Shenanigans at 279 Clermont Avenue?
When the four-story brownstone at 279 Clermont Avenue in Fort Greene hit the Corcoran website in early July at the surprisingly-low price of $1,382,000, it seemed like a classic, and probably quite smart, strategy for bringing out the bidders. (It had failed to sell earlier in the summer at a much higher price with a…
When the four-story brownstone at 279 Clermont Avenue in Fort Greene hit the Corcoran website in early July at the surprisingly-low price of $1,382,000, it seemed like a classic, and probably quite smart, strategy for bringing out the bidders. (It had failed to sell earlier in the summer at a much higher price with a broker called Prospective Properties; we included it as an Open House Pick for $1,748,000 back in June.) In fact, there was enough interest that the seller held a “best and final” closed bidding process two weeks ago. One reader who took place in the process and bid over the asking price was more than a little miffed to find out ten days later that the seller had decided not to accept any of the bids. Instead, the listing re-appeared with a new asking price of $1,610,325. Illegal, immoral or just uncool?
279 Clermont Avenue [Corcoran] GMAP P*Shark
I went to the open house about a month ago. On the surface, the house appeared to be priced well. I can attest to the accuracy of the above-described scenario, as I participated in the “best and final” round. Regardless of the poorly run process by Corcoran, there are a few material considerations that one must assess if one were to even think about dealing with an illogical seller that will take any opportunity to capture the last possible dollar even if that means using unethical negotiating tactics.
Careful examination of the mechanicals revealed a few key concerns in the foundation (significant leaks and erosion of main supporting beam). $600k and 6-9 months is a reasonable estimate for a modest renovation. Additionally, this is a legal four family, so closing costs are a minimum of ~60k even if you find a lender that doesnt charge any extra processing fees. Add that, along with your carrying cost of ~7500 per month during the 6-9 months while you have the place renovated (~45k total), as well as the stress of the renovation, and you are looking at an all in outlay of over $2.3M at the new asking price. This doesnt even consider that mortgage rates have jumped almost 75 basis points in the past month. I dont think this could be considered a good investment by anyone except the guys that ran the CDO desk for Merrill or Citi, but the market can answer that one.
Seller is stupid. Good luck to you.
Wasder,
Look backwards on this graph: http://tinyurl.com/g9vf4
Do you still think that “even without a run-up or bubble…long term it would have to be worth more than 1.5 in 20 years (in 2028 dollars)”?
If you do, I agree to disagree.
@ wasder 1:01pm – that is a big difference/drop of 1.5 versus 1.3 mil. Do you really think it would take 20 years to recover to our current prices?
helppls–Who knows? I tossed 20 years out there fairly randomly as a marker for when you could be reasonably assured that the investment aspect was on solid ground. My larger point is that if you are buying for the long haul to live in the property, some of the harder edged financial concerns are mitigated by the actual value of your enjoyment of living there.
Given that most of us seem to think that this real estate ploy was, at the very least, uncool and sleazy, with the possibility of a well-deserved karmic backlash, then we should consider it having been unethical rather than immoral.
Jerks.
And the green thing made me throw up in my mouth a little.
helppls
Why would this be illegal? If anything, I wish posting prices would be illegal.
Auctions and haggling were the way business was done for the entirety of human history until the 20th century. If anything, the indoctrination of the American people to be debt enslaved consumers has been well served by the sheep mentality of the shopper who simply assumes the posted price is the one that has to be paid.
Illgal, no. Typical for real estate in NYC? Yes.
Karma, however, is a bitch.
This happens so much in the NYC market. I wish it was illegal to “fish.” Isn’t that essentially what the inital price did – fish for higher/highest offers?
@ wasder 1:01pm – that is a big difference/drop of 1.5 versus 1.3 mil. Do you really think it would take 20 years to recover to our current prices?
I don’t know if I expect another run up similar to the one in the early 2000’s but I also don’t expect a drop in the terms that you are expecting (but in matters macro-economic I confess to a limited knowledge base). My guess is that if you bought that house for 1.5 this year it would probably be “worth” more like 1.2 or 1.3 in a year or two. Then even without a run-up or bubble, I do think long term it would have to be worth more than 1.5 in 20 years (in 2028 dollars).
But you raise an interesting point about whether a good purchase is an emotional one only. Clearly there is a lot of emotion that goes through a large house purchase, but one thing that the “value” conversation doesn’t take into consideration is all the enjoyment and sense of community that comes built into a home in a neighborhood one likes.