A few months back, I posted a story on Parkside of Alexandria and how successful they were in selling 30 of their condos on the auction block. The 30 condos were gone in an hour! Builder had set the minimum reserve price of $225,000. That's pretty much how much they wanted to net from the auction.
Interestingly, those condos were sold from anywhere between low-$288,000 to high-$362,000. Add to it buyer's premium of 5% of sales price that a buyer must pay to the auctioneer between $14,100 to $18,100. These buyers ended up paying around $300k to $390k.
My opinion was those buyers either didn't do their due diligence (compare market prices) well or got wrong advice. Therefore, they paid too much for their condos! If you go before analyzing the comparable sales, it's like gambling. Contrary to my opinion, a reader posted this comment.
I think your math is way off. If I remember correctly Mid City was asking and getting anywhere from $350,00 to $450,000 for these condominiums. If the auction buyers ultimately paid between $288,000 and $362,000 that represents a discount of 18%-20% off of the original listing price. That sounds like a good deal to me. --riskypicks
Really? How good of a deal is it?
Fast forward a few months. Here is what I found: 1) Builder still have their 'for sale' sign up in the development that means they still have units available? 2) A growing number of short-sale condos for Parkside is on the market, 3) Whatever condos builder still have available are priced lower than what auction buyers paid (upper-$200's to mid-$300's).
We know for a fact that sold prices range from low-$288K to high-$362K. Check this out and compare.
- There are 6 active listings, three of those are short-sale priced from $270,000 (1BR) to $299,900 (2BR). Compare listings [pdf].
- Two of the condos are owned by 'the same' owner. Investors got stuck in a declining market?
- One condo is 'under contract, listed for $279,900 (2B/1Ba).
Duped by Parkside?
Okay, so the next time you're thinking about going to an auction, you want to A) prepare yourself financially, B) read 'auction terms and conditions' first before going, C) analyze sales comps (or ask your Realtor for this), D) set a maximum price, and E) leave your 'emotion' at home.