In an effort to jump-start sales, the developer of an upscale condominium project near Annapolis is counting on a technique builders haverelied on more and more in a lagging luxury housing market.
Twenty-seven apartments at South River Condominium -- originally priced between $190,000 and $479,000 -- will be sold to the highest bidders tomorrow during an auction at the Holiday Inn on Riva Road.
"Auctions are no longer viewed as the old farmer selling off the family farm," said Raymond Crosby, vice president of Crosby Communications, the agency promoting the auction for New York-based developersSouth River Joint Venture. "This isn't about a bankrupt product. This is becoming a readily accepted practice by developers."
Sheldon Good & Co., the nation's largest real estate auctioneer, expects to open the bidding at $50,000, $60,000 or $75,000 for one-, two- and three-bedroom units, complete with marble foyers, whirlpools in master baths, private decks and high ceilings. Extra amenities include personal concierge service, card-key access security, an indoor/outdoor pool, a fitness center, a party room and underground parking.
The builder guarantees to sell seven condos to the highest bidder, regardless of price, even if it falls below the suggested opening bid.
Since finishing the $15 million, 64-unit project off Southhaven Road and Harry Truman Parkway last August, the partnership has sold only eightcondos.
Auctioning off some units at a fraction of the original price benefits both buyer and seller, said David Schy, auction coordinator for Sheldon Good.
"Even though people get a discount, the developer is better off to go to auction in a soft market than to hold on," Schy said.
The sooner the builder can sell, the lower his costs on the remaining units for insurance, taxes, maintenance, interest on construction loans and advertising.
For buyers, "It creates urgency. People get a once in a lifetime opportunity," Crosby said.
The South River condos are part of the 130-acre Heritage Harbour adultcommunity just west of Annapolis. Because of the community's adult status, each condo must have at least one resident age 55 or older andno permanent residents younger than 18. Buyers who plan to rent out their units are not restricted by age.
Schy said he believes the auction is the first of its kind in the Annapolis area. Sheldon Good has held auctions recently for luxury projects in Baltimore, includingThe Colonnade, Scarlett Place and Deer Ridge. Sheldon Good even handled an auction for Donald Trump -- for Trump Plaza of the Palm Beaches, in West Palm Beach, Fla., selling 62 units on auction day.
So far, Schy said, he has been disappointed in the queries he's gotten about South River.
"Normally, we get hundreds, if not thousands, of inquiries," he said. "We've had much less than we normally see."
Anyone interested in bidding must bring a certified cashier's check for $5,000 for a one-bedroom unit, $6,000 for a two-bedroom and $7,500 for a three-bedroom, for an initial down payment. Financing through Annapolis Federal Savings Bank and a deferred homeowners buying program are available.