Last week the Government of Singapore auctioned off a property that it owned in the community of Kenwood Forest in Chevy Chase, MD. The Government of Singapore wasn't selling the property for any obvious reason, other than a desire to divest itself of a property that it had owned for more than 20 years. (The townhouse had been home to a series of diplomats and other people working at their embassy.) According to the listing agent, the Government of Singapore chose to sell the house by auction because that is the way properties are generally sold in Singapore.
The house was available for buyers to preview for several weeks leading up to the auction. The house was empty, clean, and in reasonably good condition, but not updated in the last 5 to 10 years. No granite or stainless, no bowl vanities or tumbled marble in the baths. On the other hand, it was a 3 level townhouse with 3 bedrooms, 2 full baths, 2 half baths, a tablespace kitchen, and a fireplace in a well maintained community just 10 minutes walk from the Bethesda Metro and an even short walk to all the restaurants and shops.
I went to the auction, not as a bidder, but as a realtor. I have been "farming" the Kenwood Forest community for years. I have listed, sold and rented many homes in the community, and consider lots of the residents to be my friends. I have watched the values rise and now fall in Kenwood Forest. so I was very interested in how this auction turned out.
The auction was scheduled to begin at 11 o'clock. When I arrived at 10:45 at the house, it was filled with neighbors, realtors, and potential bidders. You could tell who was bidding by the $5,000 certified checks they were carrying: the auctioneer required a $5,000 check as a condition of bidding. The start of the auction was delayed shortly by the late registration of a last bidder who was waiting for his wife to arrive with the check!
At 11:10, we all tromped out to the courtyard in front of the house and the auctioneer started to explain the process of the auction. Key facts were the 6% buyer premium which applied on top of the final bid price, the requirement that the buyer settle within 30 days, and that the buyer pay all the transfer and recordation taxes, even though these are usually split in Montgomery County between the buyer and the seller. The weather was dry but it was still chilly standing outside, and I am sure I was not the only one who was anxious for auctioneer to stop talking and the auction to begin.
Still we waited while the auctioneer's assistant took pictures of the 60 of us standing outside the property facing the auctioneer standing on the front steps of the townhouse. Finally we were ready to begin!
The auction started with the call for an opening bid. Silence! Nervous giggles. The auctioneer asked for an opening bid of $500,000. More silence. He called for any bids. More silence. I couldn't imagine that sixty people were there and no one would bid. Was everyone there to watch? Finally there was a bid of $400,000. The bids progressed steadily from $400,000 to $425,000, to $450,000 up to $500,000. There were probably 4 people bidding, one of whom already owned 2 properties in Kenwood Forest. At the $500,000 point the auctioneer said that the auction was now real, since the reserve price had been met, and the house would definately be sold now.
At $500,000 the bidding began to slow down. Bids of $1000 more were offered, but the auctioneer said that the least he would accept was a bid of $2500 more. We were down to two bidders, neither of whom seemed eager to buy the property. The time began to drag between the bids with the auctioneer coaxing the two bidders slowly higher. At $522,500, we stalled. A third buyer obviously wanted to jump in but her husband held her back. The auctioneer called for final bids, but there was silence from the group on the lawn. Going, going, gone. The house was sold for $522,500.
Did the buyer get a good buy? Yes! Did the buyer get a great buy beyond the trend of the market? Not so clear. On top of the $522,500, there was the 6% buyer premium and all the transfer and recordation taxes, so it really was closer to a $560,000 sales price. The most recent sale of a similar townhouse in the community was last summer for $599,000, with a contract date in early August and a settlement date 6 weeks ago. Prices have dropped in Montgomery County in the last few weeks as buyers have stalled and sellers find themselves up against the wall.
The good news for the seller was that the property is sold, and quickly. Probably they would have received more money if they had used a realtor and gone the conventional route of putting the house out there for sale, but it might have taken a lot longer, and who knows what the market would be like by then.
In the end, the auction wasn't bad or good. It just is. The Government of Singapore sold the house, and someone new will move in. Not a bad day when you think of it!
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