RISMEDIA, April 17, 2007-(MCT)-Could something akin to eBay auctions be the next stop for new-home builders facing a glut of unsold properties?
Inland builders in recent months have been cutting prices and throwing in extras such as free swimming pools to move their new houses in a slowing market. And recently, joining a national trend, some are finding success with public auctions, traditionally seen more as a way to sell artwork or rare antiques.
Some of those builders are incorporating online elements into their auctions, giving Web shoppers a chance to bid in real time against the on-premises participants.
On April 1, Mission Viejo-based builder Prosperity Homes held a live auction at the DoubleTree hotel in Ontario for new condominiums available in its Bordeaux development in San Bernardino.
"It was a good response," Prosperity CFO Rob Wallstrom said this week. "We auctioned 23 condos and sold 23 condos at an average discount of 15.3 percent " off the original asking prices, he said.
He said about 60 bidders attended the auction, conducted by the firm Kennedy Wilson, and it took 75 minutes for all of the condos to sell at an average price of $180,000. Of the buyers, seven were property investors, while the other 16 were families, couples and singles looking for a place to live.
"Those are the type of buyers we really try to reach most," Wallstrom said of the non-investor buyers.
For another auction planned for May in Orange County, the company is looking into incorporating an online bidding element. That method could find its way into future sales of Prosperity's Inland properties.
Builders see the new-style auctions as another sales option, as they try to reduce inventories that have been growing for the past year as Inland sales declined.
Steve Johnson, a director with Riverside real-estate consulting firm Metrostudy, noted that unsold inventory of newly built Inland homes went from about 1.3 months of supply, or about 2,700 properties a year ago, to the current 2.4 months of supply, a total of around 5,000 properties.
To move those homes, he said builders are continuing to offer a number of incentives that began to kick in last summer, when the local new-home market began to soften. Those perks include free pools, upgrades on amenities such as countertops, and price and financing discounts.
The online auction element is already being seen in the Inland region. Lennar Homes of California on Thursday announced it plans to sell two Coachella Valley communities later this month through the online real estate bidding system of RealtyBid.com.
Competitive bidding for homes in Marquesa at Terra Lago in northern Indio, as well as the company's Cielo Paradiso in Rancho Mirage, will begin April 18 and end on May 7.
Bob Tummolo, regional vice president for Lennar's Palm Springs division, said this is the division's first foray into competitive online real estate bidding, which has seen "an immense rise in popularity" over the past year.
Lennar is using the RealtyBid technology to expedite sales of the remaining 14 homes at Marquesa, with online bids starting as low as $295,000; and the last two homes at Cielo Paradiso, with bids to open at $795,000.
"The expedited sale of these homes in a final close-out allows us to reduce our marketing costs in the development, which will put us in a position to accept what the market dictates as fair market value," Tummolo said in a news release. Bidders choose a confidential screen name and password and are able to bid from anywhere with Internet access. They can see bid amounts while screen names protect their identities.
Tony Isbell, CEO and president of Alabama-based RealtyBid, said the company has sold more than 5,000 properties exclusively online since its founding in 2001.
Copyright © 2007, The Press-Enterprise, Riverside, Calif.
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