The following is from Banker & Tradesman:
October is shaping up to be the month for luxury condo auctions.
First up, are 42 condos at the Natick Collection or the Nouvelle at Natick, which will be auctioned Sunday. The starting auction prices are being advertised as low as $160,000.
Two weeks later, ten upscale units at The Bryant Back Bay are up for grabs. Starting prices are listed at just over $1 million.
The same auctioneer is handling the two auctions, and he ‘s been touting them as an effective way for owners to dispose of unsold units and a great way for buyers to snag luxury residences at a steep discount.
But what the auctioneers and marketing professionals usually don’t reveal is how difficult it can be for a non-investor average Joe to get financing to purchase a condo in one of these projects.
Many lenders are balking at providing loans if a certain percentage of units aren’t sold or pre-sold in a development. In the case of the Nouvelle, only 18 out of the 215 units have been sold – even though it’s been open since last year.
The Nouvelle has also been at the center of some legal disputes. The Herald reported back in May that a lien was placed on the property by the construction company that built the condos. The company claimed that they were owed over $12 million.
The marketers also don’t readily publicize the high condo fees that are attached to these brand new properties. In the case of the Nouvelle, the smallest unit would have a monthly condo fee of almost $500. The largest units’ fees may run as high as $1,280.
Who knows if these auctions will be successful, but other developers with unsold units will surely be watching them closely.