Open House Picks: Six Months Later

If you are interested in delusional pricing, chew on this new listing (which happens to be on my block): http://corcoran.com/property/listing.aspx?Region=NYC&ListingID=1532135

Posted by: lechacal at May 1, 2009 1:41 PM

Yeah DIBS - for the same price I can buy a 3 bed on the UWS in Manhattan.

I'm looking forward to checking this place out. I will try to make it to the open house this weekend. I'm guessing it's standard fare condo conversion but who knows - I might be surprised.

Posted by: lechacal at May 1, 2009 1:56 PM

I can't give a good prediction of how much of a price chop is needed until I see it, but based on the listing I would think much more than 20%. The whole brownstone-condo-conversion-with-just-a-few-units things has really lost its appeal for many reasons. I find it difficult to justify anthing north of a million dollars for that place given everything else that is on the market now. It's a narrow property, not in one of the better school districts (I think - but the 282 debate continues), and the lower level is one of those quasi-subterranean deals.

Posted by: lechacal at May 1, 2009 3:08 PM

That being said, I have a deviously simple plan for buying an apartment that I just thought up. I am perfectly comfortable sharing it, so here it is. No pride of authorship here, so if anyone else has what it takes to copy this model please go ahead.

1. Find a newly converted brownstone with 3 or 4 units. (like the one I linked, just for example)

2. Get together with a few other couples (or individuals) who are in the market. They should be friends and/or people you trust. Everyone needs to have solid finanicals.

3. Let the condos sit on the market for a good while. Those new conversions aren't going anywhere in this market. There are real issues with trying to convince someone to buy first and real issues with financing the first couple of purchases. In this market those things can die on the vine without the first couple of units sold.

4. Let the developer start to get really desperate just to get out from under the thing without going insolvent.

5. Present the developer with cross-conditioned, simultaneous bids for all 3 or 4 units (with pre-approved financing if possible) at a very significant discount to recent comps and to asking price. The message is basically: this is the only way you avoid going under. Without us, you can't move the first couple of units, and if can't move the first couple of units this place will belong to the bank shortly.

6. At the end of the process you have bought nice new apartments at a great price and -- best of all -- the other condo owners are all people you know and trust who have strong financials.

I am starting to really love this idea.

Posted by: lechacal at May 1, 2009 3:18 PM

No, seriously though. I think it's a pretty goddamn good idea.

Posted by: lechacal at May 1, 2009 3:21 PM

gemini: Obviously the buying group has to figure out who buys which apartment and the price to be paid by each member. That either falls into place or it doesn't. You can figure that out over drinks with your group after you all go to an open house. If the group doesn't agree, it doesn't bid. But if I'm right about this I think there is enough value to be picked up that the discussions should be relatively painless. Group negotiations are much more difficult when there is less value being picked up.

Posted by: lechacal at May 1, 2009 3:28 PM

z - This is still New York City. I can't imagine it would take me long at all to find three people with money who are interested in getting a nice apartment in Park Slope on the cheap. There would obviously be some work involved, but this is very doable. Negotiating complex financial things with unwieldy groups of people is my day job.

Posted by: lechacal at May 1, 2009 3:35 PM

FatLenny: This isn't a tenancy in common. It's off-the-shelf condo units. Someone else has already done all the work, which makes the negotiations that much easier. There are basically two questions: 1. who buys which unit and 2. how much does each person pay. Once you answer those questions you are just bidding for a product that has already been packaged by someone else.

Posted by: lechacal at May 1, 2009 3:44 PM

The idea here is to exploit in a very focused way the single biggest weakness that a condo developer has in a down market: inability to move those first couple units. The beauty of it is that the developer has already done all fo the work for you, which allows you to exploit this weakness in a very clean and focused way. And your sunk costs to get to bid (and hear yes or no) are minimal.

Posted by: lechacal at May 1, 2009 3:48 PM

Well Snark, either you see it or you don't. I see it.

Alternatively, of course, you can buy and sell the same way everyone else does. If that's where your comfort zone is, then so be it. Nothing wrong with that. In my personal experience, challenging custom has always worked out for me quite well. Most people are afraid to take steps like this because all they see is difficulty and risk. I love doing stuff like this.

Posted by: lechacal at May 1, 2009 3:53 PM

brooklynguy: Certainly of result, I suppose. Maybe you can get it cheaper from the bank, maybe not. There are plenty of paths to buying cheap in a down market. Find the one that works for you and go for it!

Posted by: lechacal at May 1, 2009 4:02 PM

There are all kinds of permutations that could work depending on your goals. The basic building block is filling the units all at once in a situation where the developer is unable to do so because no one is willing (or able) to be the "first mover". There are ways to do this with friends and turn it into a coop. There are ways to do this with strangers and make it a purely financial investment. Don't lose sight of the very simple principal that is doing all the work. Dress it up however meets your personal goals.

I don't think doing this with a 3-unit building is particularly ambitious. I can think up structures that work pretty easily. Now a much, much more difficult (and rewarding?) task would be doing this with, oh, say, the Vermeil.

As I think I said earlier, some people see problems and difficulties -- others see opportunity. I know where I stand. And if everyone saw these things clearly, these opportunities wouldn't exist, would they?

Posted by: lechacal at May 1, 2009 6:09 PM