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“All homes have an unpublished reserve price (Unpublished Reserve Price) which means that the seller has established an unpublished minimum selling price.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 In order to become the winning bidder of a home, a bidder must have the highest bid and meet or exceed the unpublished reserve price.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.
No guest parking Parking one-half block north on Collier Street.
Peter Tsai says
Pat, how is parking at the Sage?
I visited last week and the units are beautiful, but I only saw 4 guest spots when I was there. Is there a safe neighborhood for your friends to park in nearby?
Pat, the sidewalks on Lamar are hideous, and Sage is oriented inwards towards its internal drive and garages. That’s what I meant.
The Sage has something like 10 units at no reserve.
“It’s not walkable at all.”
I’m not sure how you define “walkable” Mike, but I live at the Sage and I rarely drive anywhere on the weekends unless I’m shopping for more goods than I can hand-carry. We walk and bike to Zilker, Lady Bird Lake and the downtown Farmer’s Market every weekend in less than 30 minutes. If I don’t feel like walking Lamar then I scoot a few blocks west to Kinney and take the scenic route to BSR and beyond. There are at least 6 cheap and 2 fine dining establishments, 2 bakeries, a killer taco trailer, Starbucks, Alamo Draft House, 2 beer joints, and a pool hall all within a 5 minute walk from here. I work @360/Mopac and the wife at 12th & Lamar. The location is perfect.
Peter Tsai says
Hey Pat, I’m going to be living at the Sage in as soon as 2 weeks. Would be great to meet my new neighbors!
Feel free to drop me a line.
Jude Galligan says
Congrats Peter! There were some really great deals at the Sage auction.
Peter Tsai says
I agree that the reserve was a bit high on Bel Air… either that or the original asking price.
Reserve was set at approx 55% of original price (218k was the reserve on the first unit and I think it was original 399k), but the market said that they didn’t want to buy for the reserve price.
I guess we’ll find out in a few days if Bel Air is actually going to accept the lower bids or counter with unfavorable offers.
The Sage is awful too, though, unless all you wanted was a new condo within a quicker drive of downtown (but why?). It’s not walkable at all.
The Bel-Air is in a semi-hideous location. The Sage may fare better because of that.