"What a complete clusterfuck." That's how one real estate agent described yesterday's Element auction. Indeed. But in the end, it was a highly successful, and at times, entertaining clusterfuck. The auction for the Marina Del Rey condo project was held at the Ritz-Carlton Marina Hotel, and the event sold out all 41 condo units, with the units selling for $415 per square foot on average, according to Intellimarket exec Dan Lee. But what drama! The auction started at 1pm, but about 30 minutes into the event, auctioneer Intellimarket realized that 35 people had been given the same bidding ID numbers. At that point, Intellimarket shut down the auction for more than an hour before announcing that all units with those multiple bids would be cleared. Well, the crowd didn't like that and started shouting, "Start over, start over," urging Intellimarket for a do-over of the auction. Which the company did.
At that point, many people headed to the door. Investor Calvin Eng, who'd already submitted bids on three units, was one of those who left, telling us "that the auction had lost momentum." We also heard people complaining about the lack of communication to the crowd from the auctioneers during the break.
But there was such a big crowd (and by our estimation, this was the wealthiest-looking bunch of bidders we've seen at any auction to date) that it didn't seem to matter in the end. To try and calm down everyone in the room (after about two hours, the Ritz ballroom started feeling like an airport terminal, with everyone just wanting to get out), free booze and champagne were offered. "Get 'em drunk, so they overbid!" one bidder, double-fisting drinks, happily told us.
And when the auction restarted nearly two hours later, all the units sold. "All of the units with a $295,000 starting price sold for at least $428,000 (including the buyer's 2 percent premium). That was also our least expensive unit. The most expensive was a 1560 sf unit that sold for $805,800 ($517/sf)," wrote Lee in an email last night.
Meanwhile, it's hard to know if the two-hour delay helped or hurt the final sale prices in the end. Initially, our thought was that having some people leave and having the auction start over would drive down prices when the auction re-started. But at least some people we talked with said that the delay actually helped because it allowed people to get more comfortable with the auction process (to do it twice, essentially), while the delay also weeded out people who weren't really interested in buying. Additionally, one person wondered if the delay wasn't faked to build up anticipation. Err, not likely.
And given the delay, it's worth pointing out that there's no developer per se, so no one with a huge interest in making sure the prices are driven way up. Original developer John Laing went into Chapter 7, so all the proceeds from this auction will be distributed to the creditors in the bankruptcy case. Taylor Grant, of California Real Estate Receiverships, was there yesterday--he's the court-appointed receiver responsible for overseeing the sales. (Hired by the bankruptcy court, the receiver basically just babysits the property while it goes through the court case, but has no financial stake in the project other than just wanting to see it sold.) If this was a normal auction with a developer, one would imagine the owner of the project would be more upset by the delay. Regardless, Grant was working as hard as the auction company staff, ordering the Ritz staff to bring out more food and booze, and to validate for parking.
In the end, like all of these auctions, there were winners and losers, and in this case, frustrated people who decided to drop out, and not stick around for the "second" auction. Meanwhile, the second screen in the gallery shows all the final sale prices. This link had the original starting prices. According to Lee, prices were on average 33% over the minimum bid prices. Moral here? Regardless of delays, people still love themselves an auction.
· Element Auction Will Include Other People's Stuff [Curbed LA]