Auctions May Help Unfreeze Condo Market
- Feb 17, 2010
New York–With sales of individual condominium units still slow on a nationwide basis, two executives that specialize in property auctions see a growing trend toward using auctions to sell a large amount of inventory in a short space of time.
“Developers want to manage their debt load,” says Ken Stevens, CEO and founder of the West Coast division of Accelerated Marketing Partners, which conducts real estate auctions. “They don’t want their assets sitting there, they want to liquefy them and use that money somewhere else.”
Accelerated Marketing Partners is handling the auction for Westgate Resorts, which announced recently that it will auction 44 condominiums at The Lodge at Westgate Park City Resort & Spa, a new development in the Canyons, a resort in Park City, Utah.
The auction, to be held on March 28, will have minimum bids on the units ranging from $149,000 for studios to $995,000 for four-bedroom units. These prices are up to 56 percent below last asking prices.
One advantage to auctions is that they provide price transparency that a sales-starved market frequently lacks, said Jeff Hubbard, senior managing director of Sheldon Good & Co., another real estate auctioneer.
“In a slow market, buyers don’t know how much to pay, and developers don’t know what prices to sell at,” Hubbard says. An auction can also be part of a loan workout agreement between a lender and a developer, he says. Also, an accelerated sales process also means that a greater array of financing becomes available to later buyers, he says.
High-end properties are increasingly hitting the auction block, says Stevens. “There was the thought that these types of properties were insulated, because of the quality of buyers. That hasn’t proven to be so.”
Both Hubbard and Stevens don’t see a slowdown in condominium auctions. On the contrary, they believe many more are to come. Accelerated Marketing Partners is looking at opportunities in both Florida and Las Vegas.
“There’s a huge overhang of inventory, about five to 10 years, at the current absorption rate,” Stevens says.
However, Stevens believes buyers can be found. Accelerated Marketing Partners recently completed another auction in Park City, Utah for high-end condominiums at Silver Strike Lodge at Empire Pass, where eight residences were sold at auction, with an additional five sold since then.
“There’s a lot of dry powder out there, a lot of buyers waiting to swoop in,” he says.