Wednesday, February 23, 2011

Condo auction yields smiles, hope

Brokers claim event is an encouraging ‘bellwether’ for valley market


By TREVON MILLIARD
Express Staff Writer

Interested buyers bid on a Chilali Lodge condominium at an auction in the Sun Valley Lodge Dining Room on Saturday. Photo by Willy Cook

The auctioneer stands at the front of the room among four men, all wearing red ties over white shirts and dark blue suits. Each of the four scans over his section of the audience, eager for a sepia bidding card to come into sight. Once it does, they'll yelp to signal the auctioneer. About 40 buyers fill the main floor and balcony of the Sun Valley Lodge Dining Room. About six more stand by in New York, Geneva and other far-off places, or even their nearby homes, snowed in Saturday but ready to bid via phone.

The auctioneer opens the bidding at $595,000. Excited yelps immediately fill the air like cowboys starting a cattle drive. In mere moments, the price increases to $700,000 for the condominium of two bedrooms and 2.5 bathrooms.

The fervor then dissipates, causing the auctioneer to decrease the bidding increments to the minimum $1,000. It seems to be coming to a close. The auctioneer repeats "Going once, going twice, going three times" on several occasions, but a bidder repeatedly interjects before he can shout "Sold." The price climbs $1,000 at a time to $710,000 then $720,000.

"I'm here all day," the auctioneer jests, continuing the bidding to $731,000. "Going once, going twice, going three times. Sold."

The quiet crowd, some of whom are Wood River Valley real estate agents attending on behalf of clients, simultaneously break silence to note what just happened. The brokers in attendance aren't excited merely by this condo's sale, but by the implication it holds for the valley's market, particularly upper-end properties.

"We were all wondering," said 40-year valley real estate agent Ed Redman of Coldwell Banker Distinctive Properties. "This is kind of a bellwether for us."

The Chilali building in Ketchum is an example of the valley's dwindling real estate values and struggle to complete sales since 2008. The previously mentioned condo is one of 11 luxurious Chilali Lodge units successfully auctioned on Saturday by their owner, San Francisco-based Union Bank.

Chilali Lodge, at the corner of Sun Valley Road and Second Avenue, has 25 units. Up until Saturday, only three had been sold since construction ended two years ago. Two of those were deed restricted for a below-market price. The remaining 22 units had remained empty ever since, still brand new and completely unused. And they had changed hands three times. First, the developer, Barclays North, sold the project to Seattle-based Bingham Capital in summer 2008 for an undisclosed amount. In January 2010, they were taken over by Washington-based Frontier Bank. The Federal Deposit Insurance Corp. then seized Frontier Bank in April because it was overextended. Union Bank soon after bought its assets, including the 22 Chilali condos.

Although now a troubled property, Chilali is a high-profile resort property that held great expectations when it was built. For that reason, the real estate community had its eye on the auction Saturday, looking to see if the 11 condos would sell and for how much.

"We [real estate agents] weren't sure about the pricing or that they would even move," Redman said. "But there they go."

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Jed Gray of Sun Valley Associates, who has been selling real estate in the area for 31 years, was at the auction and said fellow salesmen expressed apprehension about it, predicting few units would sell.

However, the condos—ranging from a one-bedroom flat to three-bedroom, two-story condos—all exceeded their minimum bids. Sales ranged from $438,000 to $1,026,000, less than the original asking prices of $695,000 to $2,195,000 that were unsuccessful two years ago. The average auction price per square foot was $318, compared to the average $718 requested two years ago.

"It's an encouraging statement for our real estate market as a whole," Gray said.

Real estate agent Mike Murphy said the auction "shows that if you bring prices down, there are buyers."

"The activity was just amazing," he said. "I was really, really, really blown away."

And the activity didn't stop when the auction ended. Union Bank still owns 11 more units and has sold five in the three days since the auction, according to Ken Stevens, West Coast CEO of auctioning company Accelerated Marketing Partners.

"It's another sign that ski-resort real estate is starting to inch its way off the bottom," said Gray, who's also vice president of the Western Mountain Resort Alliance, an organization of real estate agents from 13 mountain resort areas, including Vail and Telluride, Colo., Park City, Utah, and Jackson, Wyo.

He said the vast majority of mountain resort areas are experiencing an improvement in real estate sales.

Jim and Jan Worthey, residents of Decatur, Ala., and the solitary market-rate condo owners over the past two years, were at the auction looking to bid. They never did but said they were encouraged by the outcome. With the building filling up, it may increase their condo's value. Plus, they'll finally have company.

"It's been nice having the building to ourselves," Jim Worthey said. "We didn't have to worry about backing into anyone in the garage and rarely saw anyone in the gym or spa. However, it's nice to now have others investing in this place. Hopefully, that will kick start other development and sales in the community."

Trevon Milliard: tmilliard@mtexpress.com




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