“Time Kills Deals” – The Real Estate Mulligan
“Time Kills Deals” – The Real Estate Mulligan
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“Time Kills Deals” – The Real Estate Mulligan
Property Spotlight – On the Market
401 Beacon Street unit 2 – Price Increase… Seriously?
Well Bought/Well Sold
434 Marlborough Street – Good Value on the West Side of Mass Ave – Well Bought
333 Commonwealth Ave, unit 22-24 – Dreadful Floor Plan, But a Good Deal – Well Bought
“Time Kills Deals” – The Real Estate Mulligan
From time to time, people buy a property and within months they put it back up for sale, often without ever having spent one night there. There are plenty of valid reasons as to why this can happen: job transfer, divorce, health issues, etc. Sometimes the purchase just wasn’t well thought out.
When it comes to what we call “real estate mulligans,” the name of the game for sellers is to get their money back (net of fees) ASAP. The problem is that the fees are significant - round trip you’re talking in excess of 10%. While mulligans aren’t necessarily a trend, it happens more often than you’d expect. Here are a few recent ones.
There’s an expression in real estate brokerage that “time kills deals,” meaning that if you don’t keep up the momentum in a transaction, buyers may think things through and have a change of heart. As fiduciaries, we advise our clients to avoid getting swept up in the frenzy of a transaction; liquidity in high-end real estate can be temperamental.
For patient buyers, these can be opportunities, but sellers are usually reluctant to take a quick loss. More importantly, in a buyer beware state, we’d do some extra due diligence to make sure that there isn’t something that caused the sellers to hit the exit so quickly.
Property Spotlight
Batterymarch Group is focused on buyer representation, so the highlighted listings are not ours. These are our opinions, so take them with a grain of salt. We’re happy to set up showings of these properties, offer our valuation analysis, and assist with preliminary renovation budgets when needed.
401 Beacon Street, unit 2 – Price Increase… Seriously?
Unit 2 at 401 Beacon Street, a 2,877 square foot three bedroom floor through unit is back on the market for $5.9 million ($2,051/sf), $405,000 above last year’s asking price. 401 Beacon Street was converted from an apartment house into six high-end condominium units as part of a 2016 redevelopment.
Out of the gate it looked like this project was going to be a home run when the 6,100 square foot penthouse duplex sold for $14.3 million ($2,332/sf). As it turned out, unit 2 and unit 3 didn’t find buyers and the developer turned to the rental market.
This unit has a lot going for it – single floor living, direct elevator access, full time superintendent, two onsite garage parking spaces, and reasonably good finishes. So why hasn’t it sold?
In our view, when people are laying out nearly $6.0 million for a three bedroom apartment, they expect at least three full bathrooms, this unit only has two. The location is good, but not ideal – the south side of Beacon Street doesn’t bring the same money as the river side. Finally, and this is subjective, having been in the unit a number of times, the ceiling height seems a bit low to us.
It’s hard for us to take these kinds of price increases seriously. This unit has been on and off the market for years, we’d say that the market is sending a clear message. Additionally, once it goes into the rental market, we’d no longer consider it new construction – maybe that extra $400,000 is for the patina from the previous tenants? At the right price, this could be a great place, but let’s be serious.
401 Beacon Street, unit 2 is co-listed with Cabot & Company and Campion & Company. As usual, we’d be happy to set up a showing and walk you through our valuation analysis.
Well Bought/Well Sold
434 Marlborough Street – Good Value on the “Other Side" of Mass Ave – Well Bought
It took just shy of 200 days, but 434 Marlborough Street, a 4,400 square foot 5 bedroom property changed hands for $4.075 million ($926/sf), a 25% discount from the fanciful original price. The house, which sits on the west side of Mass Ave, is an older Payne Bouchier renovation, so the quality of the work is good.
The lower level of the building is a separate income generating apartment with private outdoor space. The main house occupies the top three levels, with a nice roof deck. The sales agent hyped the flawless renovation, but no matter how good it was, after 12 years you should be thinking about the next renovation.
Living on the “other side" of Mass Ave isn’t for everyone, but we think that was reflected in the valuation. We’re notoriously anti-basement living, but the idea that someone would pay us to live in our basement is very appealing. The deal was right on this one, it was – Well Bought.
333 Commonwealth Ave, unit 22-24 – Dreadful Floor Plan, But a Good Deal – Well Bought
Unit 22-24, a 2,796 square foot 4 bedroom unit at 333 Commonwealth Ave has a new owner with a sale price of $4.294 million ($1,536/sf), 9% below the original asking price. The unit comes with two parking spaces and there is a common roof deck.
333 Commonwealth was one of Boston’s first residential hotels. In keeping with the times, none of the 24 apartments had kitchens as everyone took their meals in the main dining room. In the 1950s, the property operated as a home for the aged and infirm (nursing home), and it was subsequently converted into 24 condominium units in 1981.
One of our pet peeves involves combining two units by simply taking down the dividing wall and eliminating a kitchen. In this case, a bedroom became a ridiculously oversized closet, and two hallways were combined creating a cavernous space in the center of the apartment. It’s just not a good use of space.
Layout issues aside, we’re also not thrilled at the idea of a four bedroom apartment with only two bathrooms. Hopefully the new owner will add a bathroom and make some other changes. For all the short comings, valuation wins the day on this one. Backing out the value of the parking gets the price per square foot below $1,400. This was a fair deal for both parties, we’re calling it – Well Bought.
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About Batterymarch Group LLC – Batterymarch Group is an independent full service real estate brokerage and advisory firm focused on the downtown Boston high-end residential market. We represent both sellers and buyers with a sharp focus on valuation. We also offer sub-advisory and owner’s representation services to financial institutions, family offices, and trustees.
About Andrew Haigney – A 25 year Wall Street veteran, Andrew held senior positions at leading global investment banking institutions where he routinely valued and negotiated complex securities transactions on behalf of institutional clients. Andrew has been an outspoken advocate of a universal fiduciary standard. In founding Batterymarch Group, Andrew brings that same discipline and passion to the real estate brokerage.