“It’s unreal what you’re getting for your money,” said new Union City resident Mike Tilleli last week as he looked out at the view from the community rooftop deck of his new condominium building. He stopped by to check out the progress on the building, which he hasn’t moved into yet.
Tilleli, originally from Long Island, purchased his two-bedroom corner unit with a balcony earlier this year for $250,000 in The Altessa – located at 809 22nd St. Although he got a good deal, his neighbors might stand to get an even better deal this weekend as 41 units are auctioned off by Max Spann Real Estate & Auction Co., a national auctioneer of elite properties.
Auctions help developers sell units in tight real estate markets. They attract homeowners hoping to get a good deal, although some end up paying close to market rate anyway.
“It seems like it’s a pretty good deal.” – Walt Drabik of North Bergen
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Buyers must also pay a premium equal to 10 percent of the purchase price.
Next weekend, 15 units are also up for auction at The West Hudson, a four-story building with 21 condos at 529 52nd St. in West New York. The one-bedroom units were previously priced at $325,000, but now carry minimum-bid prices at auction from $95,000, or 30 percent of original pricing.
Growing trend
“Auctions signal to the marketplace that there is an opportunity to buy at a price you feel comfortable with,” said Max Spann Jr. last week. “In good and bad markets it draws people to a property to compete to buy it.”
His company has conducted a variety of auctions throughout the area, including a few in Union City and North Bergen. He anticipates that the auction trend will only continue in the coming months as Hudson County and other New York City metro areas catch up with the slow real estate market being felt throughout the country.
Spann said that people are attracted to the auctions in any market.
“We’ve seen a lot of markets,” said Spann, whose great grandfather began the family auction legacy in the 1800s. “But we’ve never seen one where people don’t show up.”
Spann said that while the open houses may attract a great number of people, fewer than half of them show up at the subsequent auction. He added that the majority of the buyers are primary home owners, rather than just investors.
How it works
Normally, prospective buyers attend an open house and/or information session prior to the auction to learn about the process and to view the homes available. Those interested in proceeding to the auction pre-register.
Financing arrangements must be made beforehand and buyers need to show up with a cashier’s check for the required deposit. Prospective buyers at The Altessa were told to bring a cashier’s check for $10,000 and a personal check for the balance of the 5 percent deposit on the day of the auction in order to participate.
The “minimum bids” are only guaranteed for certain number of units in an auction based on the developer’s preference. Other units may carry higher minimum bids. A unit is not guaranteed to sell at any bid that doesn’t meet that required minimum.
For some auctions, an additional “buyer’s premium” is also charged. For the Max Spann auction at The Altessa there is a 10 percent buyer’s premium. Therefore, a unit won at $200,000 would actually wind up costing $220,000.
These days, some auctions are being offered online as well.
Bidding on homes
“It seems like it’s a pretty good deal,” said Walt Drabik of North Bergen, who brought Patty Torres along with him to check out the open house at the Altessa last week.
Another prospective buyer, Patty Hsieh, attended the open house with her family from East Hanover in search of a two-bedroom unit to rent out. After hearing about the auction from a local Chinese newspaper, they decided to give the process a try and see if it would help them secure their first investment property.
“We figured, since the economy still isn’t great,” said Hsieh, “we can see if we can get a better price.”
Ron of North Bergen came to the auction in search of an investment for himself – a new one-bedroom apartment. He preferred not to give his last name for privacy reasons.
As an experienced real estate investor, Ron said he is looking for high-quality construction first and foremost.
“I’m just really careful,” he said. “All of this was finished in a rough economy.”
He added that although he was hoping to get a bargain, he anticipated that most of the units will go for near the original valued price.
“I’m just looking into it,” he said. “I really don’t expect to get a good deal at an auction.”
As for Mike Tilleli, who purchased his unit in January (not at an auction), he might wind up with a bonus good deal himself.
If several units at the auction go for significantly low prices, he will have the opportunity to renegotiate to a price comparable to the average in the building.
Lana Rose Diaz can be reached at ldiaz@hudsonreporter.com.