I kid you not, my iPhone now shows me this warning when various fraudsters try to reach out and touch me. Who’s my guardian angel here, is it my carrier, T-Mobile? Good for them!
I recently sold a new-construction, 6,800 square foot, waterfront house for $6,900,000. The builder swore he was losing money at any price below $7.2M. He paid $3.5M for the land two years ago, so there were carrying costs, plus plenty of added site-development costs associated with the Town’s excessive (insane) regulations for direct-waterfront building.
But how much per square foot does typical luxury construction cost a Greenwich builder? $300 per foot? $400 per foot? At $400/ft., the 6,800 sq.ft. house I sold would have cost the builder $2,720,000. Add land cost of $3,500,000, and you’re up to $6,220,000. That suggests a $680,000 “profit” for two year’s effort. Better than an outright loss, but not by much.
Now we have two new examples to study: backcountry Greenwich’s Doverton Drive, off Round Hill Road, has seen the recent sale of two spec houses, one a likely success, the other, less so
Very nearby, someone has just shelled out $25M for a classic old mansion on almost 20 acres, so let us agree, this is a fine neighborhood. But fine neighborhood or not, even experienced builders can go astray, either by paying too much for the land, or, more typically, by over-pricing at the beginning. Nothing, absolutely NOTHING dooms a project more completely than initial gross over-pricing. Copy and paste that last sentence on parchment paper, get it framed, and hang it in your dressing closet where you will see it every day.
Example 1: 19 Doverton Drive (pictured above)
- Sold for $7,970,000. (initial asking price $8,800,000)
- Square footage: 12,117
- Land cost: $2,525,000
- Start-to-finish: 2 years
- $300 per foot X 12,117 = $3,635,100 + (land cost) $2,525,000 = $6,160,100.
- Possible profit: $1,809,900?
Example 2: 1 Doverton Drive (above)
- Sold for $6,600,000 (initial asking price $10,950,000)
- Square footage: 10,767
- Land cost: $2,650,000
- Start-to-finish: 2 years
- $300 per foot X $10,767 = $3,230,100 + (land cost) $2,650,000 = $5,880,100.
- Possible profit: $719,900?
All you paid-up members of the Gid Fountain Fan Club* know that October 15th marked the 6th anniversary of the day I picked up the new Jaguar. Six years later, I’m still driving it, which is unusual for a Greenwich resident. We tend to swap out cars after two, maximum three years (houses, six to ten years, spouses, ten to twenty), yet here I am with the same ol’ clunker, go figure.
The thing is, it still looks new, smells new, acts new! It has been completely trouble-free all these years, so there is no incentive to trade it away. Do I see possible benefits for a Realtor to own the new Tesla that does zero to sixty in 1.9 seconds? Yes, I do see a possible need for such a clearly practical, real estate show-car. But dammit, the Jaguar is just plain better looking than the Tesla, so that’s that.
Anyway, here’s my brief review of this phenomenal car…
The best parts:
The sheer, over-whelming, airplane-like power. Getting on the highway couldn’t be easier. Those specs in your rear-view mirror? Those are the cars you got on with.
The “feel” of this car is very good. Maybe it’s the seats, perhaps it’s the steering wheel, or the smoothness of the ride, not sure how to pin it down, but no other car ever felt like this.
The fit and finish are superb. Again, never experienced this high a level before.
The parts that took, er, getting used to:
This is an XJ “L”, the L stands for long-wheelbase., which added about 6 inches of rear leg-room for passengers (real estate show car, remember?). The problem with a long car is getting used to the idea that the back needs to catch up with you. I complete my turn, thinking I’m ready to proceed, but the passenger-side rear wheel bumping the curb reminds me there’s still some car length left out there.
Low-profile tires: Jaguars, Porsches, BMWs, Ferraris, all powerful sports cars come with “low-profile tires”, which means very little sidewall, which means very little protection for your magnificently expensive alloy wheels. I have learned to spot and avoid potholes on pitch-black, rainy nights, at 75 MPH. New York state, which taxes its residents more than anyone else, has the worst roads of any state I drive in. I see that the new Tesla also comes with %#@&-ing low-profile tires, that’s swell.
Low-profile tires look really cool, but until roads improve (or wheels get tougher), I’d advise against them. But if you insist, then keep your eyes peeled for pot-holes!
Am I glad I bought it? Yes. Would I buy another? Yes. (nearest dealership is Darien)
End of review.
*Gift rates apply, through December 24th!
Broker David Ogilvy has sold his own listing for $21,000,000. The historians among you will quickly recall he did the same thing with this property in 2004! Back then, in a better market for Greenwich’s “Conyers Farm”, 25 Lower Cross fetched $45,000,000. 13 years later and a loss of a paltry $24M, the deal has been done again.
One of the un-heralded skills of brokering is the ability to get your seller to throw in the towel and just let the property sell. In this case, the seller waited two years, which, in the current market, is the mere blink of an eye. There are presently a dozen or two high-end properties (almost all w-a-a-y back country) passing their 10th year on the market, so I’m impressed with what happened here.
But what else happened here? Why is this spectacular place, which the current owner made even more spectacular during his time of ownership, selling for such an enormous loss? It’s not as though market punishment is being spread evenly. No, Conyers Farm for some reason bears the brunt. Other parts of town, particularly waterfront, but even mid-country, have owners showing handsome profits after 10+ years of ownership. For the nonce, Conyers takes the hit, but I truly believe it will rise again.
2017: What A Year!
Here’s a review of this year’s super high-end sales, so far:
- 9 Sabine Farm: $25M
- 460 North Street: $22M
- 25 Lower Cross Rd: $21M
- 116 Oneida Drive: $20.377M
- 60 Oneida Drive: $19.250M
- 7 Cobb Island Drive: $15.250M
- 200 Guards Road: $13.5M
- 6 Meadowcroft Lane: $13.065M
In the case of Greenwich real estate, “the market” is a collection of un-related, wealthy individuals who make independent decisions about what they will pay for a particular property. Human nature can cause those of us who regularly observe this market to accept or reject sales examples based on whether or not they re-enforce existing beliefs. Certain sales, especially high-priced ones, will often be dismissed as “flukes” by know-it-all brokers and bloggers.
A perfect example of this is the recently reported deal at 9 Sabine Farm Road, asking price $31,500,000. Along with the recent sales of 460 North Street ($22M), 116 Oneida Drive ($20.377M), 60 Oneida Drive ($19.250M), not to mention three other deals in the $13M-$15Ms, the skeptics, the know-it-alls, and the nay-sayers find themselves frustrated and confounded:
“Flukes”!, they cry. “Fools and their money”!, they sneer. Yet, those pesky rich people continue to defy expectations. Sorta reminds me of the way Dr. Seuss’s Who people carried on with their Christmas even after the Grinch stole every Christmas-related thing they had.
No one’s denying that wealth is fleeing the high-tax northeast. This week’s Wall Street Journal published a sad little chart showing just how many multi-millionaires have pulled out of New Jersey, New York, and Connecticut The three states have lost a combined $19.7 BILLION dollars worth of income producers over the last few years. And there is no reason to think anything will happen soon to reverse this trend.
And yet… here in Greenwich, we continue to have a decent showing in our ultra-high-end market segment. Notwithstanding the mystery of it all, this fact should not cause you frustration! Obviously, for reasons other than wealth-preservation, a small number of very rich people continue to want to live here. That’s good news, bunky, so go ahead, slap on a happy grin!
I ordered this $199 “sleep and fitness monitor” from some outfit called BodiMetrics. You wear it on your wrist, along with a little thingy on your thumb. That thumb part has two interior sensors that glow red when it’s on and miraculously tracks your blood-oxygen level! It works the same way as that finger-clip thing they stick on Grandma when she checks into the hospital. This is the home-version of that very sophisticated medical technology.
Here’s what I’ve learned: My oxygen level is almost always fine, way up there at 98% throughout the night, and is particularly good if I’ve done my gym workout that day (duh). My resting heart rate runs low, around 44 beats per minute, and when I dream about real estate deals collapsing, it can jump as high as 70 or more, but I don’t think that’s a problem, either.
The thumb-clip buzzes you to wake you up if your oxygen level drops below 94%. That’s only happened to me once in a month’s use, and it happened when I was sleeping on my back! So that awareness has caused me to stop doing that. I may start out staring at the ceiling, but eventually, I make at least a half turn.
The moral: get sufficient exercise each day, drink lots of water, lay off the cigars past 8 PM, don’t get liquored up! Oh, and consider blowing $199 on this O2 Vibe thing. Overall, I find it helpful.
P.S. In order to read your nightly results, you need to download the app on your mobile device. That part’s free, of course, and easy to do, then you just activate Bluetooth and… Bob’s your uncle!
P.P.S. BodiMetrics makes another device they call a “performance monitor”, basically a home-version of an EKG monitor. You hold the thing for 20 seconds and it tells you what kind of heart-rhythm you’ve got that day. Ever hear about those poor saps that drop dead whilst exercising? This thing prevents that. Truly life-saving. Oh, and the company’s support line is excellent. They have medically-trained people answering the phone, I like that.
Note: As always on this blog, this is a free plug! I received no compensation, no reduced product cost, no nuthin’!
The typical buyer’s biggest mistake is not believing it when the broker says, “There’s nothing wrong with this property. The reason it’s been on so long is because the initial asking price was too high”.
The most alert among you will, after reading my previous post, realize that if over-pricing causes properties to sell for far below their actual market value, then obviously those must be the smartest properties to buy! And you would be right, except for one teensie-weensie little problem: buyers remain convinced that a “stale” property has some hidden defect and there’s a “real” reason it hasn’t sold that the broker won’t disclose.
And of course, this near-universal suspicion causes stale listings to drop even further in price. That’s fine for the buyer who finally gets it, but plenty of other buyers miss their chance as it is drops further and further into the true bargain range.
Here is an example: a $6,000,000 property starts out foolishly priced at $8,000,000. A year later, it is marked down to, say, $6,995,000. Another year goes by, and it’s down to $5,995,000. You could pick it up at this point for $5,500,000 and you would be saving $500,000 from it’s “true” value of $6M.
But of course, no one touches it at this point because, after two years of sitting on the market, it has become stigmatized: “something must be wrong with it”, say the buyers.
So now the sellers have to keep reducing it in order to make the place such an incredible bargain that it overcomes the stigmatization. What price will do the trick? For this example, it will probably have to drop to $4,995,000. At this price, there’ll be a last-minute flurry of activity and possibly multiple offers. It will likely close at that last asking price of $4.995M. Did the buyer get a deal? Unquestionably. But suppose you picked it up 4 months earlier at $5,300,000? Not quite as good a deal, but you could have had it all to yourself back then, with no one competing against you.
Here’s the moral to the story: Don’t wait till the bitter end. If your broker tells you it’s a bargain, buy it now! If you don’t believe your broker, get a different broker. And finally, when you’re out looking, by all means look at all the new-to-market stuff, but also have your broker put together a package of all the listings in your price-range that have been on the market for one year or more. That is where the bargains are hiding.