The 11,700-square-foot lot just north of Calle Ocho in Miami had sat without a buyer for a year before Colliers International decided to list the former site of Restaurante Monserrate. Even then, it wasn’t until Colliers partnered with North Miami-based AmeriBid on a real estate auction that the lot was sold — and in just a few months.
The deadlines imposed by real estate auctions, along with the attractive illusion of a bargain, help move properties that might otherwise stay stagnant, brokers say — particularly in a slow market. When sellers have trouble finding purchasers, they can turn to auctions.
“I think it’s a natural migration, when sellers have gone the conventional route, and the conventional route has not produced the results of a successful transaction,” said Louis Fisher, president of North Miami-based AmeriBid. “Sellers normally will look for an alternative venue in downturn markets, and the auction is one of them. In good times, you don’t see as many auctions.”
An auction was similarly successful for the 65 remaining unsold units at Little Havana’s San Lorenzo condominium earlier this month, where sales had stalled for almost two years. That auction was run by Irvine, Calif.-based Real Estate Disposition.
“Everybody was extremely happy [with the San Lorenzo deal],” said Rick Weinberg, vice president at Real Estate Disposition. “The seller was happy to sell their inventory for a price they were satisfied with, and the buyers got an affordable property in what many people consider a thriving, rejuvenated area.” He also said his company intended to return to South Florida for future auctions.
Sellers turn to companies like AmeriBid and Real Estate Disposition, and the SELLERS’ brokers typically partner with the auction company on listing the properties, sharing the commission. AmeriBid has been active in the condo market, as well, with two South Florida bulk properties auctioned for bankruptcy court, and condo bulk deals in the Northeast, including potential options in Manhattan.
“We have always subscribed to the philosophy that working with a broker in the process on the listing side, and also encouraging brokers on the buy side to bring buyers to the process, is critical to ensure the greatest percentage of success,” Fisher said. By statute, auction companies are required to be licensed real estate brokers.
When the company partners for an auction, it’s typically the result of a broker approaching the auction company, either because the client has asked for it, or the property has remained unsold for an excessive amount of time.
“It might be that the client needs to liquidate, to exercise a 1031 [tax deduction] purchase, to syndicate, or to buy a portfolio. The broker can then encourage the client to look at an auction as a way of accomplishing that goal,” Fisher said.