Pat Grimm is Owner/Broker of Windermere Real Estate/Capitol Hill located on 19th Ave E. His office is not currently representing and does not own property in the Brix building.
Last week, Seattle Real estate pundits were predicting that the Brix and Gallery auctions would yield prices that would be 30% off the original asking prices, but I wouldn’t have bet on it. Patterns from previous auctions at The Press (-17%), Queen Anne High(-32%) and Lumen (-38%) and the sheer number of units being sold at one time … 80 plus … suggested to me that the discounts would be greater. Interestingly, the pundits were almost dead on.
The numbers are in and it looks like the Brix and Gallery average auction prices came in at 30.37% and 32.47% respectively off original prices. Did the winning bidders get a good deal? Well, I’d have to get out my crystal ball to answer that but that thing broke last year. In all seriousness, time and the marketplace will ultimately define the good deals. My gut is telling me that these buyers did well, but, more importantly, I believe that they got a really fair deal. Each unit is different, but as an average, the final bid numbers seem to be commensurate with the adjustments we’ve seen in the marketplace and the risk that each buyer is assuming.
Let’s face it, condo ownership requires a certain amount of risk tolerance. Because of the fact that it’s communal living, it’s kind of like Forrest Gump and his box of chocolates … you never know what you’re gonna get. This is arguably more true for the new buildings that are lying vacant in a stagnant market. But the risk can vary from unit to unit, from building to building, from micromarket to micromarket and from region to region.
In my opinion, the single most important factor that is affecting the value of a condominium in our marketplace today is not the desirability of the lifestyle or the livability of the space … it is the stability of the building. (but more on that topic later)
The developer did what they had to do in auctioning off these units. In spite of what anyone may think of the process that is generated thru auctions … and now potentially bulk sales (see The Decatur at www.realogics.com) …it is the right strategy for all the stakeholders. The worst thing that can happen is to have a building with a bunch of vacant units that aren’t selling. Does this all translate into a good deal for the Buyers? Yes. The Buyers may have been able to negotiate hard on their own and gotten similar terms, but the volume of the other transactions all at the same time can’t help but lead to a more stable building and therefore makes it an even better value. Time will tell, but as long as they don’t try to spin these units right away, I think these Buyers will look back favorably on the deal they got.