I've long been a fan of luxury home auctions, and have written about their virtues in this newsletter several times over the years. However, one has to apply the same rigorous analysis to an auction property as any other property.
In this week's new listings there is a property up for auction. On the surface, it looks exciting: the opening bid is $1.15 million and the remarks say "Previously $2.7 million."
Beware!
Foremost that $2.7 million was just an asking price - which they never got, and the listing was cancelled. Remember anyone can ask a billion dollars for a shack, so asking prices don't mean anything.
Secondly, the home sold for $1.85 million in 2005, the peak of the bubble market. We're not back to 2005 price levels even today, 9 years later.
The opening bid is $247 per square foot. That's a low price for the quality and location, and I would expect to see it bid up. Let's assume the home sells for $325 psf which is the recent average in PV. That puts it just over $1.5 million. The sellers are clearly hoping for more. It looks like they have quite a bit of debt on the property, so $1.5 million probably won't cut it. I can't say for sure where the reserve is set, that's always kept secret, but my guess is the reserve is over fair market value.
In the words of Shakespeare: "full of sound and fury, signifying nothing." Auctions can be great opportunities, or they can be dog and pony shows. Always do your homework before contemplating a bid.
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Closings
Closings were solid in Paradise Valley last week at $11.6 million.
Average sales price was $1.7 million and $331 per square foot. The weighted average year of construction was 1992.
Homes were on market an average of 110 days.
New Listings
This week's 12 new listings range from $639k to $5.5 million. Just two homes that get my recommendation:
Santa Barbara Newer ConstructionCustom home completed July 2013 still under builder warranty. Great room/kitchen with views to pool and green yard. All guest suites en-suite. Corner lot in private cul-de-sac with side motor court driveway that is privately gated. 730 square foot casita has a private bedroom, bath, and kitchen. Offered at $2.85 million --> Click Here for Report
Estate on 2 Acres Privately gated 2 acre property with views of Camelback Mountain. Amenities include 3 heated spas, fireside dining, ramada with covered bar, 2 pool baths, putting green, grotto salt water pool, lush landscaping and guest house. Indoor entertaining as well with media room with Cine Tech and theatre seating, pool room/beer tap, exercise room and sauna, wine room that holds over 1,500 bottles. Offered at $5.5 million
To see all of this week's new listings please click here.To see everything on the MLS in Paradise Valley please click here.That's all for this week, I'll be back next week with all the latest in Paradise Valley real estate.
Thank you,
Alex
SearchParadiseValleyProperties.com iParadiseValley.com
(480) 442-7325
p.s. My book on real estate, co-authored by Brian Tracy, can be found on Amazon here.
(c) 2014 Alex Goldstein PLLC
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