Do I Hear a Million?
Photography Courtesy of Individual Properties
A slow real estate market led some Park City developers to take their unsold, high-end condominiums to auction early this year. January, for example, saw the auction of eight Silver Strike Lodge condominium units at Empire Pass. All eight, and then some, sold below market value ... but they sold. The auction was considered so successful by insiders that in March, the co-founder and CEO of Accelerated Marketing Partners, Ken Stevens, was asked by the Lodge at Westgate Park City at The Canyons Resort to conduct the auction of 44 units. That same March weekend, seven single-family houses at The Homes at Lookout in Deer Valley, a Henry Sigg development, were also put on the block.
Stevens says that in this topsy-turvy real estate market, an auction can be the best means of determining real market value. He calls the auctions, which he manages nationwide, “a transparent process to prove the marketplace.” Stevens is quick to explain that his is not a liquidation company, and that it does not deal in foreclosures or other distressed properties. “We’re a strategic marketing company,” he says. “We are selling brand-new inventory in markets where there is disequilibrium between supply and demand.”
The Silver Strike Lodge auction sold all eight units at an average of $760 per square foot, down from the $1,000-per-square-foot price commanded for the condos just days before. Problem was, in the months preceding the auction, sales had been almost nonexistent. But within six weeks after the auction, another seven Silver Strike units sold at auction-determined price points.
“What we did was drive enough buyers out to sell not just the original eight, but actually 15 homes, and we have offers on one or two other homes now, too. There are only four homes left for sale,” Stevens says.
Of the seven Lookout homes put on the block, all five of the completed units sold, bringing in a whopping $11.5 million in a day. And within the week following, buyers were closing in on the two remaining uncompleted homes.
When the Westgate units were auctioned, things didn’t go quite as well as hoped. On auction day, the offering was pared from 44 to 24 units. Stevens speculates that there wasn’t “the depth of demand to offer them all.” However, 15 of the units, including two penthouse suites, were sold that day, and buyers were negotiating on the remaining five units during the following weeks.
The success of the auctions, Stevens says, is proof that qualified buyers exist out there, but that they’re not willing to overpay. “What better process is there than getting all the buyers in a room at one time and letting them decide the price?”
He says wary buyers sometimes think that real estate developers are unsure of how to price their products: “They’re either too high or too low.” The buyers “trust the market to deliver a fair market value,” he adds. And many of the buyers still involve their realtors in the process. Stevens reported that all of the buyers at Silver Strike had a real estate broker with them. “We were absolutely thrilled by the broker participation.”
Buyers who wish to participate in an auction of new properties have a few hoops to jump through. Not only do they have to become acquainted with the community, but they must also have visited the properties and know which units they want to bid on. They must have completed all of the necessary documentation and have been pre-qualified for a loan. There are no contingencies. Of the 13 Silver Strike Lodge units that had been sold by press time, two buyers had financed their purchases; the rest paid cash.
Stevens says some competing sellers in the Park City area worried that the auctions would disrupt the marketplace. “But I think overall, it’s helped them,” he says, “because it’s shaken up the market and brought buyers out again.”
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