UES Townhouse Pricing and Headwinds

Basic discussion on the other thread was that townhouses on the UES seem to be struggling to sell at prices anywhere close to where initial asking is, and many that are currently listed with probably have to drop 20% or more in order to sell.

300 and I thought that this one at 116 East 95th will probably land in the sevens in possible and fair.

Some other examples:

https://streeteasy.com/sale/1406805: I think is probably in the sixes (although I think it will sit a long time and I think it could be the low sixes).

https://streeteasy.com/building/234-east-61-street-new_york/house: I think in the low sevens or high sixes, but I think wouldn't be too surprised by the low sixes.

There are many other examples or houses that have lingered and may continue to do so.

Would be interested in other perspectives.

My pricing methodology is perhaps too simplistic with a nice renovated min 9 foot ceiling condo as a benchmark.

Calculate square footage ex basement - no allowance for outdoor space as it is just a compensation for lower floor, less light, not so useful front portion of garden floor, and a lot of wasted staircase space, full footprint being included etc vs a condo.

In this case call it 5200 sq ft (I think 5700 includes the basement).

What would a nicely renovated (this townhouse is nicely renovated in my opinion with steel windows at back, which cost a fortune, but nothing spectacular for bathrooms or kitchen) mid height (say 5-10th floor; not penthouse) resale condo with open view and 9 foot plus ceilings (no park view) trade in that area realizing that there may not be one? I would say $1500. That is the rough price. Taxes used to be a big advantage for townhouses but I do not see that much advantage in Manhattan any more vs resale condo.

I get $7.8mm. Naturally, it is not a precise science. It can trade higher or lower.

Although less square footage/one less floor, that still doesn't account for the price difference looking at this actual very recent sale:
https://streeteasy.com/sale/1381217

It is a very different product. Elevator, back facade, different AC system.

And I am only talking about $150 per sq ft premium. Did I mention outdated bathrooms for the listing you posted?

As prices fade people will cease to see the return on investment for expensive upgrades like elevators in all but the priciest of areas.

Especially in examples like 125 East 95th St above where a poorly placed elevator will never overcome the difference of an extra 4 feet of width.

Typo: 2 feet.

To be clear there has always been a large percentage of the townhouse market with the mentality "I have no interest in any townhouse less than X feet wide." No matter how nice the renovation is, very little of the townhouse market will even consider a 14' wide house untill you get down to prices where the buyers HAVE to consider houses of that width. As I mentioned in another thread, that's always been an issue selling Italianate styles brownstones which are specifically designed as narrower and deeper but lots of townhouse buyers still refuse to look at a 16' Italianate "because it's too small" even though both the room sizes and overall square footage are larger than many of the 18' and 20' houses they have no problem looking at.

300 - I would estimate the price a bit lower in the 7s for that one. While there is a certain charm and privacy to a townhouse, there's also a real inconvenience of not having a doorman and staff, having so many floors and the maintenance risks/headache.

I agree that there are a lot of differences between the one that 30 posted, but is it $3mm of differences in a practical world. I don't mean whether it would cost $3mm to make them equal (in part because I don't think that most people would renovate that house in the same way if given the choice) but rather whether someone would pay $3mm for one over the other. I am skeptical of it.

I agree with 30 that the other one on 95th that I posted is a really hard sell because of the elevator location and width but it does look to have a somewhat usable basement.

In both cases, I wonder what the owners are thinking. Some people seem content to have properties sit on the market for years. This seems particularly true of UES townhouses. It seems to destroy the value of the property, and the eventual sale price for the houses is often much lower than the original listing. A couple current extreme examples:

- I don't see how this sells at anything close to this price and it has been on the market for almost five years: 1https://streeteasy.com/sale/1242328

- Another strange one. It seems that they just don't care about the market or comps. It has been on the market for 1,000 days and I still don't think it is price anywhere close to where it would sell: https://streeteasy.com/building/48-east-91-street-new_york/house

TeamM, Townhouse is ultimate freedom (besides taxes) for some as they can do what they want in terms of reno, lifestyle etc and not having to deal with collective decision making (coop being an extreme form).

Maintenance is usually done by a neighboring super / handyman on call but is clearly more involved that a condo.

You don’t have to worry about your neighbor below you forcing you to put carpeting when your 3 year old runs.

There is a cost to doormen and staff which for a 5 bedroom large apartment 4000 sq ft can be $6-7k in common charges. You can hire your own help for that price and control their time and duties.

Earlier the options for 4-6 bedroom apartments in condos were limited leaving townhouses only game in town for people who do not want a coop but not any more. That is largely why townhouse prices have gone down along with high priced new developments.

In terms of price, the townhouse segment is so illiquid and whimsical that 116 east 95 could trade at $7mm /lower if the seller needs or really wants to sell or $8.5mm. Very hard to say.

300 - I think that paying a nearby super/doorman to help with some basic work/packages is quite different than the security and help of a 24 hours doorman and staff, which you couldn't hire for $10k a month. You would need a very large townhouse to not have your own staff impede on your privacy (much larger than this townhouse). It's also entirely on the townhouse owner to assume the risk for major repairs. I think it's a very different trade-off, which appeals to some and not to others, and I think that many people prefer to have a large apartment with the security and ease of a doorman and other building help.

I agree with you that the market is extremely hard to predict for townhouses and that may be why so many linger on the market for so long. I don't know the situation of the sellers of the townhouses referenced in this thread, and I have no idea whether they'll hold out for months or years.

Indeed. Some people have to have doorman - for a busy professional, it is indeed convenient for packages needed for security - and then there are people like me who live in a non-doorman loft building and do not want to pay for union workers (for large apartment $ cost is high) and a hotel like big building with 100 apartments with a lot of traffic and lack of privacy.

30, Do you have any stories from back in the days, when crime rate was high and most families moved to the suburbs when they had children, about when townhouses were at a big discount to condos / coops per square ft?

I'm not THAT old! Plus the big boom of Coop conversions wasn't until the 1980s by which time "White Flight" was over.

158 e 95th is a good property that still struggled to find a buyer. The first OH was moderately busy and generated some interest. The reno was a few years old, so it was good but not top of the line. Some ppl might not have liked the north view towards the schoolyard, though the back yard got good light. It sold bc it was the only UES or UWS product in its price range without some serious problem or deficiency. Still, in a more value oriented market as the UES has become, I don't see how prices for slightly better product can be $3m more.

To illustrate the point on 158 e 95th, here's a similarly priced building on a very nice block. But this one is 100% rent stabilized, and the rents barely cover the tax and maintenance. The owners unit is in "bring your architect" condition. For $4m and change, the choice seems obvious.

Link: https://streeteasy.com/building/116-west-81-street-new_york/house?card=1

George, were you the broker 95 East 158? It looks like that sale was handled properly from a pricing and negotiation standpoint. Prices realistically and cut the price a bit more to get the deal done. I think that house could have actually dropped even further if it was priced higher initially and lingered longer.

You might have some interesting perspectives on the others on East 95th and the UES more generally. Do you think that the brokers for the others on East 95th were and are just completely out of touch with the market or do you think it is a matter of unrealistic owners who won't list at a reasonable price? Or alternatively do you think that these are owners who don't really care if they sell and they are just testing the market?

'Goat Hill' is a new one to me -

There are some critical differences in 116 and 158.
- You get 50 percent more square footage. $2mm right there.
- elevator for 116 means that structure was shored up steel beam etc and is good for another 100 years. $500k.
- Glass and steel back facade lets the light in and addressed critical flaw of townhouses. It is at least $300k worth at cost which included structural changes.
- The only bathroom picture in 158 with aging lime stone is at least 20 years old. While it may be perfectly livable, it is just not gut renovated recently. Perhaps kitchen was updated.

Not a broker, potential investor. My point is that well priced THs are selling, but not much else. 158 w 95th is a rare example of one that was well priced - $4.6m for a decent TH of that size and location is about right. I would have bought it but prefer a 2 family. But most sellers are delusional, such as the RS property needing reno on W 81St for the same price. Almost every property that I've visited has had a reasonable offer already made, usually 10 to 20% below ask or about a 4% cap rate, which the owners have rejected.

You are right about 116 West 81st with new rent regulations. Could sell for $3mm depending if the rent stabilized tenants are paying enough to cover prorated taxes, maintenance and administration. Basically, value for lower two floors. Plus throw in some for option value of higher floors.

https://streeteasy.com/talk/discussion/45121-a-tale-of-two-marketing-plans

300 - you are a professional at this and I am only an amateur, so perhaps you are right, but my gut is that most buyers wouldn't look at the math that way. Rather I think that they would say that one property is larger than the other and nicer in several ways (although neither is mint), but both properties are townhouses in the same neighborhood east of Park Ave, neither are prime real estate from an UES standpoint, neither has a usable basement, both are on a similar sized plot, both could hold similar sized families, neither is an income-producing property, etc., and that the "value" spread between the two houses is less than $3mm.

Of course, the one is listed at almost $5mm more than the other one sold for, which I think everyone commenting agrees is laughable. I think the more interesting question is whether that townhouse would and should sell if they dropped the price by $2mm tomorrow.

I wish any pro can tell where an expensive townhouse more than $6-7mm in Manhattan will clear. I have seen much higher contract price than I would have thought and much lower as well on the same block of W9th street. There is no rationale - a little like art world. Under $5mm there is more liquidity both in condos and townhouses and prices are easier to estimate.

300 - good analogy to the art world. That's probably part of why sellers and buyers are having a tough time agreeing on a price.

But I think that's a problem: just like like the art world, buyers were listening to whatever dealers (brokers) said a piece was worth. Then the crisis of confidence came and buyers decided they could no longer trust things were worth what brokers were saying. And now for a very large percentage of the buyer pool the numbers they are coming up with on their own are much lower than what the brokers are currently saying (even at the current reduced figures). Listen to interviews with brokers and a fairly constant refrain is that the majority of current buyers think prices should be significantly lower than current asking prices. And almost none feel any urgency to make deals and they can wait until sellers are willing to come down. This is the exact opposite of what was driving prices up for the first half of this decade.

30, Very true for ultra luxury and high $ prices (call it 6-7mm or above) in marginal locations in Manhattan.

300 - what would you consider marginal locations in Manhattan? When looking at townhouses, it seems that the challenges on selling and pricing are pretty extensive.

For single family townhouses more than $6-7mm price in this market, most locations which are not “great location” are marginal. “Decent location” does not cut it. Some examples which will make the location marginal for a townhouse will be: Tunnel/bridge traffic, commercial block, non townhouse block, too far away from the park on UES, close to public housing etc. There are always exceptions - like the example 30 had posted for East Village - as it only takes one rich person to like it.

That was my point about 73 Washington Pl; that while it's in Greenwich Village, those blocks between Washington Square Park and 6th Ave have been considering less than prime for as long as I can remember.
I've made the point before that when the market gets overheated on the was up people tend to ignore defects that they shouldn't be ignoring. In the townhouse market I think that manifested itself in people both overpaying for pieces that weren't in prime townhouse locations and then spending too much money and over-renovating trying to make silk purses out if sow's ears. These seemed to work out as long as prices were in the stratosphere, but prices coming down shows up the folly in a lot of those project (i.e. they won't break even on those renovations).

I remember that but I disagree about that location being less than prime any more.

That townhouse has other issues as in ridiculously high taxes (commercial to residential conversion) and inability to add advertised square footage with reasonable trouble.

116 East 95 is perfect example of marginal. It will never be prime even in the hottest market. Too far up. And I think some one overpaid for 158 (looking at the crappy bathroom picture without having seen it).

I don't know how you say the taxes are ridiculously high when they appear to be about the same as a similarly sized house about a block away.

For 73 Washington, wait what the taxes will be after build out. $150k as it will get assessed by the city at $15mm (2k per sq ft at least).

TeamM, In my comment below, nicely renovated condo price probably is 1350-1400 in that area. So price below is close $7mm and it makes me think that some one overpaid for 158 which should be 1100 per square ft.

“What would a nicely renovated (this townhouse is nicely renovated in my opinion with steel windows at back, which cost a fortune, but nothing spectacular for bathrooms or kitchen) mid height (say 5-10th floor; not penthouse) resale condo with open view and 9 foot plus ceilings (no park view) trade in that area realizing that there may not be one? I would say $1500. That is the rough price. Taxes used to be a big advantage for townhouses but I do not see that much advantage in Manhattan any more vs resale condo.

I get $7.8mm. Naturally, it is not a precise science. It can trade higher or lower.”

300 - interesting thoughts, as always.

From an intellectual standpoint, one of the tough things about this particular conversation is that the liquidity is so awful that it's tough to figure out if anyone is right:) By the time a lot of these properties sell (if ever), it is sometimes years down the road.

Something interesting in the townhouse market is that contract activity has been up significantly this year - even though last month it dropped off (I think because a lot of sellers have significantly cut prices) but as a result tons of off-market townhouses are coming back (pending sales up 53%, market pulse up 35% , but supply up 16% overall and new supply up a staggering 150% this month year-on-year). To me the big question is are these new/renewed listings coming on realizing price corrections or are they hearing "the townhouse market is back" and coming on with the same unrealistic expectations they had before?

PS Resupply pace up 771.4% from prior year!

30 - very interesting points. To your point in several other threads, properties are selling when owners become realistic about what the market is going, and that seems to be the case for those townhouses that are selling. I think anyone who tried to sell a townhouse in recent years and removed the listing is going to have a rude awaking if they reenter this market at the same price expectations as before.

TeamM, Thank you for insight into a potential end-user mind. You are right about a lack of liquidity in
Manhattan townhouse market at the high end (call it top 50% of prices roughly $8mm or above listing price). Wonder if the top 50% of townhouse segment was ever liquid. The chart below suggests that townhouse category was never that liquid.
https://www.millersamuel.com/charts/manhattan-townhouse-quarterly-supply-v-demand/

In the chart, Listing inventory is on the left side and sales are on the right side on a completely different scale.

MS and UD numbers appear to be very different.

TeamM, so far I'm not seeing any rude awakenings. Just people content to stand on the sidelines like a middle school dance and turning down reasonable offers. I've seen several THs where the owners bought a few years ago, did some work, ran out of money or interest, and are now listed at what they paid. They're going to take a bath, but even they have been just sitting and waiting.

I think the rude awakening is that they aren't getting the offers they would hope, and they are left with the option of going back off the market or cutting the price. There are a fair number of properties that have closed fairly recently, most with very significant price cuts.

I think a good example of a rude awakening is the group of West Village houses currently asking under $7 million which saw 24 Commerce sell in 16 days for $4 million and they are both larger and renovated and seem to be going nowhere. If you look at $/SF plus renovation costs they would all appear to be relative bargains.

I suppose you're right, though the rude awakening doesn't come until there is a strong need to sell rather than rent the unit. If you believe, as many sellers seem to, that NYC prices never decline, you never need to have the awakening. You just hold on. I see the point on 41 Barrow, which was bought in 2016 at 4.9m and will maybe sell in the 4s, barely more then 24 Commerce, which was a disaster inside and smaller, though 24 Commerce had a real garden and doesnt sort-of back onto 7th Ave like 41 Barrow does.

What are everyone's thoughts regarding 406 East 50th? That has been on the market forever. Had I endless resources for renovation and staff necessary to maintain a townhouse, I would go for that one for the garage alone. The two others for sale in Beekman (23 Beekman Place and 29 Beekman Place) I half expect to go to a sovereign nation since that seems to be the trend in our hood. (21 Beekman Place sold to the state of Qatar in 2013 for $34.35 million - Eleanor Biddle Shipman likely turned over in her grave to see her masterpiece go to a foreign nation).

Is raising the price almost a million dollars in this market some kind of misguided defense against low offers?

It doesn't look like 406 East 50th really wants to sell. Maybe they have a listing just in case someone (e.g., an embassy) is looking for something like that.

I think you all are right regarding both defense against low offer as well as seeking UN Mission offer. The house is presently occupied by family that seems quite content any time I encounter them coming or going. Guessing the listing is a “Make Me Move” fishing expedition.

406 East 50th looks like it sold for $6.3mm in 2014. I don't think it would even get that much today.

Sometimes townhouse owners seem to think they are sitting on a pot of gold because of a garage but I don't think the market views it that way.

I have a question for the brokers or other professionals out there. 30 and 300 - you both might have input on this.

How does the brokerage arrangement work in these lingering situations and what is the real world dynamics and conversations between the seller and the broker? Using 116 East 95 as an example, I assume that the broker "won" the listing by pitching the seller with a plan and promises that the house would sell for something reasonably close to the asking price. In this case it seems that the broker was wildly off the mark. Would the broker typically be asking to cut the price with the seller angry that the broker couldn't deliver on the sale or would the broker typically try to hold out from fear of losing the listing?

I ask because in some cases it seems that the same broker stays on these overpriced listings for years while riding down the price, and in other cases it seems that there are musical chairs of brokers while the price drops along the way.

It really depends. Sometimes you have a broker who doesn't care as much because they just want a listing at $X so they can use it to acquire a set of buyers in that price range. Sometimes a broker has told a seller what they actually think the property is worth but is letting the seller dictate pricing and hoping if they hold out long enough that eventually things will work out (unfortunately this works much better in rising markets because eventually the market rises to meet the aspirational pricing). Often the broker whines and tries to guilt the seller into sticking with them because of "how much time they have put in" ignoring the fact that they "bought the listing" (see various talks with brokers about how it's better to be the second - or third - broker these days).

It depends on the relationships between broker and seller, promises made vs suggestions, how each values their time, etc.

TeamM, I don't know what your field is; but that question is pretty broad, analogous to, "well, how does the law work?"

Roughly, the broker is oscillating between two poles. One is that this is a client service business, and the minute you have more than one client, someone isn't getting your full attention. There are a lot of strategies to mask that (many copied from law firms to "leverage" the strengths of the senior person) but clients still figure it out, and they don't like it.

The second pole is that the more clients you have, the more money you make. The most successful brokerage business model is to take a ton of listings, decide that failure on x% is acceptable, and then sit back and make the money from the (100%-x%) that you do succeed in selling. Sometimes this means that you get full up on inventory and wait for the markets to turn -- I just did a deal with one broker who does a lot of new dev work, and he said, well, now we're working weekends and not making any money, but when the market turns, we're sitting on $130 million of inventory. A second example of this might be the luxury broker who pointed out that he had a good month ahead of the mansion tax increase -- I get this guy's emails, and kept seeing things that had been sitting for months and months, and then I get his monthly newsletter that he'd sold $24mm in June. So you might have a business model where you work for months to have a payday like that, and if a property or two doesn't sell along the way, you're still doing very well.

For townhouse brokers, which I'm not one of, I suspect the game is the same, with the added factor that these tend to be long-cycle deals, so I'm sure that everyone has the story of the listing they stuck with for three years and then sold. And the relationship between broker and client is probably that on every listing, the broker is saying, "this month we got Feedback A that the market doesn't like the price, so we have the choice of dropping the price to meet the immediate feedback or waiting it out, and here's what I think we should do and why." Those conversations, believe me, get had with a great deal of frequency. And then probably in every listing broker's favor is the general reputation of brokers -- a smooth broker will convince you that if something sells, it's them, but if something doesn't sell, it's the market.

ali r.
upstairs realty

30/Ali, Good perspective. I would think that having convo about unsold property and discussing price cut is the toughest portion of a broker’s job.

Our broker in DC told us in 2010 that there was no way we would get our net bottom line (minimum price that would cover transaction costs) and that she did not want to waste her time if our bottom line was really 1.06X. She was nearing retirement and had achieved that enviable position where she was just taking listings from her deep bench of clients that she believed in because she had no need to grow her business further and was winding it down. She declined the listing, and a few months later the property ended up selling at exactly the price she said it would. I cannot imagine the daily frustration that agents face as sellers refuse to admit that our beloved real estate is not worth as much to anyone else as it is to us. She said in her earlier days she would have taken the listing and just stuck it out until the market beat us down.

And also to Ali’s (front_porch) credit: When I met with her way back in 2012 about finding a new rental, she assessed the situation and was spot on that what we had already was likely going to end up being the best fit. I got the sense that she did not want to waste her time taking me to a host of other rental listings to have me end up staying put. Excellent instincts on her part because we did end up staying put and simply renewing then-existing lease at 310 E53rd.

MCR, I had forgotten that story! We should still meet on your side of town for a drink though!

300, talking about price cuts when you're right is indeed quite hard -- but I actually think the hardest part of the job is when you're wrong. You're not a surgeon, so you're not killing people if you're wrong, but if you call the market wrong it's still a pretty negative impact on your clients. I still think one of my biggest mistakes was not urging a buyer client to stretch (he would have had to waive the financing contingency, and I didn't think he had the resources to do so) to buy a condo in Brooklyn that he liked. The construction quality was truly shite, and I brought all those arguments to bear, but then of course that market got hot and the value of the asset pretty much doubled in four years. That's one of the ones that keeps me up at night.

Interesting and broad answers. Thank you.

Back around 1990 there was a meeting of the now defunct Downtown Brokers Association with a panel discussion about the new trend of "Exclusive Listings" (at that time the market was very different in that the vast majority of listings were "Open Listings" where the seller gave their listing to as many brokers as they felt like on a non-exclusive basis. Then Weichert opened their first Manhattan office in the old Rodman Realty office on University Pl and brought the suburban MLS model often taking exclusives on anything and Corcoran quickly followed suit).
Someone asked Barbara Corcoran (the following is all paraphrasing from memory) "what do you do if someone wants to give you an exclusive but the price is too high?" and she answered "Just make sure you get a long exclusive so that when they're ready to sell you still have it."

Very good answers by Ali R.

MCR,
When I was managing the sales side of JI Sopher's Village Office I got a very good look at how big rental firms work. The single regular attention garnering event would be when one of the rental managers would scream "Hotel client!!!" and you would see the rental agents scramble to see who got them.
I learned from my experience there is that if someone had a good deal with a Rent Stabilised apartment odds are they weren't going to be a good client either for rent or for sale (that's not to say that none of them ever did a transaction, but odds are that even if they did it was going to be a long row to hoe). In general I have found that a lot of the most successful buyer's brokers are the best at triaging their clients: they can pick out the ones most likelyto buy in the near-term and spend a lot of energy working them. Tying this back to the hotel clients: rental agents were taught to ignore what they were asking for and simply show them every single apartment that was available to be shown. The logic was that since they were in a hotel they had to rent something very soon and if you simply occupied 100% of the time they had to look for an apartment that something would be a deal through you.

I realize this discussion was started mostly about non-prime location townhouses, but what do you think of this one:
https://streeteasy.com/sale/1422284?card=1

Can a less than 25' wide house get upper $20 millions?

30 - as always, excellent stories and insights. Thank you.

In my opinion, there could be townhouses under 25ft wide that might be able to come close to that price, but not that house. I don't think that house is particularly appealing in terms of its location and design. If they really want to sell then I think it will require an enormous price cut. They are asking in the same price territory of much superior UES townhouses.

They started by asking $35.8 million with another broker back in April. Maybe that's another piece to your puzzle re:broker/owner relationships.

30 - yes, I think that's right although I don't think there's a way to know whether the ridiculous pricing is being driven by a broker or by the owner. If the broker says "houses are tough to price but my best bet is that this sells for $17mm but on a good day maybe you could get $20mm" and the owner says "I want to list it for $35mm" then I don't think there's much a broker could do other than reject the listing. In these scenarios I think it would be wise for the broker to reject the listing but I could reasonably understand another viewpoint.

I suspect that the dynamic is even more complicated on less expensive properties (like 116 East 95th for example) because there are more false comps that either a broker or an owner could confuse, while also ignoring more real world comps (such as other townhouses to renovate or large apartments or other neighborhoods). It is a bit of the same thinking as the snowflake generation, but applied to real estate. What's tough for me to tell is whether sellers drive it or whether brokers drive it.

Here is my question for brokers who take listings where ridiculous price is dictated by seller: How do you present the offering to your fellow agents with a straight face? Endless respect for agents who decline listings where seller insists on ridiculous price, but then again, it does only take one buyer to align with seller's love for the apartment. Case in point: There was a listing in our neighborhood where sellers would not budge (2 Beekman Place 15A), and after I don't know how many years, they actually got it. I believe it was with the same agent for the life of the listing.

MCR,
Could you be thinking of a different listing?

30yrs - Thanks for the check. I just went back and looked, and it looks like 2 Beekman 15A was only on the market for 572 days, and there was in fact a price cut from original ask of $,2650,000 (Jan 2017) to ultimate sale price of $2,395,000 (December 2018). Still, it FELT like it was on the market for years, and I cannot fathom the preferences of the ultimate purchaser at that price. We looked at in Feb of 2018 and would have been willing to pay $1,600,000 tops (and we are crazy for the neighborhood). When seller's agent told us there was room for negotiation off the then-$2,395,000, we wished him the best of luck and moved on.

*no room for negotiation

To look at it from the other side, MCR, if you saw 15A and said that it was worth $1.6 mm to you, and I were the listing broker, I would have thought

"six months ago a second floor A-line in this building sold for roughly that.

That apartment didn't have our views;

it didn't have our renovations (from the 2A listing ... and this may be my favorite line of listing copy EVER ... "It was recently renovated but the space could be utilized better"), and

it didn't have our wrap terrace."

I would have written you off as a bottom-fisher and agreed to disagree with you about price too.

@front_porch - the “wrap terrace “ is not at all what you would expect nor are the views. Check out the other A line apartments currently listed in the building and their price points.

But to be clear: 15A is a beautiful apartment, and I can certainly see someone being willing to pay more for it than we were willing to; I just never expected someone would be willing to pay that much more for it.

Reviving another old thread because I'm interested in thoughts from the experts on this board. This thread seems like the right place to do it.

If you are a broker or a seller, what do you do as the datapoints in the market emerge that suggest that you've wildly mispriced a property? E.g., 20% or more.

A lot of townhouses are just lingering on the market some of which are discussed in this thread. It seems that there's a general consensus that they are way overpriced relative to where they will clear and the market forces are working against them. I'll use 116 E 95 as an example, because it has been discussed on this thread and the general consensus is that it should sell in the mid $7mm range (although I personally can imagine it going lower as the market slips). What strategy would you use to sell that property, as sales data comes in like the below examples.

37W88. UWS v. UES, but 37W88 is a significantly larger and apparently nicer property on a better block on the park, and I see it as an interesting datapoint because with family properties like this, you could go to similar schools with either location. It was last listed for $11.5mm, and it sold for $8.75mm before the latest round of tax changes. https://www.bhsusa.com/closed/manhattan/upper-west-side/37-west-88th-street/townhouse/19010050

15E92. This one is UES, similar sized but right off 5th Ave. It looks like it could use some updating but appears that it should be far more expensive than 116E95. Sold for $9.25mm. https://www.bhsusa.com/closed/manhattan/upper-east-side/15-east-92nd-street/townhouse/19176049

If you're trying to sell 116E95 (or a myriad of other strangely overpriced townhouses, such as 123E91, 125E95, 68E91, 103E91, 44W95, 66W87, 58W75) then what do you do? It is hard to compare townhouses because they tend to be unique, but with such a clear mismatch between your listed price and the market, and with the market facing further headwinds such that you are risking increasing downward pressure, how do you balance the needs to dramatically reset the price to the market while also not hurting your credibility such that buyers would think that the price is in a freefall?

You assume the sellers really want to sell. It is very easy to list a building; much more difficult to make the decision to actually sell. Especially if there's more than one owner (think of an estate situation where there are multiple beneficiaries). If the sellers really wanted to or needed to sell, they would drop the price. Apparently they can wait.

Jas - you are correct in that I assume that the sellers want to sell and, more notably, that they sellers want to maximize the price at which they sell.

As I've noted before, I think aspirational price exacerbates market volatility: on the way up when people are excited the wildly overpriced make the mildly overpriced look reasonable and the believers bite. But on the way down the wildly overpriced add to the non-believers perception than the market is dead, nothing is selling, and everything has to take huge price cuts to transact. I'm pretty sure I said in some thread on here that if a lot of the listings come back on the market for the Fall season at the same old prices that they couldn't sell for last time they were on the market that it will further tank things.

"how do you balance the needs to dramatically reset the price to the market while also not hurting your credibility such that buyers would think that the price is in a freefall?

Good question, Team M., and there are a number of property specific strategies, but one option is that you don't. With the caveat that I don't sell UES townhouses, in some of the situations that you mentioned I would hold fast to list price with my left hand while dialing the phone numbers of every single possible buyer's broker with my right hand, and putting a bug in each ear that I thought my seller was ready to deal. If buyers as a class are calling pricing 20% off, and that strategy doesn't generate offers above that, then seller doesn't sell (which is the situation seller would have been in before I started dialing).

If, however, there are buyers who have been on the sidelines because they can't make numbers line up on something they love, but there is an emotional component to the buy (you, for example, sound like you'd want to be on East Side, all other things being equal) then maybe one of those buyers who will come up with a number that isn't 20% and we can start talking. Meanwhile, other buyers don't need to see the rip in my dress.

front_porch - interesting insight. Thank you. The approach of holding the price and calling buyer brokers makes a lot of sense if you are comfortable that you can access enough of the potential buyers that way. Harder if it is a more dispersed potential buyer base.

Any other thoughts? Would anyone simply do a huge recut of the price to the market level, or try to trickle it down?

Well, TeamM, whether it's a more dispersed potential buyer base is certainly the $64,000 question, as my dad would say. I have the feeling that it's not -- that the higher up one goes in price point, the more likely the parties are to use brokers, but I don't actually have any data to that effect.

Another strong possibility is that even the clients who wouldn't use brokers could be reached by a whisper/gossip campaign -- people who can spend six million bucks on housing tend to work in only a few industries, have their kids at certain schools, belong to certain clubs etc. So presumably they are only two or three concentric circles out from the brokers who are working that market as their main focus. At least that's how I imagine this world -- don't forget that we're already in Unicorn Land in that the broker is 20% off on the price and yet hasn't been fired already.

As far as "huge recut" vs. "trickle down," I believe 30 has a whole spiel about the reason why you do "huge recut," so I'll let him speak for hisself here...

I'm not sure I agree with the premise in that I don't know how much credibility someone who is asking $12 million for a $7 million dollar property has with $7 million buyers. I don't think the majority of overpriced townhouses are willing to take market price but can't figure out how to get there: I think they are stuck fully expecting to get substantially more than is reasonable. While we hear lots of agents saying how they are explaining to sellers the new state of the market, we continue to see those same agents take overpriced listings. This year I have had over a dozen sellers call me and after a few simple questions told them "I'm sorry I can't help you." All of them were cross that I wasn't interested in even seeing their property, all of them came on the market, and none of them sold (and while I obviously don't know if any of them have received offers, I'd be willing to bet that none of them have come close to doing a deal). A few years back when the market was booming we had too many agents vs the number of deals being done. Now things are substantially worse. So just about every townhouse owner has any number of agents to choose from to tell them whatever it is they want to hear. And lots of agents still have the strategy of "buying" listings by pricing high and hoping their exclusive is long enough that the seller will eventually come down enough to do a deal. We have seen plenty of agents state that now they actually prefer to be the second (or third) agent to represent a property so the seller has already been "seasoned* by disappointment. The reason for many price drops (including big ones) is simply to prepare the seller for the next price drop (take a look at how many townhouse listings have had multi-million dollar price cuts only to have multiple additional rounds of multi-million dollar price cuts).
In terms of simply reaching out to buyer's agents and telling them to make an offer, I see that as problematic:
Firstly most buyer's agents are simply going to convey some form of "the seller is desperate so make an offer" anyway.
Secondly, it's hard to convince most buyers to make a low "take it or leave it" offer. It's also problematic for buyer's agents to convince them that this is a viable strategy because once you do that if it doesn't work out it's hard to convince them how it's an unreasonable strategy on every property moving forward.
Thirdly, if they don't make a take-it-or-leave-it offer but instead make a negotiable offer, where do they start? 50% off asking price?
I believe in this market there is almost no such thing as "priced too low" or "to big a price cut."

Plus it's somewhat analogous to saying "Real Estate advertising is worthless. The property won't be sold by an ad or a listing on the internet or anything like that. I'm just going to call people."
Now, that's absolutely NOT to say it's a bad idea for an agent to do their job properly and incorporate that as part of their marketing. I'm just not convinced it's a good idea to throw out every other method and essentially say "there is no asking price."

30yrs -- excellent commentary, as usual. The two things I'm finding in the $1.5-3.0 million UES co-op market is:

(i) units in dire need of a gut renovation continue to be listed by brokers at ask prices reflecting a full-renovation -- and this is 5 years after the so-called "2014 market peak" and 21 months after the SALT changes;

(ii) long-time owners with the most built-in capital appreciation seem to be the most stubborn in dropping their prices (as compared to buyers in 2013-15 who seem to be more realistic). I'm not at all clear on why this is , considering they would seem to have the most flexibility. Some theories include (a) their apartments' value make up the largest chunk of their net worth so most sensitive to selling at peak prices, (b) they're out-of-touch with general market forces, (c) the "my baby is the best looking" dynamic.

I think “my baby is pretty good” is more like it if they are living there. For a seller to acknowledge that their place needs a gut reno also means acknowledging that they are fine living in a place where others wouldn’t. Also they and their brokers forget to factor in carry and trouble component of the reno which is good $ 125-200 per sq ft on top of actual reno cost.

30 - excellent commentary that could only come from someone in the business who has looked at this from different angles.

One thought that is totally anecdotal to respond to something from front_porch. In my personal and professional settings, people don't speak much about their own real estate situations. People may vaguely say that they are looking and they may say that they are getting random calls from brokers try to sell things that are off-market but that's about it. People will sometimes talk about the real estate market more generally (such as in reaction to that recent story about the spiking inventory), but it is not individualized other than people offering up (lately) that they think that Manhattan property prices are going to go into the toilet. It's possible that I tend to spend time with people who are more tight-lipped than most or it is possible that no one likes me enough to talk to me about it, but that's my observation.

I'm clearly in the wrong clubs as we never discuss whisper discounts on real estate listings.

So I go to a once-a-month lunch that pulls from a very big pool of people, and it never fails that someone says, "ali's a broker," and then everyone who is in the market, whether they're at my price point or not, whether they're in the regions I work or not, suddenly wants to talk to me -- it's like sports in that crowd; the only thing that outweighs it is "what the kids are doing/not doing to strength their future college admissions." But maybe I just have very gossipy friends?

Ali, my spouse and I once vowed to never talk NYC real estate or private schools at social gatherings. But you know what? It proved impossible. In certain settings, the gravitational pull of those topics is too strong.

Hah! We are public school people and still spend half our time talking about private school.

I just saw this new listing and it made me think of this thread.

https://streeteasy.com/sale/1441312

I feel bad for the owner/seller here. Looks like they mistimed a small development project and did a renovation on way too narrow a house. I think they will lose a lot of money on this one.

What do you think the actual square footage is?

TeamM, It is probably $1.5mm reno max. So $6.5mm cost with carry and transaction cost assuming it took 1y to renovate. If it took them almost 5y to renovate the house, the buyer is not going to pay for extra carry.

I don't have a good guess on square footage. I've walked down that street before. That house looks extremely narrow from the outside. I don't think they'll get $6.5mm for it. I think it will sit for a very long time.

FWIW, the tax assessor says the market value is $6.7M and the square footage is 3176. The property sits on a 15x100 lot, and the building envelope is 15x50. So gross square footage for the four above-grade floors is 3000. The declared square footage is complete b.s., as is the broker babble.

Yes, it was probably stupid to reno such a property, but if they sell at that price, they are going to make a small fortune. I don't feel the least bit sorry.

Here is one where the owners deserve a bit of sympathy. It's a former convent. Owners paid $4.3M in 2016, bearing taxes of $36K/year, and spent a bunch of money bringing it up to code in order to renovate it. Apparently ran out of money and are trying to sell at $4.4M. There is a ton of inventory, so I doubt it goes for more than $3.8. After all is said and done, it will be a $1 million loss.

https://streeteasy.com/sale/1387272

TeamM, $6.5mm seems hard to achieve for a 15 footer on 92nd street east of Park.

There is a fifth floor add on. So call it 3500 sq ft above ground. $1500-1650 per sq ft is the magic number. $5.5mm-$6mm.

And my view is not colored by being bearish everything all the time in Manhattan Real estate. So we are taking about 30-40 percent off list.