Monday, April 26, 2010

Brooklyn Property Auction Coming Up May 4

This unusual building at 280 Hicks Street in Brooklyn Heights (near Joralemon Street) is one of the properties that will be auctioned off on May 4 at the Brooklyn Supreme Court Building.  Details at Brooklyn Eagle

Photo by Google Maps.

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Anonymous said...

It's the same building that failed to attract any bidders at the auction of properties held last October. According to press reports, the building is dilapidated and the roof is nearly collapsing, which makes the minimum bid quite high given the extensive work needed to bring it up to livable standards let alone a high-end renovation.

mcbrooklyn said...

Interesting. We see Brownstoner posted on this and other properties when they failed to sell during a previous auction:

mcbrooklyn said...

Found a big description of the property -- previously owned by Alfred Palmer, who kept a lot of stuff there including a 1976 Mercury station wagon -- at the Eagle:

Anonymous said...

The info on Brownstoner and Brooklyn Eagle was interesting. It's hard to say how the auction opening bid prices are set. Maybe they have it appraised, but the fact that many properties did not sell suggests that the appraisals were above the real market value.

Also, it's important to keep in mind that buying at public auction entails substantial risks that are usually avoided when buying a house in the normal way.

I read the terms and conditions that apply in this auction. After inspecting the property on the preceeding Sat or Sun, the successful bidder agrees at the end of the auction on Tue to buy it "as is" with all deed restrictions, easements, covenants, liens, and other potentially negative factors. There is no time to do a proper title search or other searches that title companies need *before* they will issue title insurance. If you win the auction and a title search reveals damaging information, you are still obligated by contract to buy the house *or* you lose your entire 10% deposit. That is legally binding and not subject to negotiation.

Additionally, the contract is not contingent upon the successful bidder getting financing, which means that only *all-cash* buyers can reasonably bid. Again, if you do not have $2+ mln in cash, then you risk losing your 10% deposit if you can't get financing within the mandated 60-day closing period. Many banks will not make a loan on a building that is nearly collapsing.

In Oct 2009, according to the news and blog reports of people who saw the property, they should have started the bidding at $1 million and then perhaps it would have sold for something closer to $1.5 mln, which is probably a better estimate of its true value given all the uncertainties of buying at public auction and the dilapidated condition of the house. Of course, I have no way of knowing if $1.5 mln is reasonable or not. My opinion does not matter. All that matters is what someone is willing to pay given their particular circumstances.

In any case, we'll see if it attracts any bidders at the still elevated opening price of $1.8 mln. That's a lot of money for a house whose roof is nearly collapsing!

Anonymous said...

Well, all the above was idle speculation. It ended up selling for $2.08 mln, which was above the $2.0 mln minimum set at the Oct 09 auction when it failed to attract a bidder. I guess the real estate market is improving.