Thursday, February 28, 2008

$135,000!? EOS 21 Auction: A Steal or Bait

Only $135,000!? EOS 21 Condos in Alexandria Virginia just announced a condo-conversion auction of 43 units. A "Once in a Lifetime Opportunity!"

This is the second condo-conversion project to take this "liquidation" sales technique. I know I say in my blog "I told you so" a lot, well no exception here. The risks with buying new construction (or conversions) is huge when they have excess inventory. New Construction Bargains: Risks or Rewards?

So what about EOS 21? Well the auction is brought to you by the same people that held the Parkside at Alexandria auction back in October 2007 (see Parkside at Alexandria 1st post). Parkside had "starting prices" at $225,000, but ultimately got bid up to $280,000 to $290,000 (see post #2 the Results show with video). "Down" from an inflated sticker price of $340,000 (2lvl TH).

All in all they sold for maybe 5-10% off the price you could have gotten the week before with a written offer.

And now a few months later... they STILL have units that are priced starting at $290,000 (and there are a ton of short sales on the MLS in Parkside) which is just about what they went for at auction time.


POSSIBLE BIAS ALERT! One thing that really ticks me off is the buyer agent broker offering. They offer only 1% to the buyer agent. In Virginia 95% of the time the offer is 3%. Why would they want to discourage a buyer from having an agent???? Um, because then the agent can get in the way of the transaction and actually represent their client.

So even though I write this post and people will learn about the auction, I won't take any clients to this auction unless they make up the difference. Why?

1) They will not go for anywhere near $135,000, so I won't even get the 1% ad it will be a wait of time for me.
2) My buyer agent contracts state what I get paid, so a buyer would have to make up the difference.
3) But even if a buyer is ok with paying #2, see #1.
Unless you are SERIOUS about bidding up to 90% of list price, and agree to pay my fee, then I can help you. I know, damn greedy Realtors! Why won't they waste 5 hours with me for that Once In A Lifetime!

Why would they want to DISCOURAGE REPRESENTATION??
So you won't know your rights. Did you know that you can still back out of the contract, even after the auction, if you don't approve of the HOA docs? These auctions do not trump the HOA review period (it does for a foreclosure).

(Sidenote, the "out" that you have is a double-edged sword. Because people know they have an "out" they will probably be MORE comfortable bidding $20,000 higher, so don't just see it as a win win for you)

Disclaimer: EOS gave me permission to post their ad, as long as they reserved the right to ask me to take it down if they don't like the blog post. I'm curious to see if they will request for the ad (not the blog post) to be removed.

- Written by Frank Borges LL0SA Broker


Anonymous said...

Why would they discourage representation? Because realtors take quite a slice of the asking price for doing close to nothing. I'm amazed that realty still exists as a profession.

No wonder 20- and early 30-somethings don't understand the point of realtors.

Anonymous said...

I am a corporate lawyer (not much in real estate, however) and really find the generalization made by anonymous troubling. I am not at all inclined to support Realtors - I do think in many cases that they add little value and earn their negative reputation. But the blunt truth is that while there are far too many Realtors, there are far too few good ones. One could say the same with other services providers, such as lawyers and investment bankers. But I have been through the mill with real estate, and there is no question that the broker I finally landed in my last transaction (now retired) was worth every penny. He worked hard, knew the market, was very secure in his value add, and knew a sophisticated (relatively) client like me was going to be persuaded by the hard truth more than anything else. And bluntly, although I may not end up using his firm, you can bet with my next transaction I will give Frankly a call. There's too much helpful blunt talk not to.

Trustee Sale Auctions said...

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