Above vs. Below Grade Living Area – New MLS Transparency
There’s Nothing Luxurious About a Basement
Property Spotlight – On the Market
- 142 Beacon Street, unit PH – A 29% Markup in Just Over a Year? No Thanks
Well Bought/Well Sold
- 17 Louisburg Square – Hail the Liquidity Gods – Very Happy Brokers – Well Sold
Above vs Below Grade Living Area – New MLS Transparency
The eastern Massachusetts Multiple Listing Service (MLSPIN) has updated their systems to break out living area square footage above and below grade. With “garden and parlor” level units so prevalent in the Back Bay and Beacon Hill, this added transparency is very good for buyers. We’ve long taken the stance that a discount should be applied to “lower level” living areas and this will make that exercise more straight forward
We don’t hide the fact that we’re not fans of below grade finished living areas, i.e. kitchens, bedrooms, etc. Almost all below grade spaces have that distinctive musty basement smell; they’re prone to flooding, sewer backups, and rodent infestation.
It’s one thing to have a finished “recreation room” for kids and teenagers, but when you cross the line and extend core living area into the basement, you’ve officially left the world of “luxury” real estate – there is nothing luxurious about being in the basement.
We couldn’t imagine buying a stately home in a fancy suburb and relocating the kitchen or “primary” bedroom down to the basement. No one in their right mind would do that. If for some crazy reason basement dwelling was to become a trend, maybe then we would reconsider our stance on subterranean living – but until then, basements are dank.
As welcome as this new level of disclosure is, we expect that most sales agents won’t specify these details in the listings. Who can blame them? If they’re looking to get penthouse prices, why would they highlight the fact the the bulk of the living space is “down cellar”?
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.
142 Beacon Street, unit PH – A 29% Markup in Just Over a Year? No Thanks
The 3,908 square foot four bedroom penthouse triplex at 142 Beacon Street is back on the market after selling last January for $9.2 million ($2,354/sf), or roughly $8.79 million net after standard transaction fees. The new asking price (drum roll) is… $11.3 million. Yes, you read that right. You’re going to have to pay a 29% premium over the estimated net sale proceeds realized just over a year ago.
We profiled the unit after the prior sale, see “Penthouse – No Triplex Discount – Well Sold.” It’s a nice unit and the location is A+. We felt that last year’s sale price was more or less market correct for a brand new, reasonably good quality renovation.
Our knock on the unit relates to spreading the 3,900 square feet over three levels. The building is only 23 feet wide so you lose the sense of spaciousness that you’d expect in a large apartment. Stairs are a fact of life in triplexes, and that’s not good when your demographic targets are candidates for new hips and knees. There is an elevator with stops on all floors, but it’s common to the building and shared with other unit owners.
It took 675 days to find a buyer last time around. If $8.79 million was fair market value a year ago when the economic back drop was much more accommodative, we struggle as to why the property should command a huge premium now in the face of economic uncertainty. Where we come from, assets trade at discounts during periods of economic stress.
Unit PH at 142 Beacon Street is listed with Gibson Sotheby’s. We’d be happy to set up a showing and walk you through our valuation analysis.
Well Bought/Well Sold
17 Louisburg Square – Hail the Liquidity Gods – Very Happy Brokers – Well Sold
The liquidity gods worked their magic for the sellers of 17 Louisburg Square. The house, which previously sold in January of 2021 for $13.5 million ($1,774/sf), or about $12.9 million net after fees, changed hands last week for $14.8 million ($1,978/sf) after just 32 days on the market. It’s our understanding that the seller didn’t make any improvements to the property during their 15 months of ownership.
This is a typical Louisburg Square house, about 7,500 square feet on five floors, 5 bedrooms, elevator, and assigned parking at your front door. The house needs comprehensive updating – we profiled the 2021 sale (see note here) and pointed out that we had a client seriously consider the property and the renovation estimate came in well north of $5.0 million.
We’d say that the lesson here relates to pricing strategy. The original asking price in the most recent sale was $15.5 million. After just 32 days the seller struck this deal for $14.8 million (before fees), a 4.5% discount to the asking price.
Contrast that to the previous go around when that broker kicked things off with a ridiculous asking price of $20.5 million. At that price it’s fair to say that no one really took the offering seriously. This was illustrated by the fact that the property languished on the market for 421 days. It took a bunch of price cuts and a second broker to get a deal done at $13.5 million (before fees).
With respect to valuation, last year at a much lower price we called it Well Sold, however we noted that it’s an amazing property and the premium was probably worth it for a Louisburg Square home. It’s hard for us to swallow a $1.3 million markup in just 15 months. Adding insult to injury, we’d estimate the round trip transaction fees to be in the neighborhood of $1.261 million. The winners here were clearly the brokers, it was astonishingly – Well Sold.
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.