Guest House Returns

Posted by Dave Fratello on Friday, September 11th, 2009 at 5:53pm.

Over time, pricing mistakes can be fixed.

Consider 672 19th, which returned to the market Friday after almost a year off.

As MBC noted in "Be Their Guest," the late-50s cottage (3br/2ba, 1675 sq. ft.) was acquired by the neighbors to serve as a "guest house." In March 2006, in an off-market purchase, they paid $1.550m for the property. (In our April 2008 story, MBC opined that it was "clear" they had "overpaid.")

Later they joined the back yards so that the bigger, newer home would have access to the pool at 672 19th. They spruced up the interior of the cottage with paint, carpet and decor, but no heavy lifting to update the house.

Just 2 years later, they reconsidered the guest-house plan and tried to sell at a nice profit.

The sellers sought $1.789m for a while – a fairly breathtaking overreach. ("Be Their Guest" runs down several issues with the property that made the price appear out of whack.) After a re-list, the property came back again last year at $1.599m, but again had no takers, and it quit last October.

What a difference a year makes.

Now 672 19th is back at $1.299m. That's $251k less (-16%) than the acquisition price from 2006.

The new price is not only a stark improvement, it may also be close to land value. Just a few doors down is 652 19th, a slightly bigger home – but a major fixer being sold "as-is" – also with a pool, was priced at $1.200m, and has drawn a lot of serious interest in its 2 weeks on market. Some of the same would-be buyers will trot down the street to 672 now.

We've changed our minds a bit about 19th – the block is nicer than we first said. (Mrs. MBC urged your blog author to reconsider.) But it looks like we won't have to change our opinion, stated in the April 2008 story:
If these sellers do get out from under 672 19th, we're ready to say we'll be astonished if it is with any net gain.
There won't be any net gain after all.
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