Sunday, May 18, 2008

Bargains come at a price when a great apartment is inside a bad building

Do your shareholders a favor, and don't become a board indifferent to aesthetics and don't let your staff become entrenched-but-indifferent. Part of your duty to your shareholders is to keep their property values high, and you can help by not letting the common areas deteriorate, as this article discusses...

New York Magazine
Inner Beauty Goes Only So Far
When a great apartment’s in a foul-looking building, be careful of the bargain.
By S.Jhoanna Robledo
Published May 18, 2008

The junior four in the East Eighties was pretty, with a smartly renovated kitchen. But the outside hallway “looked like a Days Inn,” says Jason Isbell, who was apartment-hunting with his wife. The carpet was frayed, and three sconces barely lit the corridor, making it feel even dingier than it was. And the wallpaper: “You could tell where the heat from the vent came down because it was all sooty … It made the apartment feel a little cheesy. It was such a stark contrast.”

They passed—and they were probably right for doing so. Unless a buyer intends to stay in a place for a “very long run,” says Prudential Douglas Elliman broker Leonard Steinberg, “I tell people that if they’re going to buy the most beautiful apartment in the worst building, it’ll be a mistake.” Longtime board members may be indifferent to cosmetics; entrenched-but-inefficient building staff too hard to replace. And before you know it, you’re the seller persuading someone else to overlook the same problems.

A hot market forgives most ills, but “when you have more competition, like now, seemingly small things like lighting or dingy hallways or smells are magnified,” says appraiser Jonathan Miller. “Whenever there’s a weakness in the market, people are looking for reasons not to buy.” Elliman’s Stefani Pace had clients nearly walk away from a dream Harlem duplex because it shared a fence with a junk-filled backyard. “It almost destroyed the sale,” she says. One Corcoran broker’s Christopher Street listing sat on the market for months because the building stank of urine and common areas were lit harshly. “People would walk [into the apartment] and say, Oh my God!” she says. “It took two people to market a one-bedroom during open houses, because we had to have someone Febreze outside every 30 minutes.”

That said, one person’s deal-breaker could be another one’s bargain. Miller says ghastly common areas can affect values “as much as 5 percent.” Steinberg recently handled the sale of a “beautifully scaled” downtown condo that saw one buyer renege largely owing to a tacky red-and-gray-Formica-burdened lobby. “At the end of the day, the owner had to settle for less,” he says.

(Photo: Steven Ainsworth/Alamy)

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