyer pool
Of course, it will be very hard to measure what the exact difference is due to so many variables that affect how one buyer values any one given property
Posted by Noah
Mon Jun 28th, 2010 02:23 PM
so the real question is..."does the market now become convinced that for comparable properties to m127, these auction sales represent the new 'benchmark' for future bids"
given the active wave we recently came out of and heading into the seasonally slower months, it will be impossible to measure whether any effect is due to seasonal reasons, general market forces and waves, or an adjustment from this price discovery to a new benchmark..
ask ourselves? how deep do these trades get ingrained in the general buyer pool out there..?