For anyone who is thinking about participating in an auction, take a close look at this video.
Notice how fast the bid amounts rise, plus – how clear are you about the price?
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
- 682 S. Coast Hwy 101, Suite #110
Encinitas, CA 92024 - (858) 997-3801 call or text
- klingerealty@gmail.com
CA DRE #01527365, CA DRE #00873197
Good work JTR with your on the spot coverage.
hmmm….1 bidder, bids it up with no competition….hmmmm.
Who bids 100% against themselves???
Something stinks here….
Besides, I see coastal sage on the property in addition to those protected trees….the coastal commission will have a field day extracting cash from you in addition to the city.
Classic example of how this blog is an excellent educational resource.
Totally appreciate you playing it straight relative to your prediction of what was going to happen and your post mortem about how you were wrong. All it does is confirm your credibility. You’re a straight shooter in an industry that, unfortunately, has more than its fair share of crooks.
Thank you, Jim!
I had to watch the tape a few times, and I think it turns out I was kind of right?
I said five or six bidders.
I think there were four who must have at least thought about raising their hand. Check the 3:57 mark in the video, because once he got to four million, he went back to three bidders who said they were done.
The bidding started at the 2:58 mark at $1 million, and literally in four seconds it was at $3 million. The camera happened to be on the lady next to me, and you can tell her surprise/shock.
After that it sounds like the auctioneer is saying 3.5-4. 3.5-4, and the next hand that goes up he says, “we have four” and immediately goes to four-and-an-half. (at the 3:23-mark)
The full million-dollar jump from 3 to 4 had to shock even the guy bidding – but because it went higher quickly and smoothly, no big deal.
But there was no higher bids after that – in fact, it was very quiet.
Also note how the two assistants are hovering around the bidder – they must have known he was a player, and were urging him to bid.
The final price was $4.4 million. The auctioneer earned every penny of the 10% buyer’s premium that was added on.
So if there were four bidders, two of them made $1 and $2 million bids – around my $1.5, and the third who bid $3 million may not have even known what they bid, when it happened in four seconds.
I also said that there might be one guy who was crazy enough to go much higher to get it up to $3-4 million, but he would need some help getting there. He got it from the auctioneer.
Go to the 0.25-second mark in the video.
Signed Abe Zapruder
JPMorgan Chase & Co. last night alerted attorneys that employees in its foreclosure operations unit may have signed affidavits in foreclosure cases without personally reviewing the documents, the same issue that has recently plagued Ally Financial, according to a memo obtained by Housing Wire.
Last week, Ally Financial, formerly GMAC Mortgage, admitted employees signed foreclosure affidavits in 23 states without knowledge of the documents or a notary present, a process known as “robo-signing.”
Why I thought $1.5 was right for the lot:
If you are a spec builder, the amount you want to pay for the lot is no more than 1/3 of retail value of the finished house. I don’t think owner-occupiers are any different.
In this conservative market are there builders thinking that they’ll sell the finished house for more than $6,000,000?
Sounds way out there on a limb. $4-$5 million maybe.
The REO sale across the street (which was nice) closed in June for $2,499,000.
The 4,700sf house across the street has been on and off the market since 2007, currently listed for $4,700,000, and the house at the end of the street just listed for $2,950,000 which is optimistic – it’s been on and off since 2008.
Thanks Jim for filming this. I wanted to go watch but had to work. I guess people who are going to buy $4 million lots don’t need to be in the office (classroom) in the middle of the day.
Also, I was confused about what happened when the said “we are going to the bank,” the reserve has been lowered. I wonder how high the reserve was? And I assume it would be set by the city council. does the city council somehow lower the reserve in the middle of bidding? That seems unlikely, of course.
I think the “we are going to the bank” was a gaffe on his part (meaning that he was getting paid), or some fancy auctioneer talk.
There has been mention all along that the price had to hit a certain minimum to be accepted by the seller, the City of Del Mar. He was confirming with the broker that they had met the minimum.
I would guess that they knew they could get bidders into the $2-$3 million range, and it was planned in advance that when he got to $3 million, he was going to jump it to $4 million as quick as possible, in order to hit pay dirt (pardon the pun). I don’t think he had an approvable sale at $3 million – the city wanted $3.485 million to pay off the debt from the Shores park.
http://www.signonsandiego.com/news/2010/sep/29/del-mar-sells-balboa-lot-4-million/
“We didn’t have a lot of bidders, but we had the right one,” Councilman Don Mosier said.
Twelve of the roughly 35 attendees at the auction, held at the oceanfront Powerhouse community center, registered to bid. Jake Rohe, a representative for the buyer, made the winning bid while on a cell phone with the purchaser.
“Their intent is to build one home and stay here for a long time,” he said, declining to name the buyer.
Unbelievable. $4.4 million??? Anyone have any examples of lots/teardowns in Del Mar selling for that much?
Very nice view though. When I saw the first post on this I didn’t realize it had views in both directions. I hope they remove those power lines soon (maybe the buyer can pay for it!).
The only 92014 sales above $4.4 since 5/1/10:
$7M:
http://www.sdlookup.com/MLS-090044093-435_Avenida_Primavera_Del_Mar_CA_92014
$6.425:
http://www.sdlookup.com/MLS-090065473-1236_Stratford_St_Del_Mar_CA_92014
The only lot that has sold over $2M in recent years was the one on the cliff-front whose buyer built these two spec condo-homes, and sold them this year:
http://www.sdlookup.com/MLS-090020894-111_4th_St_Del_Mar_CA_92014
http://www.sdlookup.com/MLS-090020898-115_4th_St_Del_Mar_CA_92014
He paid $4.35 for the lot in 2007, and grossed about $7,000,000 on the two sales (which was $2.5 million lower than his initial list prices).
Unless they build something very modest, this will be five years with the Coastal Commission, I bet.
Great video, Jim! Really appreciated your thoughts before and after the auction and especially clarification in the comment section. I, for one, was shocked it went for $4 million, but I was even more shocked how in only a few seconds it jumped one million.
From the Chicago Sun Times:
It’s Chicago politics at its best.
Sneed hears an effort by Chicago mayoral hopeful Rahm Emanuel to move back into his North Side home next month was axed by the man who leased it.
• The kicker: Sneed also hears rumbles there was a nixed request for Rahm to move into the basement of his leased home if the tenant didn’t move out.
• To wit: Emanuel, the White House chief of staff, who has been in the process of quickly building a network to run for mayor — had been trying to move back into his leased home at 4228 N. Hermitage.
• The upshot: Sneed has learned the tenant, Robert P. Halpin, 59, who holds the lease with his wife, Lori, until June 2011, refused to budge.
$4M is crazy! Especially when you consider that the house across the street is listed for $2.5M. Even though it doesn’t have an easterly view, that view is not worth another $2.5M (assuming a $1M house is built).
Why would those two guys hover around the final bidder at the 6:00 mark? It’s as if they were convincing him to go higher against himself, LOL! I wonder if the guy on the other end of the cellphone will ever see your video, Jim. He’ll quickly find out that he could have had the lot for $3.5M or lower.
I read Jim’s link, and here’s the last paragraph, of which I viewed the last sentence as a bit snarky:
“The sale must close within 45 days. Ten percent of the purchase price, $400,000, is due by the end of the day. For the remaining 11 bidders, they might be interested in the lot’s neighbor at 2165 Balboa Ave. A 2,800 square-foot home built in 1950 is listed for sale at $2.95 million.”
My wife and I like San Diego a lot. But the home prices out there are just a little crazy.
1 million bucks and you can live in style anywhere in metro Atlanta (including furnishings). Take another $500,000 and get a real nice weekend place on the lake, in Savannah or down on the Florida panhandle (you want to go east of Destin since BP destroyed the beautiful, sugar white beaches from Destin west to Mobile). Take $250,000 and treat you and the wife to a couple of cars you like.
Take the rest and invest in your children’s education, donate to deserving charities and put the rest of the 4 million to work for you in safe investments (do we have any of those anymore?).
“I don’t think he had an approvable sale at $3 million – the city wanted $3.485 million to pay off the debt from the Shores park.”
I think that’s what the auctioneer meant when he was saying “we’re taking it to the bank.” The minimum bid wasn’t meant, but it MIGHT still have been enough for the bid to be approved anyway.
But if it turns out it WASN’T enough, that would have meant another auction, and the bidders that had originally dropped out might have found the cash required to surpass the original winning bid.
I was actually holding my breath for a few seconds! 🙂
Poor Consultant you just don’t understand. When people in SD “buy” a property they’re also “buying” the opportunity to not pay their mortgage for over a year (and often even longer) without the threat of being evicted.
According to the San Diego Union Tribune article, the auction was held in order to retire a public park debt. A previous fundraising effort was unsuccessful.
This curious mind want to know – was there some sort of contribution (tax write off) involved as a perk for inflated purchase. If the outstanding debt was 3.25, and the purchase price wa 4, could after tax bene bring the actual purchase price down to the neighborhood of .75 (half Jim’s pre-sale best guesstimate)? Add in the auction commission, and that could put the total sales at 1.15.
Something to ponder.
That’s absurd. I’ve been on that street plenty of times and the houses (they’re side by side) across from the lot has a much better view and they are fantastic houses. I”ll take the one that’s for sale.
I don’t know if people here have noticed, but there are some unsightly power lines. They should put those underground. That, and I don’t feel like hearing freeway noise with my ocean view home in Del Mar.
Call me cynical, but I have to believe there are some considerations (aka “incentives”) we don’t know about. Perhaps the buyer already has assurances that all plans will be approved, power lines will be buried, lot split is okay, etc.
think the auctioneer made a slip of the tongue when he said “taking it to the bank.” He really met “taking him to the cleaners.”
TJ,
I certainly hope so. The view is great, but those powerlines are terrible. Hopefully they’ll get those out of the way.
Marine layer, neighbors, and I-5 noise…..
Winner! Winner! Winner!!