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Condo Bulk Buy Press Release:

Realogics Brokerage, LLC. announced their bulk sales program has already generated 20 home sales out of a 30-unit release at two participating developments: The Decatur on First Hill; and Eleven Eleven East Pike on Capitol Hill. Sales volumes exceed $5 million. The two projects previously had no sales in 2009.

The firm announced their bulk sales strategy on September 10 as an alternative to condo auctions, which are becoming increasingly common in the marketplace. Their first project, The Decatur was introduced on September 28 with 21 units released and their second project, Eleven Eleven East Pike was introduced on October 11 with 9 units released. The two properties promoted bulk sale pricing that was (up to) 35 percent and 25 percent off previously listed prices, respectively. Realogics sought to accelerate sales in order to meet the November 30 deadline for first time homebuyer tax credits.

“We’re pleased to have helped our clients find their market value while assisting homebuyers purchase in a quick timeframe,” said Sam Cunningham, Managing Broker and Partner of Realogics Brokerage, LLC, who is handling both bulk sales programs. “Our unique approach has resolved a stalemate between buyers and sellers over price – there wasn’t any dialogue (offers) taking place so there weren’t any sales,” he added. “Our success is a win-win for all parties.”

The bulk sales program first offers homes for reservation so buyers can secure an opportunity to purchase – just as soon as the developer authorizes the sales price. As the buyers were aggregated, a volume sales discount was being negotiated with the developer based on the block of sales to be consummated. The price was set and reservation holders were converted to Purchase and Sale Agreements, either for block closings or individually as required.

The creative sales approach was derived to overcome several challenges that are present in the condo marketplace:

• While demand is present, buyers aren’t buying and sellers aren’t selling where there’s a lack of initiative
• Projects require a minimum number of sales before FHA and Fannie Mae mortgage products are available
• Smaller projects require a vehicle to gain attention with small budgets – collaborative marketing is a solution
• A lack of project sales results in lower unit appraisals, which can face more downward pressure from auctions
• Buyers may be concerned to “buy first” in a building that hasn’t (yet) demonstrated market success

“The irony is that homebuyers remain very interested in these projects so it was never a demand issue,” said Cunningham. “They (buyers) just needed an opportunity to start the negotiation process and had to agree on a fair price. And for their part, our sellers needed to mark to market – but were only willing to do so if it resulted in expedited sales.”

Based on the 20 sales to date, Cunningham estimates buyers purchased at prices that were between 25 and 30 percent off previous list prices, depending on the product. The pending block of sales are also helping unit appraisers by using an inter-building value matrix instead of relying solely on surrounding market comps. Third party comps alone may temporarily suppress unit values given the increased activity of condo auctions and short sales within the marketplace.

“Lenders appreciate real-time demonstrations of market demand for their mortgage asset,” said Jeff Bell, a Mortgage Banker and Partner in Cobalt Mortgage, the preferred lender for The Decatur. “Realogics has illustrated that condo auctions aren’t the only way to spur sales: especially for sensitive communities that are partially occupied.”

Cunningham says both The Decatur and Eleven Eleven East Pike now offer an additional block of 30 units for sale as an encore sales release. And while the recent deadline for homebuyer tax credits was deferred (June 30, 2010 instead of November 30, 2009), sellers remain highly motivated to move unsold product today.

“We’re thrilled with the bulk sales results to date and we look forward to more success ahead,” said Joel Ospovat, the Declarant representative for The Decatur Condominiums. “We’re sitting on standing inventory so to maintain our sales momentum we’re happy to offer the best high-rise condo value in the marketplace.”

Development consultant William Justen of The Justen Company said that he watched condo auctions impact market values just as he completed the Eleven Eleven East Pike condominiums last month. His decision to join in a bulk sales release was to shore up his appraisal values while also seeking to comply with mortgage financing guidelines, he said.

“Unit appraisals and mortgage financing can become a major challenge for projects that are just beginning their sales process these days,” said Justen. “The bulk sales approach helped us calibrate our product for the market so we’re now successfully selling.”

Website: www.CondoBulkBuy.com

Disclaimer: This article is a verbatim reprint of a press release.

The Decatur Condominium (website), located at 1105 Spring Street on First Hill, announced they are planning to sell its remaining 63 units through Realogic’s Bulk Sale program – selling the homes in blocks that feature bulk prices ranging from 25 percent to 35 percent off the original list price. One-bedroom and two-bedroom homes will now be selling from $179,900 and $264,900, respectively.

“Our client seeks to accelerate sales so that first time homebuyers receive the full benefit of federal tax credits,” said Dean Jones, President and CEO of Realogics, who is handling the marketing and sales for The Decatur. “Together, we’ve developed an exceptional value proposition and a unique sales approach to encourage buyers off the fence.”

Under the bulk sales program, three blocks of 21 units will be released for sale in sequential phases. Individual unit reservations are available for a $500 holding fee, which becomes applicable to the earnest money deposit. A few weeks later the reservation holders will be aggregated to sign Purchase and Sale Agreements and benefit from others joining in the bulk sale – the more homes that sell, the lower the pricing for the group.

Other incentives include:

• Bulk pricing up to 35 percent off original list prices (the more units sold, the lower the price)
• Zero down payment financing on select products
• Zero closing costs before Nov. 30, 2009 (timed for the first-time buyers tax credit deadline)
• Available interest rates below 5 percent on approved credit
• Innovative mortgage payment assurance program (in case homebuyers are laid off from work)

During The Decatur’s initial release in 2007, 83 of the 146 homes were sold before the development was acquired by Sandalwood Management, who completed the building improvements and held the remaining units until the market improved.

“Buyers have been trying to time the market and so we’ve been patiently waiting along with them,” said Joel Ospovat, principal of Sandalwood Management. “The market is heating up and we’re going to help make their decision to buy a lot easier by offering a volume discount to our early buyers–provided they act quickly.”

Ospovat hopes to close the first release of 21 homes by Nov. 30, but resisted the trend to auction units.

“We’re providing the same value proposition, while eliminating the inherent risk and stress of competing at an auction,” Jones said. “If homebuyers are going to benefit from perishable tax credits, they need to lock up a unit now and move confidently towards closing; there’s no time for surprises. We’re offering homebuyers a sales experience that is as considerate as it is rewarding.”

The first block of units will be released on Saturday, Sept. 26, during an open house event at The Decatur (open 11a.m. – 5p.m., Sept. 26–27). Reservations will be converted to Purchase and Sale Agreements beginning Oct. 17 and must close by Nov. 30 to benefit from the bulk sale pricing, potential tax credits and other incentives offered by the seller.

The “Payment Assurance Plan” offered by Cobalt Mortgage is unique to the industry and provides assistance to borrowers if they become unemployed within 24 months of closing. Mortgage payments up to $1,800 will be provided for up to six months to help homebuyers establish new employment without getting behind on their mortgage. Certain conditions apply.

View floor plans (8.3mb PDF)

www.OwnTheDecatur.com

View available Decatur condos for sale.

Adapted from press release.

The Seattle PI noted the trend of renaming the city’s neighborhoods. Midtown, West Edge, Gateway…where did they come from?

“I don’t know who they have in charge of that,” Jewell said. “They probably just have one dude sitting behind a desk who’s like, ‘Hmm, what should we call that?’ ”

Lately, that would be condo marketer extraordinaire Dean Jones, president of Realogics Inc., which represents dozens of developments. He popularized the Midtown moniker [see Escala Midtown] — at least among real estate agents — and has invented other would-be downtown micro-neighborhood names.

Midtown was intended to define the geographic area at the convergence of other distinct neighborhoods, such as the downtown retail district, Belltown, Pike Place Market and South Lake Union.

It may catch on, or not, but it’s a lot likelier that you’ll be able to find someone if you plan to meet at the Midtown Starbucks rather than the downtown Starbucks, he said.

And, several SCL readers called me out on the use of the Midtown moniker.

On the other hand…

Belltown Community Council President Zander Batchelder predicted that most micro-neighborhood names won’t stick around any longer than their brochures stay out of the recycling bin.

“They spend a lot of advertising on it, but I don’t think it’s going to take,” he said. “You have to have a majority consensus for that to take off, and the other people who already live here aren’t going to rename it just so (marketers) can make more money on the condos.”