Auctions Aren't Always Distress Calls

By Dave Fratello | September 8th, 2016

Auctions are fun. Auctions are interesting.

710 Manhattan Beach Boulevard Manhattan Beach CAThere's now one coming up for a condo at 710 MB Blvd. (3br/3ba, 1675 sqft.), but it's not what it first appears. This auction is also different.

The listing's come-on start price of $1.475M is intended as an irresistible low bid, a screaming deal that helps form a line at the front door.

So, should buyers rush to get in that line? Or wait? Or what?

Frankly, it's confusing. 

This "luxury auction" is more of a gambit intended to drive buyers wild than it is a more "typical" auction.

You might wait till the October 8 auction date, or you might try to make a deal sooner. They're not committed to going all the way to October. The company running the auction swears that most properties offered this way sell early. (Curiously, with 2 growing real estate companies in our area bearing the names of famous auction houses, neither is involved in this "luxury auction.")

This tactic comes off as a strange one, because in Manhattan Beach real estate, most often, auctions mean "something's wrong."

We've seen probate auctions, where a neutral arbiter has deemed that a public auction is the best way to get top dollar for a property. (Doesn't that imply a certain disrespect for real estate agents? Oh well.)

We've seen auctions when there's a bankruptcy involved, or a foreclosure pending.

2701 Oak Avenue Manhattan Beach CAThe last auction we noted in Manhattan Beach was a probate auction at 2701 Oak.

Listed at $799K (really – now that's a come-hither price), the home sold for $1.340M and is now site of a remodel that seems not to have expanded the tiny 2br/1ba, 900 sqft. house. (See our post from April 2015, "Oak Auction Wraps at $1.340M.")

All of those "typical" auctions require special kinds of buyers: People with a nose for a deal and lots of cash ready to deploy. You have to show up with a cashier's check for a large deposit and have the ability to close all cash.

Probate auctions, in particular, can be subject to overbid in court. So you "win" the auction, then don't get the property because someone can come along and outbid you.

We caught the full auction of 1761 Voorhees on tape (tape?) in Nov. 2012 and shared the video in this post here. Fun to go back to that one.

MBC also reported right after the conclusion of a 2009 auction at 1801 Elm. (See "Probate Auction Ends at $805K.") 

We've also seen failed auctions.

There were the 5 failed spec homes in Hermosa & Manhattan that tried to unload in a late-2008 auction.

All failed to sell at the event, later liquidating by way of the MLS. (See "Forget 'Qualified' – Auctions Failed," from MBC in Dec. 2008.) 

Ten years ago, a "Roth-built" home on a corner at 2323 N. Herrin (3br/2ba, 2020 sq. ft.) set a price of $900K and set an auction date... at least a couple of times... to no avail.

That was only the first in a series of gimmicks that didn't work out. It took till 2014 to sell that one.

So, back to the current moment.

710 Manhattan Beach Boulevard Manhattan Beach CA710 MB Blvd. is not guaranteed to sell, or to sell for more, just because they've announced a "luxury auction."

It's not guaranteed to go to auction, either.

You don't have to be one of those "special" all-cash buyers to offer on the property. Make an offer now, with typical financing, and it might be accepted. Then it's just a regular deal, and the auction is foreclosed. (Perhaps a better choice of words would be "rendered unnecessary.")

So as a buyer, you should... ?


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