Some Great Deals at Today’s Real Estate Auction!!!
December 15, 2007 by Lucas Lechuga
Below are the results of some of the condos that were auctioned this morning:
- Courvoisier Courts - Unit 2312 - 3/2.5 - 1,655 SF (Brickell Key) - $540,000
- Isola - Unit 1509 - 1/1 - 735 SF - (Brickell Key) - $185,000
- Jade at Brickell Bay - Unit 502 - 2/2 - 1,460 SF - (Brickell) - $625,000
- Jade at Brickell Bay - BL45 - 2/3 - 1,730 SF (Brickell) - $735,000
- Murano Grande - Unit 805 - 2/2 - 1,400 SF (South Beach) - Withdrawn
- Neo Lofts - Unit 1006 - 2/2 - 1,109 SF (Miami River) - $185,000
- Ocean View - Unit 210 - 1/1.5 - 1,005 SF (Sunny Isles Beach) - $140,000
- Ocean View - Unit 909 - 1/1.5 - 1,005 SF (Sunny Isles Beach) - $160,000
- The Club at Brickell Bay - Unit 2114 - 1/1 - 818 SF (Brickell) - $180,000
- The Club at Brickell Bay - Unit 2603 - 1/1 - 825 SF (Brickell) - $175,000
- The Club at Brickell Bay - Unit 3102 - 3/2 - 1,232 SF (Brickell) - $225,000
- The Club at Brickell Bay - Unit 3202 - 3/2 - 1,232 SF (Brickell) - $270,000
- The Cosmopolitan - Unit 2603 - 2/2 - 1,010 SF (South Beach) - $405,000
- Vue at Brickell - Unit 811 - 1/1.5 - 796 SF (Brickell) - $180,000
- Vue at Brickell - Unit 3606 - 3/2 - 1,551 SF (Brickell) - $290,000
It's interesting to note that the units at The Club at Brickell Bay and Vue at Brickell sold in the range of $187-$226 per square foot. I think we'll be seeing much more of this in the months to come. The high bidders of the units in these two buildings at the Hudson & Marshall auction simply overpaid.
The two units at Jade sold for around $425 per square foot. I think the BL45 unit is a terrific buy!
In June of this year, I submitted an offer of $440,000 for a client on unit 2603 at The Cosmopolitan when it was a short-sale. The bank rejected our offer. We were prepared to close within 30 days. It sold today for $405,000. This happens all the time! It really frustrates me which I why I rarely will deal with a short-sale. Banks just don't get it yet! It's a better use of my time to wait until the bank takes it back and have my client buy it for much less.
Does anyone have any data on the historical cost-to-own vs cost-to-rent ratio for top-end condos in Miami?
The reason I’m asking is that even though that unit at Jade on Brickell (BL45) sold way below its previous price, the cost to own (by my rough calculations) comes out to around $7500/month.
I don’t doubt that there is some premium to owning vs renting in these ultra high-end condos, but I’m just curious what that number is.
I believe something like this unit would rent for no more than $4000/month. Normally I would say that if the cost to own exceeds the cost to rent, then it’s not a good deal. However, I do admit that at some point if you get into the really high-end stuff, there will always be a premium to owning.
If anyone has any historical data on this (high-end condos only), I’d be very interested to see what those numbers are. I think that would be key to figuring out when to buy.
BFG – Yes I’d love to know the same thing. I’m considering a 1/1.5 mid-range condo in Broward right now. It’s listed for $230,000 for about 950 sq. feet in a newly completed building. It has nice views, marble, granite, stainless steel, etc. There are similar units renting for about $1,450.
On $230,000, the principal and interest would be about $1,400 alone – then when you factor in taxes and maintenance, you’re probably looking at upwards of $2,100 or so carrying costs. From what I’ve heard, the carrying costs should be about 110% of the cost to rent (i.e. if rent is $1,450, the carrying costs should be about $1,600). So the price is historically way out of line.
The question is, should this ratio hold true for a newly constructed semi-luxury building , or is the rule-of-thumb more applicable to lower end units and homes?
Thanks
Lucas,
Is there a place where we can get ALL results for the AUCTION? If not, do you know how much the units in “Turnberry on the Green” in Aventura – Item #: 114 & 115 went for? Any info would be greatly appreciated?
Thanks, Jack
Jack,
The auction house’s website is http://www.ushomeauction.com. They don’t have the results on their site yet and I’m not even sure if they plan to but you may want to take a look in a few days. I’m pretty sure though that someone will tell you right here in a comment by tomorrow or Monday.
i wish i had enough money to buy one of these house …just kidding . thx for your share ….
Hola Lucas,
Is there an Auction in the Fort Lauderdale area. I am interested.
Thanks
Blanca
Miami River prices are affordable for the average potential homeowner. Brickell and Sobe still have a ways to fall.
Lucas,
The two units at Jade sold for almost half their last sale prices (based on the last sale price information at the Miami Dade Appraiser’s website). How will these prices impact property taxes? Will future property taxes be based on the latest sale prices and will be substantially lower?
Thanks.
PS. You’ve a great blog!
I’m new to this auction business. For these units to get auctioned, are they purchased by a private buyer then foreclosed by the bank? Or these coming from developers?
Lucas,
I was in shock of how much Neo Lofts went for. I had an apartment there which was 820 sq ft. and paid $275K four years ago. Thanks for the info on this auction. Do you know of any other auctions coming up?
Hi Lucas,
I would have loved to have attended this auction and I likely would have bid on several units at these prices; however I live about 3 miles from the convention center and had no idea there would be an auction yesterday? I follow your blog very closely via RSS and I don’t recall that you mentioned it prior to now. Maybe you did and I missed it?
It would be awesome if you could put up a reminder post before future auctions or registration deadlines.
Your blog is top notch and the best I’ve seen covering the Miami condo market. I refer everyone I know to it and I really appreciate the integrity and hard work you’ve put into it.
If you have a mailing list could you please add me to this as well?
Thanks,
Sean
To put these numbers in perspective:
(1) Vue (2 units) – avg P/SF at auction: $200; avg listing price per Lucas’s latest index on the building (“ALP”): $441. Discount: 55%.
(2) Cosmopolitan (1 unit) – PSF @ auction: $401; ALP: $579; Discount: 31%.
(3) Jade (2 units) – PSF @ auction: $426. ALP: $798. Discount: 47%.
(4) Courvoisier (1 unit) – PSF @ auction: $326; ALP: $460; Discount: 29%.
(5) Isola (1 unit) – PSF @ auction: $252; ALP: $510; Discount: 51%.
I can’t comment on the Club at Brickell, since Lucas threw it off his index in disgust a while back. However, I seem to remember him commenting on a suspicious looking sale of a 2/2 there for +/- $700k, and saying, No WAY is a 2/2 at the Club worth anything close to that – a fact clearly shown by these results.
Of the seven units that sold that I CAN compare to ALP, in the aggregate, they sold at a 44% discount to ALP.
We’re finally beginning to see some reality.
Lucas, I second Sean’s motion about advertising these auctions ahead of time – if you did, forgive me, but I don’t recall seeing this mentioned until it was over.
JM – I didn’t throw The Club at Brickell Bay off the index. I threw The Sail on Brickell off the index.
Sean & JM – I wrote a post about this auction on November 18th.
Rudy: I’ve had this problem in the past, owning a unit that is way over-appraised. Miami-Dade went mad a year ago, increasing the assessed value of every unit I owned by 60%. (Way to go on the timing, M-D!!)
Lucas can probably advise you better on this, but my experience has been that if you are homesteaded, the judges won’t consider an appeal.
If it’s an investment unit, you can be much more successful at appealing appraisals. I doubt the judge will bring it down to the auction level, but you can certainly reduce your tax bill.
One company I have used in the past is taxsaversmiami.com. I’m not plugging them, there may be better or worse companies out there. It’s one resource of many. I hope I haven’t violated the blog rules by mentioning them.
Sorry, Lucas, both about missing the Nov 18th post and my mistake on the Club.
To amend my earlier post, add:
Club @ Brickell (4 units): PSF @ auction: $207; ALP: $550; Discount: 38%.
And we now have 11 condos (assuming these sales are final) that sold, in the aggregate, at 50% below ALP.
Even better! Plus, that would be 11 closings in the next month, not insubstantial compared to the 26 closings across all three of your indexes in November. I know there have been other contracts signed in the last month. This market needs activity.
Are these sales final? I could actually see some value at some of these prices, which is something I thought I would wait a long time to say about this market.
Or will the sellers just walk and deny reality again?
Any word on what the buyer’s premium was?
Lucas,
Next time there is an action I’d like to bid on a unit.Actually I’d like you to bid on a unit for me. How can we arrange it for you to represent me? What is the procedure? I’m real new to this.
Thank you.
Thanks, JM. That’s very helpful.
For some of the folks out there that don’t take time to crunch numbers:
regardless of how you slice it—condos today are for end users only and not for investors who can’t take a loss for a few years.
you can’t possibly have positive cash flow when you are financing a property when you add in taxes and condo fees
you would have to rent a unit for $3000 a month if you bought it for $300,000 in order to make a profit.
And it would be impossible to flip a unit in the next 3 years and try to make a profit
(fuhgetaboutit!)
and if you have cash in a 5.4% CD, you are making $17k a year sitting on your butt.
Moral of the story: sit it out folks—the prices will come down after this year. Buy at the end of 2008— Just relax and don’t do anything you’ll regret
(does anyone remember 1990?)
Thanks for the info Robin. I’m interested in a condo (auction and/or sale etc.) in the Broward area. Information is very helpful.
Thanks
Those units at Jade sold cheap!! Does anyone know how much the maintenance is at that building?
does anyone know how much the homes in coral gables went for
645 madeira
233 romano
??????
Did the bank take the highest bid or can they still reject them?
This is merely the tip of the iceberg; there will be plenty of foreclosures in the upcoming year; below is a summary of the unit inventory either on the market at the moment, or coming up withing the next 12 to 24 months. (excluding Brickell Key)
500 Brickell Avenue 633
Brickell on the River North 384
Brickell on the River South 319
The Avenue 570
Solaris 138
Plaza on Brickell (One) 440
Plaza on Brickell (Two) 500
The Sail 152
Lattitude 427
Met One 447
Wind 489
Ivy 498
Mint 602
Cima 471
Capital 832
Axis 718
Emerald 120
Icon 1,800
Epic 342
Total 9,882
JM,
The buyer’s premium was 5%. From what I heard all of the above condos were final sales and not contingent upon bank review. There were some other properties auctioned that day that were contingent upon bank review but not the ones above from what I heard.
Wow there are some really amazing deals in that list. I wish I had the resources to snatch up a great investment prop like these!
The best thing to note about this auction is that there are plenty of interested buyers for this market…same can not be said for other areas of Florida!
Robin, Regarding renting vs. buying (after taxing into account the tax deductions for mortgage and property taxes): I read somewhere that a 20% spread was a typical premium.
Besides being able to finish the unit the way you want to and not worrying about moving every 12 months, the big advantage of owning is price “protection” (I’m putting that in quotes, because folks who bought here in 2005-2006 have negative equity).
For example, I sold a condo in NYC in 2000 for $525k; today (NYC is a much healthier market), the unit sells for $1.3m. (Yes, you may point at me and laugh; or, just shoot me already).
Meantime, NYC rents are through the roof. If I’d stayed in NYC, I would have been very happy at having paid what I did, even though at the time, it was easily a 20% premium to renting.
I just don’t see the same dynamics in the Miami market, unless you are buying at some of the prices in this auction.
And if you’re looking at buying vs. renting, don’t forget insurance and assessments. I stupidly bought a 2/2 ground floor condo in 2004 w/o thinking about those two. I was astonished to watch my insurance premiums soar – they’re about the same as my taxes now. Then the assessments began. The assessments have averaged about 60% of annual maintenance for the last four years. I admit, the building is in much better shape than it was when I bought in, but it’s not being reflected in selling prices due to the market.
And incidentally, assessments are not limited to older buildings. I’m renting at a 2005 building, and they’ve had to do major work to correct shoddy finishes by the developer that became apparent after just two years of completion.
Lucas, wow, if those sales are final, I can’t wait to see the January indexes! (Assuming they can’t close by Y/E).
P.S., I’m with Sylvia. Next time there is an auction, I’d like to go with you representing me.
One problem I have had in the past (and again, this is probably due to my overlooking an earlier post) is that by the time it dawns on me that an auction is about to happen, I don’t have time to do my due diligence, let alone transfer funds over to my interest-free checking account to cover the deposit. I need about a week’s notice to do both.
Also, to be honest, after reading results from prior auctions, it has seemed like a big waste of time. The banks/developers/sellers were just unrealistic, and abandoned good offers – your experience with the Cosmo is a good example.
I hope this auction is not an isolated event but the start of a much more realistic market in Miami.
AlexG: My completely unscientific study (5 units where I could see the SF and the maintenance; there were more, but I’m too lazy since I can’t afford the Jade) shows that maintenance PSF at Jade runs around 75c/mo. Ouch.
For example, there’s a 1BR 895 SF apt listed with monthly maintenance of $700 (78 cents). Hope this helps.
JM – The problem is that the sales from the auction won’t hit the January indexes because these did not go through the MLS. These are private sales. The figures from my index are derived from MLS figures.
How is it that in a new building that is 2 years old, does the building have pay for these repairs? (JM’s comment) Doesnt the contractor have some sort of line item in the contract with the developer that guarantees their work for a period of time?
Lucas, well, I learn something every day on your blog. You can’t include these sales on your indexes – wow. Don’t they show up on the M-D property site?
JM – Yes, they do show up on the Miami-Dade website but there can be big delays in having them show up on the site and there isn’t an easy way of extracting the numbers. At least I don’t know of one.
Carlos, I don’t know why. I should have thought that the buyers could have sued the developer, and for all I know, they can.
I’m renting in the Cosmopolitan. I’ve been here nine months. All I know is the pool has been closed off and resurfaced, the “grand staircase” cordoned off, they intend to resurface all the elevator floors, they had to shut the lobby off for a few days because it wasn’t sealed properly, and the carpets in the hallways get dirtier than a no-tell motel.
I’ve only been here nine months, however, so something else could go wrong.
In its defense, it does seem the board is active in fixing the problems. I have read there have been assessments but I don’t know how much.
There should be a blog after and if an association files for chapter 11 as to what happens, I know its similar to the Villa Regina write up but its different because it would have to do with the present not what happened in the early 80’s which was very different as the construction boom wasnt of the same magnitude
Do these prices include the 5% fee or should we add 5% to the sales price for the auction fee? These prices these early on scare me, If you look at miamidade.gov and cross reference the last sale of those units to what they sold at the Auction you are looing at 31-40 cents on the dollar from late 2005/ early 2006 Prices, for example at the Jade unit 502 last sold for $1,500,000 and it traded at the auction for $625,000 or at 41.6 cents and for the CLub at Brickell Bay unt 3102 last sold for $600,000 and at the auction it went for $225,000 or 37 cents on the dollar from last sale, Club at Brickell Bay Unit 3202 last sold for $856,000 and it traded at $270,000 or 31.5 cents on the dollar from the last sale.
Come on people … chill … these aren’t purchase prices, read the fine print, below; these are just low ball offers, doubt any will be accepted.
And now for the fine print: “Subject to Confirmation. In the event the winning bid amount is not immediately accepted by the Seller, the Auctioneer will inform the Winning Bidder that acceptance of their winning bid amount is “subject to confirmation.” Winning Bidder acknowledges and agrees that Winning Bidder’s purchase is subject to, and contingent upon, the REO management of Seller approving the purchase, which shall be given or denied at their sole and absolute discretion within ten (10) business days following the execution of the Purchase Agreement. Winning Bidder will receive a refund of monies deposited in the event Seller chooses to cancel the transaction”
Could someone report back after 10 days?
Perez – I didn’t attend the auction but I heard that once the round of bidding was over the auctioneer would say whether or not the high bid would be contingent upon bank review. If he didn’t say anything then that meant that the bank would accept the offer. I was told that nothing was said after the above condos were auctioned. I know somebody that won one of the condos above.
Starting Bid at the REO at Murano Grande was $399,000 I wonder what it went to before the offer was withdrawn, what does withdrawn mean here that they didnt aprove the amount? or that it didnt meet the reserve? or that no one bidded?
Alejandro – I was told that the condo at the Murano Grande never went up for auction. I’m guessing that someone made an offer on it that the bank accepted before the day of the auction.
perez –
did you go to the auction
any word on the coral gables homes??
Does anyone know what Sunny Isles units went for?
You have to keep in mind that Vue at Brickell, The Club at Brickell Bay and Jade were all ridden with mortgage fraud. Prices in these buildings, including list prices, have been affected. Additionally, most of the units at Vue at Brickell and The Club at Brickell Bay were in bad shape. The building’s themselves were in pretty bad shape themselves.
JM – By the way, above you wrote that The Club at Brickell Bay sold at a 38% discount. It should be a 62% discount.
Do these prices reflect the 5% charge that the auction house charges you ? Should we just add 5% to all these prices?
I understand that the $1.5M apartment at Jade was most likely fraud, but if you look at the comparables all the other listings like that on the MLX are in the $800,000-$2,600,000 (for the BL 54) range and there are 42 apartments available so these still sold at a significant discount. I would have had to see the actual units to see if these really were great deals or not but just looking at the numbers I can tell that they all sold for under market value, if we refer to market value as the asking or listing comparable prices…
The prices listed were the bid price. Add 5% to get the contract price
Lucas, totally sorry if I screwed up the numbers on the Club – I’ll take your word for it. Hey, it just makes the auction results even more astounding and encouraging.
I’d like to go back to your comment that anything that doesn’t sell via the MLS won’t show in the numbers.
I understand why you can’t do this; searching the MD site is exhausting. However, if you exlude the 11 most recent and relevant sales from your indexes, in a market where we all agree that activity is so low, sales points mean nothing: well, aren’t you understating the activity and overstating the prices?
You know you have a huge number of fans of this blog and count me in.
How should I read the January index w/o these recent auction results? Or is this part of changing to paid content in the new year?
Alejandro,
In regards to your comment on the $1.5MM unit in the Jade that went for $625k. It was never a $1.5MM unit. The reason it got into the bank’s hands is that someone flipped to a straw buyer and defrauded the bank at that inflated amount– then walked away form it.
It was always a $625K unit… probably around what it was sold for before it was re-sold a few times in between a few related buyers.
Don’t believe any of the comps you see in the buildings Lucas mentions above (and probably many, many others).
Also, don’t know if anyone has heard this… I heard it from someone who used to work at countrywide, for what it’s worth… but she told me that the associations at the Jade and the Club are both looking at chapter 11 filings. Scary if you were one of the legtimate buyers. All the more reason to stay away no matter how good the deal looks.
btw…not the former-boss-of-Lucas-Tom..
The usually-ranting-about-mortgage-fraud-Tom
JM – I decided 2-3 weeks ago that I’m not going to charge for content after the New Year. I know that there are tons of investment groups that would pay for some sort of premium service but the potential buyer leads that I may lose from doing so wouldn’t be worth it. It would also mean that I would be committed to providing this information each month in a timely manner.
You are correct that it would make for a much more informative index if all sales were included. However, as I mentioned it would be nearly impossible to include these figures. Additionally, it would be a bit misleading because the average buyer wouldn’t be able to find the same deals on the open market. It’s just like if a stock is trading at $125 per share and two hedge funds cross a million shares at $120 per share. The trade hits the tape but that doesn’t mean that an investor can get the same price right now. All it does is provide information. It may act as a precursor, however, as to where the stock may go. In my opinion, these auctions are acting as a precursor as to where prices may go in the future. The indexes that I provide reveals how the market reacts to the news of these auctions. Because we’re dealing with real estate which is so illiquid, I am guessing that it will take a long time for the auction information to be reflected in the market.
Put another way, my indexes reflect the primary market while the auctions act as the secondary market.