About a week after a spectacular auction, the sale of the famous “iron building” in New York has finally collapsed. The winner of the auction – a man posing as Jacob Garlick who won the auction with a bid of $190 million after about an hour of bidding – had an initial down payment of $19 million The organizers of the auction informed the German Press Agency on Wednesday that the dollar was not handed over on time. This means that his right to purchase the Flatiron Building expires.
Now the bidder with the second highest bid can buy the building for this price, it said. This is real estate developer Jeff Gural, whose company previously owned part of the triangular building. Gural had bid $189.5 million before exiting. This sum would still be offset against his previous ownership share. If Gural refuses, there will be a new auction, the organizers said.
The first auction was ordered by a judge after a dispute broke out between the five previous owners about the future of the building. The real estate companies GFP Real Estate, Newmark, ABS Real Estate Partners and Sorgente Group together owned 75 percent of the building, with real estate developer Nathan Silverstein owning the remaining 25.
The biggest financing traps for real estate buyers
Anyone who overestimates their financial limit for interest and repayment jeopardizes the entire financing. The monthly installments should not exceed one third of the income. After all, everyday life goes on for real estate owners too. Unforeseen expenses, such as a major car repair, must remain affordable without any problems. Reserves of three to six months’ salary are recommended for this.
Source: Bausparkasse Schwäbisch-Hall, own research
Status: 2022
Builders should calculate exactly whether they can handle at least two or better three percent repayment per month. Another point of reference for the bill: The property should be paid off by the time you retire at the latest. Although interest rates have risen recently, the interest premiums for long loan terms of 20 or even 30 years are not particularly high. A fixed interest rate that is as long as possible makes sense and protects against a further rise in interest rates.
The more equity that is brought into the financing, the less money the borrower has to borrow. As a rule of thumb, buyers should be able to cover at least 20 percent of the total costs (construction, purchase and ancillary purchase costs) from their own funds. Anyone who underestimates the need for credit may have to accept expensive follow-up financing. If, on the other hand, the required sum is set too high, banks demand compensation for non-acceptance.
Banks are reluctant to help finance them: the total ancillary costs from real estate transfer tax, notary and land registry fees and possible brokerage commissions can add up to up to 15 percent of the purchase price. If you want to finance a property worth 300,000 euros, you should already have saved 45,000 euros for the additional costs.
Credit from Riester contracts, loans from the public sector, such as loans from the KfW bank, or building money from the mayor can reduce the need for credit. Additional grants may also be available. Anyone who does not use the Wohn-Riester subsidy, which is particularly lucrative for families with children, or the building child allowance for financing is sometimes giving away a five-digit sum. Oberländer’s tip: “Buyers should inquire about allowances and subsidies in advance.”
A total of eleven bidders had actively registered for last week’s auction. After the gavel fell, Garlick got on his knees and cried. Clapping and cheers could be heard from the audience. “We are honored to be the stewards of this historic building and preserving its integrity will be our life’s mission,” said Garlick, posing as an investment firm employee.
Gural later told the New York Times that he was “annoyed” by Garlick. “I never thought he would call to a high price. He just pushed the price up.” The building isn’t worth that much, and repair costs of around $100 million are also in the offing. Numerous observers of the auction were also surprised, since Garlick had not yet appeared in the highly competitive New York real estate scene.
The triangular Flatiron Building is one of New York’s most popular attractions. The approximately 90 meter high building, which can also be seen in numerous films and television series, was opened in 1902 – at the intersection of Broadway, 23rd Street and Fifth Avenue in the middle of Manhattan. Up until a few years ago, Macmillan Publishers rented all 21 floors of the building. Since moving out, it has been empty and is currently partially scaffolded.
Also read: Galeria real estate: Departure through demolition?
