Day of the event. Buyers waiting in line in the garage of Concerto. Photo courtesy of Sonny Astani
The recent Concerto sales event moved 77 loft units in one day, bringing in $31 million for downtown developer Sonny Astani. But two weeks after the sale, ask real estate agents and downtown residents how they felt about the event, and you’ll hear a range of responses. “It was done very well,” says Drew Panico, a downtown real estate agent who helped his clients—a couple from Culver City--purchase a 982-square one-bedroom for $325,655 at the event. “It was a waste of time,” says Young Kong, assistant to Koreatown-based real estate agent Dae Young Hur. Kong is one of those agents upset by the discrepancy between Concerto's advertised prices and the actual pricing. “It was deceiving in one sense," he says. "But they got the job done because it got a lot of people in." After the jump, an explanation of how Astani got the job done, why some people got deals, and how much of a sale this event really was.
The Pricing
As Kong and real estate agents have pointed out, the advertised prices--announced the week of July 29th--were lower than the prices of units offered at the event. The following prices were advertised: studios from $219,000; one-bedrooms from $279,000; and two-bedrooms from $449,000. But only one unit at each of those price points was offered to buyers, according to Astani.
Instead, Sold2U,the Bay Area-based sales company Concerto used (Sold2U's parent company is Accelerated Marketing Partners, the same group that did the West Ocean Two auction), set prices that were based, in part, on demand. Here’s how it worked: In the weeks before the event, potential buyers pre-qualified at the Concerto sales office on Figueroa Street and were asked to choose four units they were interested in. According to 27-year-old Ankur Vakil, a downtown resident who registered for the event shortly after it was announced, the Concerto sales staff were vague on pricing. But in an obvious tip-off that the event would have an auction mentality, Vakil says he was encouraged to pre-qualify for a condo above his price range of $290,000 (he was looking for a one-bedroom). "They said you might as well go up to the max, you might as well go up to $330,000." According to Accelerated Marketing CEO Ken Stevens, 550 people were pre-qualified in the weeks leading up the event.
To set prices, Sold2U staffers looked at what units were picked during the pre-qualification. They also factored in downtown sales comps, says Accelerated Marketing's Stevens. Additionally, during the actual event, Astani raised or lowered prices from the set prices based on buyers' reaction. But Astani says more often than not, he lowered prices. “I dropped a lot more than I raised."
Day of the Sale
The sale itself took place in Concerto’s 6,000-square foot retail space on Flower Street. Using curtains to create three different rooms—a waiting room, a sale room, and a closing room—Sold2U staffers led buyers, in groups of 20-40 (all buyers could bring a friend), through the different rooms. "It was all dark, and it felt like “Space Mountain,” says Vakil. "They put these in this different rooms to get you really excited?it’s totally a mental game.”
“It was very strange,” agrees Mimi Kasden, a resident of 1100 Wilshire, who was shopping for a unit as an investment.“You’re waiting in the garage, and it's dark. We felt a little foolish. But sometimes you have to be a fool.”
All the buyers were given a time slot. Days before the event, Vakil got an email from the Concerto sales team, announcing he had a 1:30 pm time slot. Even though he registered weeks before, going to the sales office with a friend, Vakil's friend was given a much earlier time slot--at 9 am--which confused Vakil. Both Astani and Stevens say that the time slots were based on when buyers completed the pre-qualification process, a procedure that may have been held up by paperwork, according to Astani.
When buyers (there were 8 groups, and on the day of the sale, all the groups were given a 5-minute explanation about how the event would take place, according to Stevens) were led into the selling room, the available units—and their prices were flashed on an overhead projector. If a unit had sold, it was marked as such, but notably, buyers didn’t know if a price on a particular unit had dropped during a previous time slot.
And if some buyers wished they'd had an earlier time, it may not have mattered much in the end, because activity during the morning groups, which had a shot at all 77 units, was very slow, according to Astani. “The first couple of groups had more no-shows than the rest,” Astani writes in a follow-up email. “Therefore [the groups were] smaller and lower energy, more hesitant but later groups were larger, more aggressive and fed off each other's energy. Therefore more units were purchased. Theoretically the earlier groups had more choices of units since more were available.”
By 11:30 am, when downtown real estate agent Panico entered the sales room, he was able to get his clients a one-bedroom for $325,655. Panico says he was told by a staffer at the event that prices dropped following the slow response in the morning.
But by the time Vakil entered the sales room at 1:30 pm (the groups were running behind schedule at this time), the cheapest one-bedroom displayed was $340,000, and the remaining one-bedrooms were in the $380,000-$400,000 range, according to Vakil. After seeing the numbers flash on the screen, Vakil left, although he says the Sold2U staff tried to stop him from exiting, asking him to leave his information in case back-up units became available. “They don’t want you to walk out because three people will see you and walk out, too,” believes Vakil.
Just before Vakil left, Dae Young Hur and Young Kong, who had five clients pre-qualified for the event, were getting word about the pricing via a phone call from a friend at the event. Kong called his buyers and told them to skip the sale. “If it had been $60,000 above the [advertised price], it would be a decent, but the fact that it was $100,000 over value, that’s its way too much,” says Kong.
Meanwhile, by late afternoon, prices seemed to be holding. Real estate agent Panico left at 4pm, and says at that point, there were seven units left, including two-bedrooms in the $600,000s, and one-bedrooms that had hit $406,000, he says. And by the time downtown resident Kasden arrived for her 4:30 pm slot, the building had sold out.
But Kasden did end up purchasing. The following Friday night a rep for Concerto called, saying that three units—511, 611, and 402—had become available after buyers backed out. The next day, Saturday, one week after the sale, Kasden returned to the Concerto office and purchased unit 511, a 1,019 square foot one-bedroom, paying $372,000. “I don’t think it’s cheap,” she says of the price. “But it’s a good location.”
The Aftermath
An investor, Kasden plans to rent out the unit. Which raises the question, how many investors were there? According to Accelerated’s Stevens, there were no investors who purchased the day of the event. “People got fantastic deals,” he said. “There were no investors, these are folks who want to live downtown.”
Real estate agent Panico dismisses Stevens' belief that there were no investors. “There was investors,” he says. “I saw them. They were the guys in dark suits with briefcases."
Meanwhile, if there has been some grumbling about the prices, the fact of the matter is that all 77 units sold. Astani says that he's heard the complaints about the sale. "Some people got better deals," he says. "Because of luck, or because the unit didn’t sell till early in the auction."
Rhonda Slavik, sales and marketing director for South Group’s Evo, also says she has heard some of the chatter about buyers being upset about the sales process and the prices, but has her own theories about buyers' unhappiness. “I think people are mad because it’s been a buyers market,” says Slavik. “And buyers aren’t used to being herded around like this. There’s this mentality that I’m a buyer and I need to be treated very well.” Also, Slavik points out that she’s thrilled Astani sold out because there are fewer condos flooding the market.
Real estate always has been a blood sport, but one might argue that if a buyer is spending $350,0000, perhaps no herding--particularly by a company that uses the name Sold2U---should be going on? Isn’t this why people like Vakil left the event, thinking there was something scam-like about the sale?
“It wasn’t a scam, it was fun,” says downtown real estate agent David Kean, who points out these type of auction-sales hybrid events were held during the boom days. But with Concerto's units averaging $400 a square foot, he doesn't think the event was much of sale. "You can walk into any downtown development and get that price," he says.
And Kean has no sympathy for anyone who purchased at Concerto and is grumbling now. “They didn’t have to buy,” he says.
Looking into the retail space. A week after the sale, the sign was still up in the parking garage of Concerto.
· Sonny Chops at Concerto, Looks to Move Lofts [Curbed LA]
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