One Bed-Stuy Brownstone Represents The Insanity of Our Real Estate Market
Image via Halstead Properties
Just a quick mid-week case study in the delicate art of buying out longtime Brooklyn brownstone residents and flipping their former homes at a dizzying markup: this property at 196 Hancock in Bed-Stuy, which was bought up by an anonymous investor at an estate sale back in February, and put on the market just 3 days later for $650,000 more than its recent purchase price. It jumped from $1.2 million to $1.85 million, a 54 percent increase, and about four times the average per-square-foot price of other properties in the neighborhood. So, um, how exactly did this happen?
Well, the brokers naturally say this is a fair price these days for an 1899 building that’s larger and nicer than most that surround it, has maintained a lot of its original historic details, and comes with lucrative, rent-able rooms within. The current owner is also making a few small improvements, including an oil-to-gas conversion. Mainly, though, as the Brick Underground Points out, the current owners likely bought the place at an unnaturally low price:
“The former owner was the late Glencora Smith, who bought the property with her husband in 1969 with a mortgage of $15,500, property records show. (The purchase price was not available.)
Smith’s heirs may have let the house go for significantly less than market value. Perhaps they wanted a quick sale, and the current owner was willing to pay all cash or close quickly; or perhaps the two parties arrived at the price a year ago. Or maybe they were simply unfamiliar with the Bed-Stuy market, notes Jonathan Miller, president of appraisal firm Miller Samuel. “
This is a fairly common phenomenon (and it’s worth re-iterating that organizations like the Coalition for the Improvement of Bedford-Stuyvesant exist to help long-term residents protect themselves from bad deals) though even if the heirs to this particular building didn’t use the opportunity to gouge the Brooklyn real estate market for all it’s worth, the original sale was still probably a pretty great deal on their end. What’s less clear is whether or not the person who decides to drop almost $2 million on the place will be able to say the same a few years down the road.
Follow Virginia K. Smith on Twitter @vksmith.
