While real estate auctions are now common practice in South Florida and other battered markets, they are still a rare sight in the big city?but that's all about to change. The Times reports that Accelerated Marketing Partners, a real estate marketing firm, is in negotiations with developers for auctions "that will start as early as April on five mid-range to high-end projects in desirable neighborhoods of Manhattan and Brooklyn." Eep. What sort of markdowns will consumers be looking at? According to the Times, "A two-bedroom on the Upper East Side, for example, could be marked down to $1.1 million from $2.2 million," and appraiser extraordinaire Jonathan Miller says he expects auctioned properties to sell for 40 to 45 percent below '08 asking prices. As for the projects that will hit the auction block, that's still a bit of of a mystery, though the identity of one?211 East 51st Street (right)?is made fairly clear in the story. UPDATE: Or is it?!
Most developers declined to discuss the subject. But one lender, who asked not to be identified because his plans are not final, said he intends to hire Accelerated to auction a large group of units in April. "We have quite a large investment in a new condo building in a good location downtown," he said, but sales have been "very, very slow." With just under 50 units, the building is currently priced around $1,000 per square foot. Minimum bids will probably be set at around $600 per square foot, the lender said.
Henry Justin, a developer who has 48 units left to sell in a 73-unit Midtown building, said sales hit a wall in December. "All the deals I'm doing are all-cash, mostly from foreign buyers, because only people with a private banking relationship can get any money out of a bank right now," he said. Mr. Justin doubts that lower prices will sell many units because so many buyers cannot obtain mortgages.
Accelerated, the auctioneer, has been working with the development marketing group at Prudential Douglas Elliman. Andy Gerringer, the group's managing director, said he has urged clients to consider auctions, because many of them are selling only one or two units a month, if any.
Henry Justin's HJ Development is the developer of the 73-unit 211 East 51st Street. Will the auction route work? The Times notes that not since the early '90s have auctions been used in large numbers in New York, so anyone willing to share a history lesson with the class is welcome to do so.
· And Do I Hear $2 Million? No? $1 Million? Sold! [NYT] 12 p.m. UPDATE: A spokesperson for HJ Development writes, "Henry Justin's 211 East 51st Street is NOT up for auction, nor is it printed or even implied in Teri Rogers' article today. For the record, he is self-financed and is his own general contractor. He doesn’t have to lower his prices, he's still selling and can afford to wait out the slowdown, either way."