Unusual Persistence

Posted by Dave Fratello on Tuesday, April 5th, 2011 at 2:05pm.

Dial back to somewhere in 2009, and imagine trying to sell.

Those were rough days. Higher-end home buyers had temporarily lost their shirts, the economy was teetering, it was unclear how anyone was supposed to get a mortgage, and the local RE market was about as slow as it has been in years.

Into that mix, in June 2009, jumped 521 12th (4br/3ba, 3020 sq. ft.). It was about to become a fixture.

The home's a late-80s build that someone had last grabbed back in late 2005 with a must-have urgency – the listing logged just 18 DOM way back then, in a post-Thanksgiving listing.

The buyers did have it, for $1.760m. But the property was a major bore – frumpy and dated and needing a lot to revivify it.

After spending quite nearly $2m to buy it, the new owners took on a big project with gusto. They gave it a wholesale revision, with a modernistic flair inside, an update to the exterior, even the addition of some space for the first-floor master and master bath in back. (If you saw it, the computer workstation right off the master bath shower was a head-turner.)

It became a semi-great home, but, by appearances, a second home – and in 2009 those were becoming more like albatrosses than luxuries.

About 2.5 years after acquiring the home, probably less than 2 years after the re-do was complete, the owners offered the revised product back for $2.295m (+$535k/+30% after the remodel).

That was their first mistake.

The non-public portion of the first listing also included this treasure of a quote:

Owner won't lower the price - Bring your offers.
Talk about your mixed messages.

No one, and we mean no one, wanted this snazzy 3br at or near $2.3m. (One of the listed 4br is a cool office at the top of the entry stairs off the kitchen, very hard to imagine as an actual bedroom.)

The list price was quickly down to $2.099m within 2 months. Hey, we thought the owner wouldn't lower the price!?!

After a bogus re-list, the price was at $1.995m, after 9 months. No deal.

The DOM were mounting. Time for another bogus re-list at 10 months. Same price. No deal. 

The March 2010 re-list ran an additional 255 DOM, bringing total (true) DOM over the 500 mark. Now that's stick-to-it-iveness.

A deal flirtation occurred in Summer 2010, after a micro small cut to $1.979m. But that first posted escrow flopped.

By September 2010, the price was at $1.899m, basically off $400k from start, and then – from MBC's perspective – something changed.

Your blog author had a client looking seriously at 521 12th. We talked a lot about the benefit of the location (nearly across the street from downtown MB), the snazziness of the remodel, and so on. Of course we talked price. Though the client did not submit an offer, here's a whiff of our view at the time, from a note to the client – with the list price at $1.899m:

There are not a lot of comparable sales to go by, but there seems to be support for a PPSF > $600 and a value in the mid-1.8s. I honestly thought these sellers were being unduly stubborn, but I can see why they're holding out, even if the market has been telling them they won't get their price.
For various reasons, we opined that the home's value was in a 1.7ish-1.85 range. The client did not write an offer.

But lo, some months later, someone did. With the listing agent, no less.

And now, after that unusual long-term listing and without resorting to an outright fire sale, the deal has closed for $1.820m. The final PPSF: $603/PSF.

With 4-5% commission costs, the sellers netted less than the $1.760m that they paid – not to mention carrying costs these past 2 years while the home was on offer and often vacant. This means that the costs of the big remodel were basically donated to the new owners.

At the end of this particular line, we see buyers grabbing a refreshed home for a 2003/4 price and pretty strong support for values in this particular part of the Martyrs neighborhood near downtown. We'd guess that the neighbors are happy that the sellers didn't totally cave – and that the for-sale sign is finally coming down.
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