This week a new construction townhome on 815 Crest Drive closed at $3,425,000. If you recall our October blog post (A Manhattan Beach Deal or Rip-Off), I compared this townhome to its attached counterpart on 814 Highland Avenue that sold for $3,800,000.
Both townhomes are gorgeous plantation style with virtually the same square footage, so why the discount? Well, if you are a local then you know that this lot runs east to west so the unit on Crest doesn’t have the views, natural light, and general good feeling that Highland possesses, thus the almost $400k discount.
By re-examining the new construction attached complex at 428 23rd Street and 429 Marine Place that I touched on in the previous blog, we can help our buyers avoid being over eager and protect themselves from overpaying. The Manhattan Beach Deal or Rip-Off could be classified as a rip-off, but really it is a case of moving too quickly. Both of these townhomes were of the same square footage and layout, just different sides of the street on a lot that ran north to south. One sold for $3,849,000 and the other sold at a massive discount of $3,065,000…that is a $784,000 (or 20%) discount folks.
A similar north to south lot on 315 Marine Avenue and 316 Marine Place sold in 2015 for $3,520,000 and $3,499,000 respectively. That is only a $21,000 (less than 1%) difference on a new construction site with the same north to south lot dynamics as 428 23rd Street and 429 Marine Avenue and virtual spitting images of one another.
The reason we were waiting on the 815 Crest Drive sale result is that its counterpart on Highland sold for almost the same price ($3.8 million) as 428 23rd Street. So should 815 Crest Drive sell at a discount of almost $800,000? Absolutely not. But what it really shows is exactly how much that hurt 428 23rd Street. Its counterpart at 429 Marine Place captured an almost $800k discount on a north to south lot that has very little difference between either unit whether it be in size, view, etc. That is a shocking discrepancy when you compare it to the $400k discount between the Highland and Crest Sales that had very different views, natural light, etc.
In the end, what can be learned here is that the townhomes on 428 23rd Street and 429 Marine Place should have sold around $3.8 million together…not separately (or sold at $3,065,000 together…not separately). Maybe the buyer of 429 Marine Avenue really did get a deal, but if I owned 428 23rd Street I would not be happy having everyone hold me to that lower comparable.
The moral of this story is not discouraging quick offers at asking prices, but rather if you are the first buyer into a newly constructed townhome complex with similar units then you must be sure that there is another ready and willing buyer planning to match your price. Protect yourself with a clause ensuring that the seller must find a buyer willing to pay a similar price, and if not, then you may delay your closing until that buyer is found…or you get a reduction in price.
Unfortunately, it looks like that was not done in the case of 428 23rd Street. It is almost a $800,000 mistake that could have been easily avoided.