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Auction of Lots in Ginn Developments Yields Disappointing Results

The ingredients were all there respected auctioneer, prime properties, and a willing seller. Only the buyers were missing.

By Toby Tobin
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July 23, 20007 – Palm Coast, Florida – The ingredients for a successful sale were there. The auction company was highly respected Sheldon Good, the largest real estate auction company in the country. The properties were desirable, all in private communities developed by Bobby Ginn, rich with amenities packages. The seller was flexible, understanding that the market had changed from the time $2.5 million was paid for the lots two years ago. The sale venue was the Palm Coast Yacht Club. But the buyers were missing – at least enough of them willing to bid seriously.

 

The five properties in the auction were:

 

Hammock Beach

  • Lot 41 North Shore Avenue, purchased for $700,000 – suggested opening bid $175,000
  • Lot 47 North Shore Avenue, purchased for $430,000 – suggested opening bid $150,000
  • 5 Spanish Moss Court, purchased for $427,000 – suggested opening bid $150,000

The Conservatory

  • Lot 7, 223 Conservatory Drive, purchased for $385,900 – suggested opening bid $150,000

Yacht Harbor Village

  • 224 Harbor Village Pt, purchased for $505,000 – suggested opening bid $150,000

As advertised, two lots were to be sold without reserve, meaning regardless of price. The auction board listed all five properties. Only lot 41 was listed as reserved. There was not a separate sale for each lot. The winning bidder of the first round of the auction selected the lot they wanted, either the reserve lot or one of the others. If the selection was without reserve, the sale was final. If the chosen lot was a reserved lot, the seller has five days to accept or reject the contract. During the five day period, the bidder cannot withdraw their bid. A 6% bidders premium (commission), paid by the buyer, would be added to the winning bid price.

 

There appeared to be about six to ten people holding bidding packages. There were three additional bidders on the phone. Unable to get the suggested $150K opening bid in the first round, the auctioneer accepted a bid of $25K. Bidding moved quickly to $180K where the auctioneer had to work hard to get $5K increments. The winning bid was $230K. The winning bidder selected 5 Spanish Court, in Hammock Beach.

 

During a break following the first round, the seller instructed the auctioneer to place all but the Yacht Harbor parcel on reserve. The second bid cycle started at $50K but dropped to $5K increments once bidding reached $150K. The winning bid was $185K. The winning bidder selected the Yacht Harbor Village lot, paying $320K less than the seller’s purchase price. At this time, the seller, disappointed with the sale results so far, elected to withdraw the remaining three parcels and the sale was over.

 

What did we learn? Two people got some desirable property at great prices. At least it looks that way. But it was anticlimactic when the sale was suspended. Two sales do not establish a market. Everyone would have wished to see a sale price for each lot.

 

The current market resembles a Mexican standoff. Many sellers are still holding onto the unrealistic thought that they can break even (assuming they bought at the peak). But others have reduced their prices to levels below their acquisition cost. On the other side, buyers are reluctant to be the first to establish a market price. They don’t want to pay $299K if they think it’s possible someone else might be able to buy at $250K soon after.

 

I attended a foreclosure sale on Friday where lot# 92 at The Conservatory was sold. The representative of the plaintiff (bank) was the only bidder. When I spoke with him, he indicated that he had been authorized to go as high as $285.9K for the lot, which was originally purchased for $339.9K. So anyone bidding would have to bid higher than $285.9K to win the property. A bundle of four contiguous lots on A1a South in Flagler Beach also did not attract a bidder. With no bidders, there was no price established. Hence, we still don’t know what the market is. By all measures, it’s a buyers market. But even a buyers market needs transactions to establish a market price.

reader comments
Reply to Vincent
Posted by Toby
Nov 16, 2013, 3:23 pm
GoToby currently reports on newsworthy auction events and is not a central repository. The best sources are the local newspapers. The News-Tribune publishes foreclosure and tax deed sales. GoToby will soon offer local real estate advertising. Hopefully, we will attract auction ads as well.
AUCTIONS?
Posted by VINCENT B. VITRANO
Jul 24, 2007, 2:24 pm
DEAR DON:

HOW DO YOU FIND OUT ABOUT AUCTIONS OF PROPERTIES, OR HOMES IN THE COUNTY OF FLAGLER.

 
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Don "Toby" Tobin is a licensed real estate professional affiliated with Grand Living Realty. Toby is a member of the Flagler County Association of Realtors®, the Florida Association of Realtors, Enterprise Flagler, Flagler Home Builders Association, and the National Association of Realtors.

GoToby.com proivdes real estate news, commentary, and analysis for Palm Coast and Flagler Country Florida, as well as Realtor® referrals and consultation to buyers, sellers, and developers.