High-end Highmark units put up Friday; effect on market unknown
March 13, 2010
Steamboat Springs — Absolute real estate auctions are seldom what they are advertised to be, but the gavel came down anyway on nine of 15 Highmark condominiums offered at auction at the base of Steamboat Ski Area on Friday. It won't be known until at least next week whether any of the winning bids will be accepted by the sellers.
The combined amount of the nine bids was $7.68 million, with the highest being $925,000 for a four-bedroom, 3.5-bath condominium that was last listed for $2.3 million. Records on file at the Routt County Courthouse confirm that a similar unit sold for $3.12 million in 2008.
Friday's high bid converted to a price of $477 per square foot. Most of the high bids were lower than advertised auction minimums.
Contrary to auction promotions, auctioneer Wayne Thorn never delivered on the promise to sell one of the luxury condominiums at any price.
"I think it's really too bad because they advertised it," registered bidder Lynne Miller, of Steamboat Springs, said. "I think it's stupid because it's my information it would have sold for a good amount anyway, and it's what draws people."
William Bone, president of The National Auction Group that handled the sale, said his company learned the week before the auction about the change in the status of the absolute auction and immediately began informing people who had shown interest in the sale process. He explained that developer Steve Sirang had pre-qualified the absolute sale of one unit with the FDIC, which had closed original loan holder Integrity Bank of Georgia last year. However, an investment company called Rialto Capital subsequently purchased the debt from the FDIC and balked at selling a condo regardless of price.
"We spent six months working it out with the FDIC," Bone said. "It wasn't Steve's fault."
Nonetheless, advertisements for the event continued to promote the absolute auction of one unit up through Friday.
Development of The Highmark, originally known as The Chadwick, broke ground in August 2003. Work ceased in January 2004 after the original developer said rising construction costs had exceeded what his business plan allowed.
After the foundation of the building stood through a winter of inactivity, Steamboat Ventures stepped in to resolve some outstanding construction liens. The new developer negotiated a $20 million promissory note in October 2005, which extended the original construction loan. The Highmark was completed in June 2008.
As it turned out, most of the 17 registered bidders who were sprinkled among about 50 people in the audience appeared unruffled by the change of status.
The auction terms give the sellers the right to reject bids below the minimum amount, and one Florida man, who was the high bidder on two condos, wasn't optimistic that his bids would stick.
"They won't close on them. Hell no," said the man, who declined to give his name. "I guess you never know. I hope they do. It will be an excellent buy for me."
He had picked up a four-bedroom unit for $700,000 and another for $820,000. He added that he has purchased 15 condominiums through previous sales conducted by The National Auction Group.
As of 5:45 p.m. Friday, Bone said the majority of the bids had been accepted and several more were being discussed by the principals but that the real challenge was getting the aggregate value of the sales above the release point for $10 million in original construction loans held by Rialto.
"Some of the bids were above the minimums and their release points, but it's a dollar figure we have to reach to get above the (overall) release point," Bone said. "We've got six more to sell, and we need to sell them to get above that point. If we can sell a few more, they'll probably accept all of" the bids.
Realtor Bill Pyle, of HomeSense Realty, and his colleague Carolyn Bird represented a Chicago investor at the auction, and they landed a four-bedroom on his behalf for $815,000 after some of the most active bidding of the afternoon. Later, he was in negotiations for a possible second purchase.
At about 6 p.m. Pyle said he did not expect to know until Monday or Tuesday whether his client's bid had been accepted.
Thorn opened the auction by offering the high bidder the pick of any of the 12 three- and four-bedroom condos in the auction.
The opening bid was $850,000, which was just slightly below the quoted minimum bid of $870,000. Another bidder quickly bumped it to $925,000 and that's where it ended as Thorn did not attempt to draw things out.
He quickly re-started the auction process and struggled to match the previous bid, ultimately awarding four-bedroom condo 5E to a bidder who was not pushed to go higher than $820,000.
"Anyone else want the same price?" Thorn asked. There were no takers.