Not a Good Day for Ginn Property Owners looking to Sell Now

Stirling Sotheby's Auction of privately owned properties in The Conservatory, Bella Collina, and Reunion was a bust by any measure.

By Toby Tobin
Palm Coast, Florida – November 8, 2008 – In September, Orlando-based Stirling Sotheby's International announced an October 25th auction of 20 privately owned homes located in Bobby Ginn developed Florida communities; The Conservatory, Reunion, and Bella Collina. Some were to be sold "absolute," meaning with no reserve. The auction was finally held today, offering 17 homes, a single lot, and a group of 25 lots. The room was packed with about 200 people. An undisclosed number had pre-registered as potential buyers, plunking down $25,000 refundable deposits. Only a handful placed bids.

Click for Auction brochure

Typical of real estate auctions, the auction company collects an upfront marketing fee from sellers to cover their marketing expenses. (Stirling Sotheby's turned down an opportunity to advertise on GoToby.com.) Commissions are paid by the buyer via a buyer premium, 10% of the winning bid price. The auction was equipped to take bids over the phone or the internet as long as bidders had pre-registered. A seller listing their property could withdraw their property or remove the "absolute" designation any time prior to the opening bid.

The first property offered "absolute" was 7812 Whitemarsh Way in Reunion. It was previously listed for $1,595,000. The suggested opening bid was $550,000. An internet bidder placed a $500,000 bid which turned out to be the only bid. SOLD for $500,000.

Next, two properties were offered at the same time, both in Reunion. They were offered as "buyers choice." The winning bidder could choose which property they wanted. One was a condominium at 7593 Gathering Dr. previously priced at $779,000. The other property was a Reunion home (2,725 SF, 4BR, 4/1B) originally listed for $849,000. The single bid was $375,000. The bidder chose the condo. The home was withdrawn from the auction.

In another bidder's choice auction, three Bella Collina homes were offered:
6,207 SF, 4BR, 4/2B, originally listed for $3,500,000
6,532 SF, 5BR, 4/2B, originally listed for $4,000,000
5,180 SF, 4BR, 4/1B, originally listed for $3,400,000
The single bid was $1,000,000. The bidder chose to take all three for $1 million each.

In a third bidder's choice offering of Reunion homes:
4,895 SF, 5BR, 6B, originally listed for $1,895,000
4,895 SF, 4BR, 5B, originally listed for $1,895,000
The single bid was $500,000. The second home was withdrawn.
Only two properties attracted multiple builders. An offering of 25 home sites offered as a batch in Patriot's Landing in Reunion, did not receive an opening bid. Some properties did not attract opening bids. The only Conservatory entry, a builder model with 4,862 SF, 3BR, 3/1B, originally listed for $2,595,000 was to be sold "absolute." It was pulled from the auction before being offered. The auction began after 11:00 AM. It was done by 1:00 PM. The final tally was 10 homes sold. Only the first home was sold "absolute." All other bids will require lender or seller approval.

In a related sale in October, Elliot Paul & Company conducted an auction, selling a lot in Tesoro Preserve, a Ginn community in Port St. Lucie for $22,500 (plus 10% buyer's premium). The lot had been purchased originally from Ginn for about $200,000.

Over one year ago, an individual owner offered five lots in Palm Coast area Ginn communities. (story) After two absolute sales drew disappointing results, the owner withdrew the other three properties, including a lot in the Conservatory. That lot just closed as a short sale for $79,000. It was originally purchased in 2005 for $385,900.

In my recent newsletter, I pointed out the dismal absorption rate of luxury properties. I've also stated that it will take the appearance of bank-owned properties on the market to set a price that successfully flushes buyers out of the bushes. I think today's auction illustrates that the luxury market is far from that level. Distressed owners, most of whom were investors planning to flip quickly have few options; foreclosure, short sales, and auctions. But at the luxury level, only a small minority fit the distressed label. The market will find its level. These properties will eventually move through the system. The system will return to normalcy.

Those owners who have no need to sell now are not affected by today's market. In fact, they benefit by reduced property tax assessments. Those with staying power can wait out the market. But it will be a VERY long time before 2005/2006 prices are seen again.

I highly recommend Toby's blog at http://www.gotoby.com/ for up to date Ginn news.