An update on the Pier Homes at HarborView
Buyer's remorse being what it is, people sometimes get cold feet after purchasing a home at auction.
The auctioneer who handled the Pier Homes at HarborView sale in Baltimore last month says one of the 18 buyers backed out during the rescission period, which ended last week. One more is in an extended rescission period while both sides work out pricing on some extras for the unit. The remainder are now in a hard-contract period and will lose their sizable deposits if they walk away without closing.
Jon Gollinger, co-founder of Accelerated Marketing Partners, which handled the June 28 auction, said another buyer signed a contract at the development overlooking Baltimore's Inner Harbor after the event.
He called a one-out-of-18 rescission unusually small.
"It’s rather unprecedented for us," he said. "It’s remarkable."
He attributed it to buyers doing their homework in advance, "and I think the other thing it clearly states is that people think they’ve got a good price."
The luxury townhouses were conceived during go-go times but delivered as the housing market soured. Nearly half the 88 units were unsold going into the auction.
The development team ended up putting 18 on the block rather than the 11 originally planned. Winning bidders got them for as much as $1 million off the advertised last asking price.
I say "advertised" because, as a reader pointed out, a few of these units were once on the multiple-listing service with prices lower than the "last asking price" in the marketing materials for the auction. Bidders were told the last asking price for one of the units on Pier Pointe Landing, for instance, was $1,479,000, but it was on the MLS for a time in 2009 at $1,290,000. (It ultimately sold for $637,000.)
Gollinger, who notes that this question also came up at the "practice auction" held for registered bidders the day before the real deal, says the asking prices he provided to interested bidders were the ones the development team gave him. But he argues that it doesn't matter much in the end.
"What I said to the room: ... What difference does the last ask make vs. what you pay?" he said. "It wasn’t last ask that got people into the room. It was the minimum bid."
The development team's answer to the question was that it offered "special deals to incentivize sales" on certain units at certain times, Gollinger added.
Closing dates for the auctioned units range from very soon through Oct. 1, depending on whether the bidders are buying with cash and how many upgrades they want.
"In many cases, people have asked for a lot of extra work on their units," Gollinger said -- from elevators to extra rooms.
The average deposit, including upgrade costs, is "upwards of $75,000," he said. He doubts anyone will walk away now that they're past their rescission period.
As for the remaining units still for sale: "The developer has raised the prices from the auction pricing. Not substantially, but raised the pricing, in some cases as much as 5 percent above auction pricing."
Why? Because the development team is betting that fewer Pier Homes competing with each other -- and the market signals created by active bidding on the auctioned units -- has stabilized the supply-demand seesaw.
Earlier in the month I chatted with Ross Mackesey, sales manager at Long & Foster in Lutherville, to see what he thought the auction would mean for other luxury properties. He has a background in new-home sales.
"I think the jury's out on what effect it has on the [luxury] market," he said. "Because there's no market. The whole reason they did it is because there was no market. If it got people looking, that's good. I would think in that luxury-home market in the city, any transaction is a good transaction."
The trouble is so much supply searching for buyers, Mackesey said.
"People aren't changing lifestyle right now the way they were in the mid-decade," he said. "My experience at the high end in the city, over $1 million: Most of those people were moving from comparable suburban properties -- comparable price-wise. And people aren't doing that in this market. They're just staying put."
The highest price at the Pier Homes auction was $956,000. More than 20 units sold for at least $1 million in earlier years, including several in excess of $2 million, according to state records.