The South Florida Bussiness Journal has followed closely the auction scenary. on April 10, 2010 for the 1st time since 2007, a Miami developer sold all remaining units through auction, reporting a 15% more returns than expected. This is how the story begun:
"A Miami developer whose condominium sales have stalled is taking 62 units to auction at an average starting price of $63 a square foot, or 71 percent below replacement cost.
The units - in the 10-story San Lorenzo, in Miami's Little Havana, just a few blocks from the Florida Marlins ballpark under construction - will be auctioned April 10, with an average minimum asking price of $50,500 a unit.
So far, 24 percent of the project's inventory, or 22 units, have closed at an average price of $224,300 a unit, or $329 a square foot, according to public records compiled by Condo Vultures LLC, a Bal Harbour-based real estate consultancy.
Peter Zalewski, Condo Vultures managing principal, said the real estate industry would be watching the auction closely.
"This is one of the first times since September 2007 that a Miami condo developer has attempted to sell off individual new units at auction, rather than cutting prices dramatically to move product to individual or bulk buyers," Zalewski said.
The San Lorenzo units have an undisclosed minimum reserve price that must be reached for a transaction to occur. If a high bidder does not reach the minimum required price, the developer can reject the offer, according to auction literature obtained by CondoVultures.
Built in 2007, the San Lorenzo has 90 units. Three one-bedroom units and 59 two-bedroom units are set for auction.
Developer Beta Credit Management, whose principals are Carlos Rodriguez and Oscar Rodriguez of Miami, constructed the tower using a $16.5 million - or about $216 a square foot of saleable space - construction loan from Citibank N.A. in New York. Construction began in August 2005, at the peak of the real estate market.
The 22 residential units were sold for $4.9 million. The project also includes commercial space, which was sold for $2.6 million. All of the unit sales - residential and commercial - took place between August 2007 and February 2008, according to the report.
Zalewski said the developer would have to sell the units at an average price of $216 a square foot for the bank to break even and close out the loan. Anything less, and the developer is probably shooting to collect offers that it can take to the lender".
"The strategy would be to generate offers for 62 units and take them to bank and position the units for a short sale," Zalewski said.
Read more: San Lorenzo condo set for auction - South Florida Business Journal
And finally on April 10, 2010. The success:
"Sixty-five unsold condos at San Lorenzo in Miami's Little Havana neighborhood were sold over the weekend for $6.5 million, or an average price of $100,000.
The units in the 10-story development, just a few blocks from the Florida Marlins ballpark now under construction, went up for auction with an average minimum asking price of $50,500 a unit. The lowest price paid was $80,000 for a one-bedroom. The highest price was $141,750 for a two-bedroom unit, according to Rick Weinberg, vice president of public relations for Irvine, Calif.-based Real Estate Disposition LLC, which handled the sale.
"After all of the advertising and marketing efforts, the auction worked to simply reinforce the estimated market value of new condo product in the Little Havana area," said Peter Zalewski, a principal with Condo Vultures LLC, a Bal Harbour-based real estate consultancy, in a news release. "We anticipated retail prices for the product to come in about where it did at the auction, excluding the five percent buyer premium to be paid to the auctioneer for hosting the event.
"It will be interesting to see how many of the winning bids will be accepted by the developer and lender, and then ultimately end up closing."
As the Business Journal reported last month, just 24 percent of the project's inventory, or 22 units, had sold, at an average price of $224,300, or $329 a square foot, according to public records compiled by Condo Vultures.
"Many people bought the residence of their dreams at a huge discount," said REDC CEO Jeff Frieden, in a news release.
Built in 2007, the San Lorenzo has 90 units.
The project also includes commercial space, which was sold for $2.6 million. All of the unit sales - residential and commercial - took place between August 2007 and February 2008.
Developer Beta Credit Management, whose principals are Carlos Rodriguez and Oscar Rodriguez, of Miami, constructed the tower using a $16.5 million - or about $216 a square foot of saleable space - construction loan from Citibank N.A.. Construction began in August 2005, at the peak of the real estate market"
Read more: San Lorenzo condos sell at auction - South Florida Business Journal
Now, a new auction is set for June 12th, 2010 at the Altos de Miami condo, and a similar success is expected. For investors, auctions are the best way to get bargains and the best of it is that they can participate online. Of course it is recommended to have an agent in Florida to handle the transaction and mange the unit rental after their purchase.
Contact me for details on free auction representation and information on the up coming auction at los Altos. Units starting from $39,000 to $99,000. All must sell.
Good luck on your investment.
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