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Sabine On Fifth Auction Results

February 28, 2010 By 21 Comments

UPDATE: As of 3/24/10 there are five units remaining at the Sabine.  Send me a message for availability.

In a packed house, over 200 registered bidders showed up for the auction of 31 units at the Sabine on Fifth condos.  31 29 buyers walked away very happy, as this was believed to be the last great buying opportunity for attainably priced downtown Austin new construction.  Where 27 units were originally intended to be auctioned, earlier in the week CWS (developer) decided to include three more, then in the final minutes of the auction they included another 1bd.

The building has 80 units total.  Once the 31 auction units close, there will be 13 new construction units remaining.  These will be sold through traditional channels at, or near, auction pricing.  36 units closed before the now settled lawsuit was filed in February of 2009.  During 2009, the 44 remaining units were taken off of the market due to litigation.  This auction marked the “re-debut” of the Sabine.

# of units offered = 31 (29 bids accepted as of 4pm Sunday)
Avg winning bid (inc. 4% prem.) = $228psf
Avg original asking price = $326psf
Avg discount from asking price = 30%

You’ll recall that the Brazos Place auction fetched an average of $281psf, and that was an avg 29% discount from original asking price.

You can download the complete Sabine auction data set here. (pdf)

-Jude

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Auction Planned For Downtown Austin Condo – Sabine On 5th

January 6, 2010 By 6 Comments
sabine condos exterior

*** UPDATE: Sabine auction results ***

A selection of the remaining units in downtown Austin’s Sabine On 5th building will be auctioned on February 28th.  A lawsuit filed by residents against CWS, the developer of the Sabine On 5th, and the building’s condominium association (which was under CWS’s control) has been withdrawn as the parties have reached a settlement agreement.  The lawsuit was filed last year as residents grew tired of lack of action by CWS regarding “persistent and major problems” relating to elevator repairs, amongst other problems.

The HOA has been turned over to the owners, which is unusual in buildings where less than 50% of the units are sold.  The specific terms of the settlement agreement have not been released.  Scott Dixon Smith, president of the Sabine On 5th HOA, indicated that “there will be major renovations to the building to alleviate the concerns of the lawsuit.”

Greg Miller, vice president of investments at CWS, has confirmed that steps are being taken to prepare the Sabine for the auction.  27 of the remaining 44 units will be available for bidding.

During the litigation no units were available for sale, and CWS’s loan had twice been posted for foreclosure by Compass Bank.  The first time in September, when Compass Bank granted CWS an extension to remedy issues.  Then in December, it was reposted for January’s courthouse auction.  CWS was able to restructure the debt and is expected to offer most of the remaining inventory for sale via an auction this February.

There were several condo auctions in 2009, and when the Sabine goes to auction, it will be the second major development in downtown Austin to do so.  The first, Brazos Place, was auctioned last year by Kennedy Wilson.  Brazos Place is frequently compared to the Sabine on 5th since both structures are located east of Congress Avenue and are adaptive re-use condo conversions

Originally built as an office building in 1981, and converted into condos in 2007, the Sabine is located along the west bank of Waller Creek, on Sabine St between 5th and 6th Streets.  With the success of developer discounts at 360 Condos and the Shore Condos, the Sabine is the last “attainably” priced building with new inventory left.

Email jude [@] downtownaustinblog.org, or send me a note, to inquire about the Sabine auction and the status of Waller Creek.

-Jude

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A Sabine Condos Auction?

August 26, 2009 By 3 Comments

UPDATE 01/05/2010: The Sabine auction has been confirmed.

UPDATE 02/28/2010: The Sabine auction results!


This should be interesting…

In a conversation with a credible source I learned that CWS, the developer of the Sabine condos in downtown Austin, is on an almost certain trajectory to place the remaining units at the Sabine condos up for auction.

Information is a little spotty, but 20-25 undetermined units could be auctioned off in mid-October, just in time for buyers to qualify for the $8,000 first-time home buyers tax credit. The remaining units would be sold in the open market.

In February, a group of owners filed a lawsuit against the Sabine HOA, controlled by CWS, which has prevented any units from being sold since then.

This would be the second downtown Austin auction, the first being Brazos Place.

Updates will soon be forthcoming. :-)

-Jude

p.s. As a current resident/owner, and former listing agent for the Sabine, I have a personal interest in this story. Investors and buyers desiring original pricing, unit availability, and insights into the building and specific units to pursue/avoid should contact me directly – judegalligan [@] gmail.com

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Sage Condos Auction Results

August 22, 2009 By 2 Comments

[non-downtown related news, but should be of interest to most DAB readers]

The remaining 23 units at the Sage Condos, located on 1702 S. Lamar, were auctioned off today. JP. King was the auctioneer of the “highest bidder’s choice” style auction where the winning bidder could choose to purchase any unit for the amount of the winning bid. The video above is of the first auction.

Including the 10% buyers premium, the average winning bid was $131 per foot, and prices ranged from $151,250-253,000.

I estimate 300 people were in attendance, perhaps 1/3 of those were registered bidders, the other 2/3 being spouses, friends & family, etc. Though originally slated for only 10 absolute auctions, the developer was on-site and confirmed all but five of the winning bids. The units were offered “as-is.” The bidding interest favored the units with downtown Austin views.

PDF of winning bids

-Jude

p.s. you’ll notice the video is labeled austincondoauction.com. That will soon become the repository for all the auction results and discussion – as soon as I work the bugs out :-)

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Bel Air Auction Latest – Did The Auction Work?

August 11, 2009 By 10 Comments

This past Sunday the Bel Air auction was hosted at the Hilton hotel.  I was out of town, unfortunately, and was not able to record the winning bids. Keye reported 300+ attendees.  All of the units had a winning bidder.

After Brazos Place, the Bel Air auction was the second high profile condo auction in Austin.  There was some speculation in my office that the undisclosed reserve would be roughly 2/3 of the original price.  My sources indicate that most of the winning bids were in the ballpark of 60% of the original list price, but these were all won “Sold Subject To Confirmation.”

Here is the shocker:  Of the 25 units that were auctioned at the Bel Air condos, only two of the winning bids were accepted! The Seller/bank was still negotiating hours after the auction and many of the units  may have added 5-10% on top of the winning bid [and on top of the 4% buyers premium] in order to meet the reserve minimum.

The auction rules clearly state that the Seller was allowed to set a reserve:

“All homes have an unpublished reserve price (Unpublished Reserve Price) which means that the seller has established an unpublished minimum selling price. The Starting Bid is not the reserve price. In order to become the winning bidder of a home, a bidder must have the highest bid and meet or exceed the unpublished reserve price. The highest bid is subject to acceptance by the seller (see ‘Subject to Confirmation’ section below). With respect to a high bid less than the seller’s reserve, the high bid and resulting purchase agreement/offer are subject to the seller’s acceptance, counter-offer or rejection during the auction, in the contract room, and/or within 3 days following the auction.”

The rules go on to state…

“With respect to a winning bid that is not immediately accepted by the seller, the auctioneer will inform the winning bidder that acceptance of their winning bid is ‘Sold Subject to Confirmation.’  The winning bidder acknowledges and agrees that winning bidder’s purchase/offer is subject to and contingent upon the seller approving the resulting purchase/offer, acceptance, counter-offer or rejection during the auction, in the contract room and/or within 3 days following the auction.”

Over the next couple of days we will see how the dust settles.  Because it was behind closed doors we don’t know how many of the auctioned units actually went under contract nor where the final negotiated price ended up for those units.  I wouldn’t be surprised if someone from the DAB readership was in attendance.  If so, please share your experience in the comments! :-)

If we can confirm the final negotiated prices, then it appears we can expect the average clearing price at Bel Air condos to be in line with what I’ve been suggesting: a  25-35% discount is the magic number for a developer to quickly unload condos in bulk, in either the open market or the auction market.

When the undisclosed reserve is set too far above what the market is expecting it can ruin the effectiveness of the auction.  It’s situations like this that I suggest bidders bring a Realtor they trust – per the rules of the auction it cost bidders nothing – and they can help with strategy, understanding the project’s history, and negotiating when unexpected scenarios like this occur.

-Jude

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Auction Systems

August 3, 2009 By 4 Comments

The auction of the Sage Condos will use a different system than the auction at Brazos Place or the Bel Air.  Rather than auction each individual unit, the auctions are for the right to choose which unit you want.  Everyone bids and the highest bidder gets to choose the unit he/she wants. The auctioneer repeats this process until 10 units are sold.

The different models necessitate different tactics.  For instance, at the Brazos Place auction, a buyer was able to study the units they wanted and were only required to participate in the auctions for those specific units.  Collectively, with only those interested in the same units, buyers would only participate in the auctions for those units.  Conversely, the auction system being used at the Sage encourages all buyers to bid in every auction.

At the Sage, if I simply want the best deal – without regard to view, size, etc – then I am still competing with other buyers that DO want a premiere unit and are willing to bid more to win the right to choose that unit.  It is hard to say if this would encourage or discourage me from bidding.  This system should clear out the premiere units early.  Most likely, those that want the choice of premiere units will bid early and aggressively.  Those that want the best deal at the Sage will bid in subsequent auctions once the premiere units are absorbed.

It remains to be seen if the bidding system used at the Sage will be of greater benefit to the Seller by encouraging more bidders and higher bids.

The Bel Air auction is this Sunday.   The Sage auction is a couple of weeks from now.

-Jude

[Update from local auctioneer, Mike Hanley: "This is called the Multi Parcel Auction Method. It can be very effective!  I have seen it used at Sheldon Good Auctions of Condos in Dallas,a Tranzon-Hanley Auction in Wimberly and have used it myself for the sale of undeveloped land in Utah and New Mexico."]

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Sage Austin Condos Going To Auction

July 16, 2009 By 3 Comments
Sage On South Lamar

Sage On South Lamar

[non-downtown news]

I just learned that the Sage condos on South Lamar (about a mile south of Alamo Ritz) will be auctioned off on Saturday, August 22nd by J.P. King.  This is the second auction announcement this week as the Bel Air condos on South Congress will go to auction on Sunday, August 9th.

The Sage has 32 units total, 24 will be auctioned, 10 will be sold through absolute auction (i.e. without reserve).  It is a great time to be a buyer.  Details on previewing access and opening bids are sparse.  More to come.

-Jude

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The Bel Air Condos Auction

July 10, 2009 By 4 Comments
Many units have a full floor roof top terrace
Many units have a full floor roof top terrace

Many units have a full floor roof top terrace

OK, non-downtown Austin related news here.  The Bel Air condos are located deep in South Austin, but I’m confident many DAB readers will appreciate knowing about this before it hits the PR wires.

Kennedy Wilson’s website indicates that the Bel Air condos in South Austin will be going to auction on August 9th.  Kennedy Wilson is the same group that auctioned Brazos Place.  Located on South Congress, past Ben White, and not far from Hills Cafe, the Bel Air is a unique product in a unique location.  Although not downtown, the Bel Air condos have always appealed to me: they’re designed to commercial specs, they’re raw, industrial, and highly functional spaces.  Some units have full floor roof top terraces.

Bel Air Condos Availability

Bel Air Condos Availability

Bidding begins at $90k.  As we all know by now, this is a ruse.  It’s doubtful this auction will generate the buzz and turnout we observed at the Brazos Place auction.  My prediction is the condos will sell for an average 30-40% discount from original asking price, or at least more than what we would see in the downtown CBD.  We’ll just have to wait and see.  Unlike foreclosure auctions which require cash on the spot, private auctions are more buyer friendly as buyers can have up to 30 days to close if they are pre-approved for a mortgage.

Bel Air features:
• Rooftop decks
• Private direct access garages
• Private balconies
• Commercial grade construction: steel and concrete
• Green Building Features
• Loft design: Concrete floors, high ceilings, exposed ductwork
• Tankless water heaters
• Energy efficient appliances

For my investor clients, here is a link to the Bel Air condos auction brochure and registration form. (pdf, 6MB)

Preview by appointment Showing hours 11-6pm everyday, and there are several photos of Bel Air available on Flickr.
–
Jude Galligan, Downtown Austin Realtor
jude@urbanspacerealtors.com
512-226-3414

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Foreclosures in Downtown Austin: Fact, Fallacy, and Analysis

June 26, 2009 By 3 Comments
Foreclosure Statistics

In this article I hope to share some of the knowledge that I’ve gained by researching foreclosure properties for clients.  Buyers may believe foreclosures are complicated and out of reach.  Generally, I believe this is accurate, but certainly not all of the time.  Knowledge is power, so let’s see what we can learn…

Foreclosures are not new.  Every community is dealing with them.  Austin has escaped the worst of the problem because we didn’t develop to great magnitudes as did Miami, New York City, or all of California.  Certainly downtown Austin is not immune to foreclosures.  We also tend to receive a greater level of interest from the press.  Rather than deny that foreclosures exist in downtown Austin, lets temper misinformation with facts, and if we discover opportunity along the way then all the better.

The facts
In June there were 671 properties posted for foreclosure in Travis County.  155 ended up selling.  Approximately 380 were reposted from prior months.

Foreclosure Statistics

Foreclosure Sales Since January 1st, 2009

A property can be posted for foreclosure and never end up at auction.  This scenario is not uncommon if the borrower and the lender can work out an agreement prior to the auction date.  Also, third party investors can negotiate with the lender to purchase the mortgage (not the property), and work out a new agreement with the borrower.

2009 downtown Austin foreclosures
Since January 1st, 2009 there have been five recorded foreclosure sales in downtown Austin.   Four have been condos.  Two were owned by one person.  Two of the foreclosure sales were won by the banks themselves for the balance of the mortgage.

The four downtown Austin condo foreclosure sales:

1) Avenue Lofts #308, 1092sf, $187,302
2) 360 Condos #2210, 770sf + 105sf, $242,909
3) Avenue Lofts #208, 1092sf, $183,274
4) Nokonah #410, 1849sf + 524sf, $555,624

The opportunity
The current asking prices at the Avenue Lofts, 360 Condos, and Nokonah are $274/ft, $410/ft, $403/ft respectively.  So we can calculate that the two Avenue Loft foreclosures yielded a discount of 37% and 38%, respectively.  The single 360 Condos foreclosure yielded a discount of 23% from the average asking price.  The Nokonah foreclosure yielded a discount of 26%.

The foreclosure discounts above are identical to the opportunities we’re seeing in the open market.  As I’ve reported before, developers are negotiating 25-30%-off discounts, the Brazos Place auction generated a 29% discount.  Buyers are responding en masse:  54 transactions at The Shore since May 1st, and 20 transactions at Brazos Place in one day.

The market is working efficiently and it seems to have found equilibrium.  Market and auction clearing discounts for new developments are 25-30%.

Summary
Even though the number of foreclosure sales in downtown Austin is low, it’s difficult to predict what the future holds.  It’s the best buyers’ market in the past 20 years, maybe more.

Focusing on downtown Austin condos, the data suggests that there are similar opportunities for discounted pricing outside of foreclosure auctions.  The challenges for the majority of buyers interested in foreclosures are limited information, time, and money.  Sifting through the foreclosure postings takes time.  Choosing a property requires knowledge of the neighborhood and the condition of the property.  The most significant hurdle for savvy buyers is the velocity of the all-cash transaction.  A pre-approved mortgage will do you no good.  Fortunately, in this market buyers have traditional channels for finding similar opportunities.

–

As the saying goes, “cash is king.”  Interested in pursuing opportunities in Austin’s urban core?  Feel free to send me an email.

Jude Galligan, Downtown Austin Realtor
512-226-3414
judegalligan [@] gmail.com

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iBidCondo.com

May 27, 2009 By 5 Comments

iBidCondo in action…

The first iBidCondo auction was held last night.  The result was a high bid for the right to purchase a condo originally priced at $690,000 at the Star Riverside – located on I35 and Riverside Dr and planned to be complete in 18 months – for $87,000.

Watching the video above, the process is just too anonymous for me to get comfortable with.  At the recent Brazos Place auction there were hundreds of real people in attendance. You had an existing building.  You could see the person that won each auction. The market clearing price for Brazos Place’s 19 downtown Austin condos was $282 per foot. The auction company was not affiliated with the developer.

From the iBidCondo FAQ:

“A selection of the properties listed on iBidcondo are being developed by Constellation Property Group. Constellation Property Group is an affiliate of iBidcondo.”

Constellation Property Group is the developer of Star Riverside condos. Constellation Property Group is also listed as the registrant contact for the domain iBidCondo.com. It appears CPG is more than just an affiliate.

Was this a real auction? Or, was this was a cunning loss-leader for Constellation Property Group?

I suspect there will be a couple of people that will “win” these “auctions” and have the right to close on the units for highest bid once the building is complete. In my opinion, the risk of Constellation not completing construction is real and iBidCondo only serves to further that concern. Constellation wouldn’t sell every unit like this and still expect a return on investment of construction dollars.

Hmmm…

Paul D’arcy has an interesting write up at Austin Towers and DAB will continue with updates as I learn more.

-Jude

Filed Under: austin condo auction, downtown austin
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