The developer of the Olive 8 condo project in downtown Seattle auctioned off 32 condos today at steep discounts from previous asking prices. The Olive 8 project is a luxury condo building built atop a Hyatt hotel where residents can take advantage of hotel amenities just like hotel guests.
The Seattle Times reports that there were over 200 bidders at the auction, where 32 condo units were put up for sale. Unique to this auction, each bid was subject to a secret reserve price. According to the developer, 28 out of the 32 bids had been accepted at the end of the auction. That would indicate that 4 of the winning bids were under the secret reserve price set by the builder, and they are still potentially negotiating with those buyers, so hard to say if deals will come together.
Before the auction, 74 of the 227 units (33%) in Olive 8 had been sold. Assuming that at least 28 of these auction deals actually close, that would leave the building at 45% sold. Most of the remaining inventory at the Olive 8 are higher-price units on upper floors, so there is still a significant inventory of condos remaining to be sold.
The Seattle Condo Blog posted a great recap of the auction, including a chart of the units that sold, their starting and winning bids, along with previous listing prices.
I still scratch my head about why these auctions are necessary. Clearly buyers see value in condos when they reach certain price points, and I can’t help but think simply listing the units at reasonable prices would get the transactions moving and eliminate the need for such an auction. But these auctions are all about tapping buyer psychology and generating excitement. One buyer mentioned that they were “still shaking” from the excitement of the auction atmosphere.
If you ever attend such an auction, remember to do your homework up front and keep your wits about you while the auctioneer whips the crowd into a frenzy. Do some bidders get good deals? Sure, some do, but most end up paying the current fair market price for a home.