SAN DIEGO, CA - Developers with time and unsold condominiums on their hands might give Eugene Marchese a call. The Australian developer and architect, who moved to San Diego six years ago, has launched iBidcondo.com to auction his units without losing his shirt and to give bidders a chance to land a bargain. Marchese has now drawn in other developers with their unsold inventory and is using social networking sites to interest thousands of bargain-hunting buyers who pay $100 to play.
"What we realized is there is a buyer out there and there's a developer out there, and the two ends are trying to meet somewhere in the middle," said Marchese, 44.
In the first auction, held in May, downtown San Diego renters Casey and Maybritt Haeling submitted the winning bid of $86,000 on a $690,000, 2,000-square-foot condo in the Star Riverside development on Lady Bird Lake in Austin, Texas. Star Riverside, now under construction, is a project of Marchese's Constellation Property Group.
"We've been trying to buy something, and it hasn't been feasible," said Casey Haeling, 33, who works for a real estate company. His wife works for an advertising agency. "Though the market has been dropping here, it's a lot more expensive than we can afford. So we decided, 'Let's give it a try.' "
To participate, the Haelings and more than 3,000 other participants paid $100 each to get a virtual seat at the auction table. The company used Twitter, Facebook and other social networks, along with word of mouth and media coverage, to attract bidders.
At the appointed hour, they began submitting bids in $10, then $100, then $1,000 increments. When bidding stopped after 25 minutes, the Haelings had only one or two competitors. There was no set minimum or reserve bid.
Within 30 days, the winners must deposit their bid amount into an escrow account. The usual terms and conditions involved in property purchases apply.
The seat payments go to the developer or seller, and in the future, as many seats are planned for sale as are required to cover the listed price. In the next auction, set for July 27, a $280,000 unit in The Beat project in Dallas is on the block, so up to 2,800 bidders would be eligible. The seller has the option to cancel the auction or reschedule it to attract more bidders.
Marchese gets 10 percent of the unit cost, while the top 10 losing bidders get a free seat at the next auction. "It's not a liquidation," Marchese said. "It's a sale that makes the developer and investors whole."
Haeling is reviewing the purchase contract and hasn't decided how he will finance his purchase. He doesn't know if he and his wife will move to Austin, rent out the unit or sell it at a profit. "It's a good opportunity to make a good investment," Haeling said.
IBidcondo.com, which started in February, has about eight employees, with eventual staffing planned at 25, Marchese said.
His general manager, Jason Harper, said no San Diego condos are scheduled to be auctioned, but several developers are interested. Inquiries have come in from other markets and around the world as news has spread about the concept. The Web site lists 11 auctions in Arizona and Texas through Nov. 16. "I could see an auction a week, once it becomes international," Marchese said. "There's no reason why we couldn't have multiple auctions."
Meanwhile, Marchese is completing construction on the 61-unit first phase of his Centro condo project in National City. He lost the nearly completed, 85-unit Stella at Five Points condo project in Middletown to his construction lender several months ago, said Wayne Hann, Marchese's development director.
The site and plans for a third project, Embassy1414, a high-end condo/hotel development planned for downtown, were sold after Marchese was unable to secure $130 million in financing, Hann said.
Source: SignOnSanDiego.com