Friday, June 22, 2012

What a Difference 6 Months Makes (Pt. II): 678 Dean Street


It seems like just yesterday that 678 Dean Street was this ratty little 25' x 25' that a developer swooped up for $680K and tried to flip for $999K just a few months later.  Ok, well not yesterday.  But it was still available for $899K just 6 months ago.  To and from watching soccer matches at the lovable bar Woodwork across the street, we'd notice the renovation going on over the past few months at the house and wonder how much they'd want for it renovated.  The answer?  $1.575M as of 6 days ago.

What's the renovation like?  What'd they do to inject another $675K of asking price into this tiny place?  Well, they blasted the paint off the brick exterior for more curb appeal, and they went shiny & generic inside:

 

That mantle looks mighty lonely in the corner amidst this renovation that will remind many of 16 Hunts Lane, 400 Bond Street, and 643 Degraw.  But none of those tiny, generic renovations were asking above $1.1M.  The developers on Dean threw a little brick down and landscaped the "yard" (with recently-sawed tree stump intact) in the back & called it a day:


The Prospect Heights market is burning hot, but we don't know that $1.575M is quite the price.  We'd much rather have gotten you into 542 Carlton Avenue at a cheaper price, with more original details, a block closer to the train, on a more quaint block, just a few months ago.  But that's long-gone.  This project at 678 Dean Street wouldn't be the first time we saw a developer try and turn a quick flip sans renovation to no avail, only to decide to try their hand avec renovation for much more money.  208 Lefferts Place went for $600K last summer, then wanted $849K last fall as a shell, then decided to start a renovation as an attempt to fetch $1.5M just last month.  Very similar play-book to what we see here at 678 Dean Street.

Who doesn't love making a quick buck, right?  Oh yeah, that's right... the people the buck's being made off of.  Just look at the salty comment on 643 Degraw Street, a property that actually managed to finally get in contract after a price drop to $899K.  One reader with the handle "smartbuyer" moaned, "Not that sweet considering this house was purchased a few months ago for $525,000."  As if that actually has anything to do with it.  The world we live in is full of mark-ups that we gladly pay for things we can't do ourselves or can't be bothered to do.  For everything else, there's the Karl Marx Mastercard:


"I can't imagine anyone paying close to $375,000 more than this place was purchased for a few month ago when they see the cheap work that's been done," the reader goes on to groan.  Well, across the street from 678 Dean, there's nothing like the hanger steak at The Vanderbilt to cure a hangover on a Sunday.  Of course you can buy a dozen eggs (not just two) at the store for a few bucks, the steak couldn't cost more than a few bucks, so does that mean the bĂ©arnaise is $10?!?!  No, it just means we live in a world where mark-ups abound and we make cost-benefit compromises about them every single day.  It is what it is.

The buyers of tons of great properties all over Brooklyn over the past few months could sell them for a profit this very instant just a few months later (even if they had no intention of being flippers) simply because the market's run up so much.  In fact, as we speak, buyers are inking contracts on some places at prices that will seem appallingly low, and on other places that will seem appallingly high, to spectators when the sales are closed and the prices are recorded publicly a few months from now.

Don't want 678 Dean Street for $1.575M?  Neither do we.  But that doesn't mean you can get in your time machine, go back just 6 months, and go buy the infinitely-superior 270 Sterling Place for $1.537M either.  We were inside 270 Sterling on a cold winter day with a 2nd chance to get it for a crowd of Platinum Members.  Where were you?  Wanna buy some Apple stock before it goes back to $600?  Guess what... you might be buying it from someone who paid $315 for it just last spring.  Are you going to be salty about their profit?  That's just how buying and selling things in markets works.  But please don't hate the player; hate the game.

Pro's:  it's technically renovated, it's technically a double-duplex, it's technically a good location, it technically has a backyard

Con's:  small, how they're calculating 25' x 25' into 3,000+ sqft we'll never know, the renovation in will elicit a "Meh" from most

Ideally:  Huff & puff about the owner's cost basis if you must.  The reality is some people make the mark-up and some people pay the mark-up.  The good news is, depending on the scope of the product, sometimes you can choose which one you'll be.

6 comments:

  1. one big issue: bus stops right outside. having lived at lafayette where the bus stopped right outside the townhouse, i can attest that it will be noticeable. i lived there for 2 years and heard it every day. and dont get me started on the dust.

    www.onehansonplace.com

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    1. Agreed. Same problem at Dean & Franklin right now

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  2. For the sake of making your point (prices are going up - true) you're being a bit disingenuous :)

    The salty comment on 643 Degraw street was pointing at the shoddy renovation work. Would a decent developer offering a better renovation have asked for more money? I'm not sure. What we have is a developer asking good dollars for mediocre work, simply because the market can bear it and he can get away with it.

    To use your analogy, imagine going to a mediocre steak house charging the same as the best steakhouse in town. Would you be happy?

    Anyway, I'm curious to see where it closed!

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    1. "disingenuous", eh? - ouch. There's a difference between "shoddy renovation work" and what we'd call "generic renovation". We retain that the listing's claim that "the renovation is not overly ornate or demanding" is a fair one. People buy $6M finished houses in Brooklyn Heights and put another $1M into them to personalize 'em. Luckily, it's a free market and it's a free country. Developers can do what they wanna and the market will reward or punish 'em for it. What seemed most salty about the comment to us was trying to bring the seller's cost basis and date of acquisition into the picture, as if that alone determines the final equation.

      One reader even took the time to wish, "I hope the new buyer will restore the first floor as a garden apartment and the upper three floors as a triplex," in the comments on 270 Sterling:

      http://bktothefullest.blogspot.com/2011/03/deja-vu-all-over-again-270-sterling.html#comment-form

      Isn't that the owner's prerogative?

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  3. Closed for $1.575M in September 2012

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