Miami condo auction distance between buyers, sellers

September 25th, 2007 6:14 PM

South Florida condominium developers may be reluctant to resort to auctioning off unsold units anytime soon, if last week is any indication.

The developer of the new Platinum condominium in Miami's Edgewater neighborhood auctioned 20 units Thursday in hopes of speeding up sales in the sluggish housing market. But Maysville now says bids were so low that it is rejecting all offers except those it promised to honor regardless of price. It plans to rent the units and wait until the market improves.

''The bids were significantly lower then even our preconstruction prices,'' said Alex Redondo, Maysville president.

''I had hopes that units would at least sell north of that,'' he said.

The auction drew widespread attention because it was the first to sell newly-built Miami condos since the housing boom soured, drawing curious developers assessing whether they should auction units as well as bidders. Cameras from cable business channel CNBC rolled.

BUYERS VS. SELLERS

Maysville's rejection of most bids, market watchers said, is one more sign of the tension infusing today's market: Buyers want a bargain while sellers are unwilling to budge too far despite ballooning numbers of condos for sale and many more under construction.

''It's symptomatic of part of the problem, buyers and sellers are still too far apart,'' said Tom Dixon, a commercial real estate broker who assesses property values for tax appeals. ``Someone has to say, ouch, I give up.''

Some cautioned the 22-story Platinum may not be a good barometer because of its location in an area on Northeast 30th Street, a struggling district north of downtown Miami. Maysville is also not a prominent South Florida builder. Others note auctions are not always the best indicator of a market.

Still, said Kevin Tomlinson, a Miami Beach condo broker, ``this is the market speaking.''

Maysville's cheapest unit at Platinum that sold preconstruction was a sixth-floor one-bedroom condo that went for $235,000, or $284 per square foot, Redondo said. Pricier units were sold preconstruction for more than $450 a square foot.

At the auction, Redondo said, the most expensive unit sold for $269 per square foot -- and one even went for as low as $195 per square foot.

''I am not going to just give away my work,'' Redondo said. ``I was very surprised.''

Maysville initially promised to sell eight of the units absolute, meaning the units would go to the highest bidder no matter how low the price. Ultimately the developer sold nine without minimums.

On the remaining 11 units, Maysville reserved the right to keep them if the price wasn't right -- and it's now doing just that.

Redondo added that he had taken a calculated risk by auctioning units but ``took it on the chin.''

GOOD DEALS?

Some observers said winning bidders got good deals if they plan to live in the units, but deemed prices too rich for investors planning to re-sell. Many think better deals are coming.

Matt Allen, chief operating officer of Miami's Related Group, among the biggest condo builders in the country, said they would never use an auction to sell unsold inventory.

''The perception is it devalues a property,'' Allen said. ``When you have an auction the bottom feeders come out. For us, with any remaining inventory there would be an orderly disposition.''

Redondo said he didn't undercut his previous buyers but the market did, albeit vividly illustrated through an auction.

''The market is what it is,'' Redondo said. ``This is a sign that the market has already come down more than people are thinking.''

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