[youtube = http://www.youtube.com/watch?v=3j2ff1YydWE]
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.”]
Just to give a few words of clarification on some terminology in the Auction world and Auction law here in Texas. An “Absolute” Auction means that there is no reserve. In this case, 10 units then are selling “Absolute”. If an Auction does not state if there is a Reserve or if it is “Absolute” it is deemed to be “With Reserve”. Some of the ambiguity here may result from some auctions where there is a Minimum Bid – which in many cases may be the Reserve (but possibly not). Two popular ways to sell like units (like condos or lots) are either “High Bidders Choice” which is what you are referring to with the upcoming Sage Auction and also Multi-Par which stands for Multi-Parcel. This method is a little confusing but it serves much the same purpose. An Auction is one of the best ways to accelerate the process and to bring focus and attention to properties that may otherwise be on the market for awhile. Auctioneers in Texas must be licensed. An Auctioneer with the AARE designation has earned that designation as an Accredited Auctioneer in Real Estate by the National Auctioneers Association. A CAI designation is thet highest designation you can receive as an Auctioneer – a rigorous three year course offered by the National Auctioneers Association. Real Estate Professionals may be able to receive great referral fees for referring properties to an Auction company for sale at auction. Also, many Auction companies (but not all) participate with Brokers who represent buyers. Make sure you know the terms and conditions for each property and for each company that you are interested in. For more information, you may want to refer to the National Auctioneers Association website at http://www.Auctioneers.org
In general is looks like the minimums are approximately 1/3 of the original price. I’ve advised my clients of what the “secret” reserve price most likely is for the units they will be bidding on. I’d be happy to assist you if you want to send me an email directly.
Yes, JP King is telling us that the first 10 units will sell regardless of price. I don’t think this is a significant additional risk for the Seller b/c bidders are bidding on the choice of unit, not a specific unit.
I have looked at both auctions. i’m confused? It seems the “minimum opening bids” at the Belaire are not related to anything. What is the secret reserve selling price? Is it true the first 10 units at the Sage really sell to the winning bidder regardless of price?
Good overview Jude! I think your analysis of the bidding is “spot on”. I’ll be curious to see how it turns out.