As Coronavirus Cases Grew, Some Wealthy Buyers Still Bought Multi-Million Dollar Homes

Some buyers pushed ahead with deals, while others looked to pull out or renegotiate amid the pandemic and stock market plunge

Source: Katherine Clarke | Mansion Global | Wall Street Journal

On March 16, as New York state’s coronavirus response kicked into high gear, Angelo Acquista and his wife Svetlana Acquista closed on a $19.5 million penthouse atop 252 East 57th Street, a luxury new development.

The couple said they had no choice: They’d already sold their previous home on Park Avenue and had placed a $2 million deposit on this one. Before the closing, their agent Marina Bernshtein of Halstead Real Estate armed herself with a mask and gloves to give Dr. Acquista, who specializes in pulmonary diseases, a final walk-through of the apartment. The closing was done over teleconferencing.

Ms. Bernshtein said her buyers got a great deal regardless of the pandemic, paying 48% off the apartment’s original listing price of $37.5 million in 2017. The six-bedroom apartment has two sprawling private balconies and views from the George Washington Bridge to the north to the Verrazano Bridge to the south.

“Corona or no corona, we wouldn’t have gotten a lower price,” Ms. Bernshtein said. Listing agent Tal Alexander of Douglas Elliman said the deal required “working overtime and thinking outside the box.”

All over the country, moneyed buyers continued to ink deals for real estate over the past two weeks, even amid the uncertainty of the pandemic and the stock market plunge. Some attempted to capitalize on the downturn by renegotiating prices at the 11th hour, while sellers sought to expedite closings before the market tanked further.

Agents, realizing that the market would grind to a halt once property showings were impossible, sought to get as many in-progress deals across the finish line as they could.

Last week, 14 contracts on Manhattan units priced at $4 million and up were signed, according to a report by Olshan Realty—relatively consistent with the number of weekly contracts signed at that price point in February. Donna Olshan, the creator of the report and an agent, said she was surprised by the number of contracts, but noted that some buyers may have seen the market nosedive as an opportunity.

“I have found in my 40-year career that the buyers who venture out in the worst periods do the best,” she said. “The recipe is cash and balls: Throw in a very low offer and see what sticks. No guts. No glory.”

One buyer signing a contract for an Upper West Side co-op for about $5 million moved to renegotiate, and scored another 4% off a deal that had been agreed to 10 days previously, said real estate attorney Pierre Debbas of Debbas Romer.

“Honestly, [the sellers] took the bird in the hand,” Mr. Debbas said. “If you’re getting almost exactly what you asked, do you want to take a gamble on what the world is going to look like 90 days from now?” For clients signing contracts today, Mr. Debbas said his firm is adding a “coronavirus clause” to contracts, mandating that if the pandemic gets in the way of the buyer obtaining financing, the deal can be nullified.

Allison Turk of EWM Realty in Miami said her clients had an opportunity to back out of a deal for a $14 million parcel of land in Miami Beach last week but chose to move ahead, closing last Friday. Before they closed, Ms. Turk said she received a call from a competing agent with a buyer offering to pay to take over their contract: a get-out-of-jail-free card. Her clients turned down the offer. “They weren’t interested,” she said. “They were committed.”

Others won’t have the option of backing out. For buyers who signed contracts for new development units in New York over the past several years, they’d risk losing deposits of 20% to 25% if they reneged, said appraiser Jonathan Miller. That is a departure from the last financial crisis, when buyers were only generally required to make 10% deposits, making walking away a little easier.

Adam Leitman Bailey, a New York real estate attorney who helped buyers wriggle out of contracts in the last financial meltdown using an old federal statute, said he’s already faced a barrage of calls from buyers looking to get out of condo contracts—and sellers looking to enforce them. It is early days in figuring out how many contracts will stand, he said. “If I don’t hear the right set of facts, I’m not taking the case,” he said.

Agent Lisa Lippman of Brown Harris Stevens said she is working on three deals this week, including two where she already has accepted offers. The apartments are priced at between $2.5 million and $5 million.

“In all three cases, the seller is taking less than they hoped to get, but that’s not really a change from the past few months anyway,” she said, referencing the recent softness in the New York luxury market. “And the possibility that we have a recession coming was already baked into New York City prices.”

Then there are those in urban areas rushing out to secure more desirable quarantine destinations. In Miami, real-estate agent Oren Alexander of Douglas Elliman said he saw a flurry of deals rushed through last week, as clients looked to swiftly relocate to Florida amid the outbreak. His team has closed four sizable deals since March 13, including a $13.8 million condo sale at the new Zaha Hadid-designed building in Miami. Some buyers planned to move in immediately.

“People were like, ‘I want to close ASAP because this is a better place for me to be quarantined,’” Mr. Alexander said. “If you’re cooped up in your apartment somewhere in Chicago or Detroit you think, ‘I wish I had a big house in Miami right now,’ where you can sit out by your pool while still being close to a major hospital. If you have a boat you can go fishing for the day with your kids, it’s like the ultimate quarantine.”

One homeowner in the Hamptons, speaking on the condition of anonymity, said he had been offered $500,000 by a renter to take over his 9-bedroom Watermill mansion through Labor Day, but he had to turn them away as he and his family had nowhere else to stay.

In Los Angeles, agents said they haven’t yet seen buyers try to renege on deals already in contract, but sellers are already more willing to negotiate on price.

Branden Williams of Hilton & Hyland said he had two deals close last week for around $10 million apiece. One buyer was able to renegotiate based on an appraisal last week, and got a 15% discount, he said.

Ben Bacal, an agent with Revel Real Estate, said he’s received calls from buyers looking for discounts on major listings. “Typically, I would never approach my sellers with these offers but now, a handful of my sellers are open to them,” he said.

While sellers aren’t taking listings off the market—Zillow reported 34,639 listings priced at $2 million or above on the market as of March 22, just 1.78% less than March 1—agents don’t expect activity to last. Without the ability to show, it is hard to sell, they said.

With cities across the country shut down, showings were down by as much as 45% in some North American markets over the past two weeks, according to data from ShowingTime, a showing management technology provider.

McKenzie Ryan, an agent with Compass who sold a $7.2 million townhouse in the West Village last week, said she heard from the seller after the closing. “He said, ‘It looks like we sold just in the nick of time.’” she said.

As for Dr. Acquista, he said he and his wife haven’t been able to move into their penthouse completely yet, since large furniture deliveries are banned in the building for now. So they are staying with a family member outside the city.

“I don’t have a table or chairs,” Dr. Acquista said. “I don’t even have beds!”

Filed under: Headlines by Alec Reimon
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