The Gallery Auction appeared as though it would be much like many other condo auctions that have occurred over the past couple of years. Here was a development that had been completed and come on the market around the time that we experienced the down turn here locally. Initially units sold and over time more sold. Sales became fewer and farther between and the developer decided to hold an auction. The first auction at The Gallery was held in 2009 and was well received. Condos sold at about 68% of the previously listed prices.
The second auction was to be held on March 5th with the same auction company that held the first auction in 2009. It was to be held in the same place and was anticipated to sell off most if not all of the remaining units. The Gallery was nearly 80% sold prior to the auction being held. Approximately 4 weeks before the auction was to be held The Gallery condos were removed from the market and were made available for the public to view prior to the auction. Auction packets were given out and information on the auction process and documents were made available online.
The registration process was clear. All bidders were to be pre approved through one of two preferred lenders the seller had chosen. Once pre approved bidders were required to fill out a registration form agreeing to the process. Bidders were also required to bring a Cashiers Check in the amount of $2500 to the auction as well as a personal check in order to pay the remaining balance of the earnest money if they had a winning bid at the auction. The earnest money requirement was to be 3% of the sales price. We were told that no upgrades to unfinished units would be included in the sales price but would be an 'add-on' if the buyer chose to have them. The seller was offering up to 3% in closing cost credit to the winning bidders.
Slightly more than 24 hours before the auction an e-mail was sent out to the registered bidders that the auction process was being changed. The letter stated that 2 weeks into the process it became apparent that the majority of interested bidders were first time home buyers and that many of them were either scared off by the auction process or were unprepared to meet the registration requirements for the auction. In an effort to allow all who wanted an opportunity at purchasing a home at The Gallery a chance they had made the decision to fore go the auction and instead have a 'One Day Sales Event'. (Insert comment, what a line of bull.....)
In my opinion (and many others who were at the One Day Sales Event on Saturday) what they realized was that there was not enough interest to have made an auction a lucrative event for the seller and the auction company. What more than likely would have happened was the 3-4 of the units would have drawn enough interest to have sparked a little competition while many of the other units would have sold at the minimum bid price or only slightly above. Not what the auction house or the seller was hoping for.
The One Day Sales Event was slated to take place at The Gallery condominiums rather than the Hyatt (much cheaper venue). It would begin at 2:30 PM rather than 5:00 PM. The sale was to be first come first served. When my client and I requested clarification on how this would work we were told that the condos would be available for one last look from 9:00 AM to 2:00 PM. At 1:30 PM all bidders would be asked to go outside and line up. At 2:30 the sales event would begin and the first person in line would meet one on one with a sales representative. At that time they would be given a price sheet which would disclose the New and Better price the seller was offering the condos at. These prices would be less than the previous auction prices but higher than the minimum bid that would have been offered at the auction had it been held. The seller felt these prices were more than fair. We were unclear how the line would form and when we questioned further it was clear so were they. They stated no one would be 'signing in' prior to 2:00 PM but it was a bidders choice if they wanted to get there at 9:00 AM and wait in line outside The Gallery.
My client decided to show up at 9:00 AM. Upon arrival he found that two other bidders had decided to do the same thing. Tom Reddy showed up at 10:30 AM to see how our client was doing and to give him a break from standing in line. What he found was that they had welcomed the bidders into the building so as not to have them standing outside in the cold. They had taken their names on a blank sheet of paper but would not guarantee that this secured their 'place in line'. In fact they wouldn't give a clear answer as to what exactly was going to happen come 1:30 PM. Our client decided he was doing fine and didn't want to leave the building prior to the event. so Tom came home. I spoke with our client via phone a couple of times and each time it was anything but clear what would be happening that afternoon. About 1:00 PM I showed up to join our client. Shortly after I showed up they began shuffling the bidders that had accumulated in the building outside to line up. It was then that I met up with our client. As the day had wore on the staff had collected the names of bidders as they arrived and compiled a list. This list did in fact end up forming the first come first serve basis that the sales event would derive from. It turned out to be a good thing that our client had decided to show up at 9:00 AM. At least we would be second to see the price list and to have the opportunity to negotiate for a unit, or so we thought.
After hustling everyone outside it was only about 5 minutes before the auctioneer came out and once again said he did not feel it was appropriate to have the bidders standing outside in the cold. You think? He explained that they had compiled a list of when the bidders had arrived and this would be used for the order for the event. Some were happy about this and others were not. He then asked that all bidders come back inside and go up to the second floor gathering room until the event was to start. So we all shuffled back into the building (for my client this was the 3rd time I believe that he had been shuffled around the building that day). Once in the room we were left to chat amongst ourselves. This was when many of the comments were made about the change in format, what would have happened if they had held an auction, and the disgust in how this was being handled for the most part. While no one was seriously disgruntled there also was not a lot of confidence in the process either.
Around 2:00 PM the auctioneer returned and explained the new process of how the event would proceed. Yes, even more changes were made. At 2:30 PM he would return at which time he would call out 5-6 names. These names would be in the order the bidders had been signed in. These bidders would go upstairs to the 9th floor sales center where they would hear a quick debriefing on the process after which each bidder would be introduced to a contract writer. They would then go to a separate room with the contract writer who would then show them the price list for available units. The prices were non-negotiable. The price would include whichever upgrade wall unit the bidder wanted if there was not currently a wall partition in the unit. These are valued between $3500 and $6000 approximately. They would also still be offered the 3% credit toward closing costs OR they could reduce the purchase price by this amount. No other concessions would be given or offered so as to keep the playing field even for all buyers. The bidder would need to make a quick decision as to which unit they wanted. Once they agreed to the price their contract writer would dash back to the sales room and grab the contract. Once a contract was out of the box that unit was no longer available. So while it was stated that it would be a first come first serve sales event it wasn't quite so. Shortly after the first group were in their rooms with contract writers a new group would be brought upstairs for the debriefing and would then be set up with contract writers as they became available.
Now all we needed to know were the prices the units would be sold at. As I mentioned our client was 2nd in line so we were in the first group and we quickly found out the pricing. As we shuffled down the hall with our contract writer she began asking for our top picks. Our client called out a number and she called out a price. Our client said, "No." Next unit number. Next price. No. We entered the room and looked at her list. None of the 6 he was interested in were at a price he would agree to. In fact they were about $35,000 higher than his maximum. I advised him to walk away rather than stretch his budget and he agreed he wasn't willing to do that. I told him that it could be that many bidders would feel the same way and if that were the case the units would come back on the market at which time we could make a lower offer. The contract writer than offered us to make a back up offer. She said our client could simply write down the units he was interested in and the amount he was willing to pay. If the units did not sell at the event they would call us. He chose to do that.
The results are in. I am told that 11 contracts were written at the event. All were written for the amount the seller offered. I believe there were 25 units for sale so not quite half sold. We received a call the next day that the three units our client had wanted all sold. They did have 2 left with westerly views if he wanted to consider them at the price the seller was offering. Our client is thinking it over.
The auction did not go as planned. Changes came from all directions and details were unclear at best. All in all it was a very disorganized organized event. The one good thing I could say about it would be the on site sales staff were wonderful. They were friendly, patient and truly seemed to do their best to get answers to the questions people had, even if the answers weren't always right or accurate, they tried. Their pleasant attitudes and friendly nature made what could have been a stressful and annoying process tolerable. My hats off to all of them for handling a very difficult situation so well.
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