Going, going, gone! Condos move fast on auction block
''What am I offered for this luxury condominium of three bedrooms, superefficient kitchen, and 2 1/2 baths? And look at that viewm! Who'll start off with $175,000?''
And so it goes these days as expensive residential real estate is sold by an age-old marketing technique that is usually identified with the selling of used furniture and farm equipment.
The fact is, luxury homes, condominiums, and town houses are being sold at auction, all of it happening in from one to three minutes from the time the property is offered for sale until the ''sold'' call from the auctioneer.
I recently learned about an auction of 69 luxury condos coming up in Ventura, Calif., and decided to see and feel at firsthand the atmosphere and emotions that motivate people to quickly commit a large chunk of their savings - with the raise of a hand and nod of a head.
During a little more than two hours, all 69 condos were sold. It took an average time of about two minutes to offer and sell each unit. Indeed, it was a lively and dramatic ''market happening'' - a professionally packaged real estate auction. Everyone seemed to be happy with the results: seller, buyers, and representatives of the auction company.
Although auctioning of land parcels and commercial properties is an old technique, auctioning of individual residential units is new and could evolve into a major marketing trend in the near future.
The Ventura auction was at Seaview Condominums, in a close-in foothill community in which many of the units offered a panoramic view of the city and Pacific coast.
The units were large and well planned, ranging in size from 1,444 to 2,331 square feet, and included one and two fireplaces and individual two-car garages. The development included a swimming pool, saunas, and other recreational facilities.
Even with all these attractive amenities, however, the condo units did not sell by conventional marketing methods and it was decided to call in an auctioneer, a sophisticated auction firm that specializes in producing auctions of residential real estate - a new breed of marketing organization in the 1980s.
The auction produced $10,295,000 in sales, with individual sales prices ranging from $135,000 to $197,000. Surprisingly, the average sale price was 90 percent of the average original asking price - and 142 percent of the published minimum bid price. There were more than 700 registered bidders, and about 1,300 people attended the auction.
This kind of response and participation in an auction are not produced by placing a few ads and cranking out promotion flyers. It involves a systematic program - from identifying the most logical ''bidder profile'' to arranging for on-site escrow and financing arrangements for successful bidders.
Basically, the key attraction to an auction of this type is an opportunity to benefit from a bargain, according to William R. Stevenson, president of Kennedy-Wilson Inc., the firm that handled the auction in Ventura, which is based in Santa Monica, Calif.
''Another strong motivation for bidders is the knowledge that all the offered units will be sold out on that very day,'' Mr. Stevenson adds. ''Also, the bidder's feeling about an offered property's value is supported by others around him bidding on the same property.''
Owner-sellers benefit by quickly converting their equities into cash. Even at reduced selling prices, this is highly advantageous and saves substantial carrying and promotional costs, thus allowing other investments to be launched.
In fact, I was interested in the well-planned, orderly procedure, from preliminary live music and refreshments to the final closing process. I was, however, a bit surprised at the confidence in which the bidders quickly offered up their savings.
I asked several successful bidders how they felt about such a quick decision to commit their money. They showed no sign of ''buyer's remorse'' and seemed elated with their purchases. The key to satisfaction is a thorough inspection and investigation before auction day.
The buyers with whom I spoke had carefully inspected the units and examined all the pertinent documents. They were well familiar with the property and had determined in advance a maximum price they would pay.
''We place great importance on full disclosure of all information for interested bidders,'' Stevenson says. ''We provide a great deal of documentation for interested buyers long before the auction, and most serious prospects take full advantage of it.''
Stevenson is optimistic about the prospect for more auctions in the future. ''I feel that 1983 will be a particularly active year for this form of marketing ,'' he says. ''The lower interest rates have increased the feasibility of auctioning for developers and lenders across the United States.''
Stevenson also notes that reduced interest rates have sparked much new construction and condo conversions (rental apartments converted to condos) throughout the country. These new units, coupled with a large inventory of unsold housing units that has built up over the past three years, has created a marketing problem in many cases.
A professionally planned and produced auction is a practical alternative.
Several major firms are now specializing in this area. The growth of one, Kennedy-Wilson, reflects the rise of this specialized industry. In 1980, the firm auctioned off four projects of residential units; in 1981, 20 projects; and in 1982, 31 projects. A substantial increase is expected this year.