anecdote about prime UWS co-ops

Can you divulge the building? I imagine not, but never hurts to ask...

Concerned, sure, who wouldn't be. Did they offer any pearls of wisdom about how they will react? Co-op boards have a great deal of power with regard to approving sales, rights of purchase, etc, etc. What measures are they considering?

No. I will say it's on West End Ave between 70th and 80th St.

People like to say that coops are more conservative because the boards are more stringent than the banks and and also limit the size of a mortgages. But coops generally impose limitations on subletting which limits coop values. I expect we will see many coops loosen their restrictions during this downturn.

Someone so desperate to sell that they cut the price by almost 50% from when they bought, yet can afford to repay their mortgage out of pocket for such a ridiculous short sell? Sounds fishy to me (like most of these doom and gloom stories as of late).

"The example she cited was a couple thinking of listing their apartment for $850,000. They bought the apartment for $1.5 million."

tech_guy, I agree. That story is 100% fabricated. Nice try fakeestate, your post is truly moronic.

tech_guy and JuiceMan, you truly have no concept of liquidity (or lack there of)... keep your head in the sand and attack all signs of reality. Good luck with that approach.

Regarding short sales.. who sets the initial listing price?

I still want to hear more about the mindset of co-op boards.

I think fakeestate's post could be accurate. Listing a place at a HUGE discount to 2007/2006 prices is the only way to move inventory in this market, and probably will give the couple it's best chance of maximzing price as they could recieve multiples bids if the property is really priced at a 40% discount to 2006/2007 prices.

People forget how quickly things change/how easy it is to manipulate co-op boars. I know people who borrowed money from friends/family to show they had $x.x in liquid assets. This may not work on super-strict co-ops who want to see statement of assets for the past 5 years, but works on some. Also, even if somebody had $500k of liquid assets when they bought a place, that can change quickly. Maybe the $$ was in the stock market- worse yet with financial stock exposure.

Stock market down nearly 50%. Would anyone really be surprised if something sold for less of a discount off the peak of the biggest RE bubble maybe all time?

tech_guy/JuiceMan: Considering the number of people in New York who may have had a huge chunk of their personal wealth concentrated in financial stocks (often just one stock)and their residences, it's easy to imagine some coop owners facing a brutal squeeze that would force an asset liquidation on the real estate side.

The numbers in this case do seem extreme, and there's no way to authenticate the story until a sale occurs. Nonetheless, it's possible this particular couple has calculated how much cash they need to escape the immediate crunch. Knowing that figure, they might have decided to risk leaving some money on the table by underpricing their apartment, in exchange for reasonable certainty that it will sell quickly.

"Nice try fakeestate, your post is truly moronic."

Actually, I know of (just) one case in the early 90's where a co-op board refused to approve a sale of a dentist's office / apartment because they didn't like the price. However, I think case law has developed enough on the rights of a board to preclude such action now.

"Nonetheless, it's possible this particular couple has calculated how much cash they need to escape the immediate crunch. Knowing that figure, they might have decided to risk leaving some money on the table by under pricing their apartment, in exchange for reasonable certainty that it will sell quickly."

I don't disagree that there are folks that will discount to sell quickly, but let’s do some simple math here. If they paid $1.5M for it with 20% down, they will sell and still owe a huge chunk to the bank. At this point it would be much better to default and walk away from the place. Another scenario is that they put 50% down or more when they purchased it. If that is the case, don't you think you would try and sell it for $1M or $900k first?

I can't believe you guys are buying this crap. It is 100% fabrication, no doubt about it.

"you truly have no concept of liquidity (or lack there of)... keep your head in the sand and attack all signs of reality. Good luck with that approach. "

AdamM, you are an idiot. Read what I wrote above. It is one thing to have your head in the sand it is another to not understand basic math.

What if they were doing the deal for cash and intended to abscond with said cash to another locale? Might they not look to do the deal ASAP?

Sure it sounds like a phony story, but perhaps it is a scam?

What if they're bailing out of NYC before the market gets worse to buy in a place already down big?

Guy lost his job, moving closer to his mom in Ft. Lauderdale. Take a 40% loss in Manhattan to get something 50% cheaper down there...

"What if they were doing the deal for cash and intended to abscond with said cash to another locale? Might they not look to do the deal ASAP?"

Yes, lots of 1.5M all cash deals that people are willing to take a 50% loss on. Those happen every day.

"What if they're bailing out of NYC before the market gets worse to buy in a place already down big?"

Yeah, that's it. I'm going to leave $500k on the table to go buy in FL. That's a good one nyc10022.

For what it's worth, if the building is 277 WEA, the story has some credibility. I've seen some other signs of real pain there, though not at that particular price point.

JuiceMan... your basic math is right, your assumptions are pure desperate hope. Good luck to you.

"the story has some credibility."

West81st, There were two $1.5M units purchased, one in in 2005 and one in 2007. First, how do you know the building and second, how did you validate that these units are being sold for $850k?

"your basic math is right, your assumptions are pure desperate hope."

AdamM, please explain how my assumptions are wrong. What is hopeful about them?

I can believe this, as I can easily imagine a circumstance where someone (banker/trader) bought for all cash a year or two, and now has to sell for divorce/job loss/whatever.

In fact, I do know of one seller who was trying to sell his Tribeca loft for $1750/ft for some time, and then cut his price to $800/ft for a quick sale (which did sell for to an all cash buyer). He had been recently laid off by Lehman and thus needed the quick sale.

I don't know how widespread it'll be though because most people suffer from loss aversion psychology and will try to ride out the market, or they financed and bank won't let them do a short sale.

JuiceMan: Second-hand information from an industry source. Take it for what it's worth, which is probably no more than fakeestate's original post. All I meant was that a situation like this at 277 would suprise me less than, say, at 300. But it would still surprise me.

Stock market is down 50%, and this town's RE was inflated by the folks who run it.... and now pretty much the entire country is shitting its pants. So why would anecdotal 50% RE declines surprise anyone?

500/sq ft here we come!

"So why would anecdotal 50% RE declines surprise anyone?"

Because the story and the numbers don't make any sense. I'm all for anecdotes, but the numbers need to work. On this board, all you need to do is throw out a crazy doom and gloom anecdote and the herd revs itself up clamoring for more. nyc10022, do you enjoy being part of the herd?

> nyc10022, do you enjoy being part of the herd?

When someone is walking alone, and others start following you only afterward (in this case months later), thats not "part of the herd", thats the shepherd.

;-)

I see a scenario like this...
Never before in the history of a building has an apartment in this line EVER sold for >$1 million. From 1994-1997, apartments of this vintage typically sold anywhere from $350K-$550K. Then, the market took off, and this apartment was shockingly worth close to $1M in 2005. Then, the market went "hyper" in 2006, and this apartment went on for $1.2M and, in a multiple bidding war fueled by the greed and shrewdness of brokers, sold for $1.5M shocking not only everyone living in the building, but neighbors in the surrounding buildings as well.

Fast forward to 2008, and you'd logically put the apartment on for $1.2M since that was it was really worth without the brokers hyper-greed and manipulation. Bids come in at 20-30% less than that since the equities markets just took a huge hit, financing is harder to come by, and people are getting laid off. So, what, it's down to $850K? That's what it was in 2004, so most people in the building wouldn't even take a loss if they had to sell now.

This is not big news at all, completely not shocking, and, in fact, a little hopeful knowing that apartments are returning to some level of affordability. If it gets sold for $300K - now THAT would be news!

West81st: do you have more information about 277 West End? It's far from the best building on West End, but the location is decent if you can stomach Schwab House views. If the A-line ever came on the market (8-room) with most rooms facing West End, I'd consider it. Prices seem depressed compared to rest of West End. Agree it's not 300.

"Stock market is down 50%, and this town's RE was inflated by the folks who run it.... and now pretty much the entire country is shitting its pants. So why would anecdotal 50% RE declines surprise anyone?"

Maybe because a home is where you LIVE. And RE is not as liquid as stocks, and RE sales typically lag other indicators; therefore a direct correlation wouldn't make sense.

I'm with JuiceMan. This story sounds suspect. If anything it's probably an over-exaggeration on price. Or a divorce/quickie sale so the other half doesn't get any gain.

Brings up a question - can someone take a capital loss on their home for tax reasons if they sell within a certain time frame?

You can't take a capital loss on your home.

you know, I did not know that...

that sucks.

but, given that you get an incredible break on the upside... understandable...

> Maybe because a home is where you LIVE. And RE is not as liquid as stocks, and RE sales typically
> lag other indicators; therefore a direct correlation wouldn't make sense.

Just as none of these things stopped RAMPANT speculation on the upside, I'm surprised you think they would keep values stable on the downside. If anything, the illiquidity would mean even BIGGER downside in a fire sale...

I buy the lag, but this is anecdotal, and still less of a decline than the stock market, which did not have the same bubble.

nyc10023: Every coop is going to have some problems in this environment. 277 is no exception. The story just happened to ring a bell, and the geography fit.