Friday Flashback: Olive 8: “We’re going to wait this out.”

Today’s flashback comes from… just over a year ago. July 2009:

At Olive 8 in downtown Seattle, county records indicate only 28 of 229 units have closed. But David Thyer, president of developer R.C. Hedreen, said his firm has no plans to cut prices.

“We’re not inclined to discount the product to generate sales,” he said. “We’re long-term players. We have the support of the hotel [a new Hyatt occupies Olive 8’s bottom 17 floors]. We’re going to wait this out.”

Apparently in this case, “long-term players” are only willing to “wait this out” for about a year, because guess what was announced this week?

The Olive 8 Sales Team is proud to announce that we will have 34 homes auctioned in September. The auctioned homes will be on our lower floors 18 through 26.

From the auction flier:

Starting bids from $160,000, previously priced from $395,000 to $1.23 million.

Of course, not surprisingly every unit up for auction has an “unpublished minimum reserve bid,” which is short for “sure, you can bid $160,000 for a unit that we have listed for $395,000, but we won’t actually sell it to you unless the bidding reaches at least $375,000 (or some number that is probably closer to $395k than $160k).”

I wonder how many of the units going up for auction had pre-sale buyers who walked away?

Even though this “auction” is possibly just a thinly veiled attempt to drum up interest in a project competing in an overly saturated downtown luxury condo market, the contrast between “we’re going to wait this out” and “we’re proud to announce a major auction” still strikes me as amusing.

Hat tip: Matt Goyer at Urbnlivn

P.S. – If you’re thinking of going to the auction, read Potential Pitfalls to Watch for at Real Estate Auctions.

The purpose of our Friday Flashback series is to remind people why it’s never a good idea to base your home purchase decisions on the word of someone with a vested financial interest in selling as many homes as possible for as much as possible, no matter what. If you’ve got a good example of local home salespeople or other industry shills on record making fools of themselves in the years before the bubble burst, shoot me an email.
  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

14 comments:

  1. 1

    Cash Reserves

    Once the owner of this sorry investment runs out of cash to stall and wait for a ghost rebound in real estate prices, they’ll wish they would have sold now for 30-40% off….IMO, it will likely be 40-50% off next year for Condos.

    The persistent/brainless hope still exists for real estate price increases in Seattle, using/propping up things with Fannie/Freddie lax lending standards with little down payments preventing a deluge of foreclosures, but alas, government debt limits and a shot chronic job market make this brainless/hopeless plan to prevent foreclosure deluges a pipedream.

    It’s time to just bite the bullet.

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  2. 2
    Condoseeker says:

    Is there any way to get a full inventory of all the condo’s in downtown? The inventory is staggering, but I never know if any of it is being absorbed. I looked at Enso 5 months ago and they were “70% sold” and ready to turn over the HOA to the owners so I better purchase quick. Last weekend I was told the exact same thing.

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  3. 3
    Marc says:

    “I wonder how many of the units going up for auction had pre-sale buyers who walked away?”

    I would guess a pretty fair number although I haven’t and won’t be checking. I forgot that my partner Craig was quoted in that Seattle Times article about Olive 8. Back then we represented 5 pre-sale buyers. That number grew considerably.

    Rate this comment: Thumb up 0

  4. 4
    bob says:

    re: inventory. There seems to be a ton of 1br condos still available in the new construction and resale markets. Oh well – these never made personal sense to me

    Rate this comment: Thumb up 0

  5. 5
    NotMe says:

    Seems like a great way to get information on what they COULD be sold for….assuming that the minimum is not met.

    Rate this comment: Thumb up 0

  6. 6
    CCG says:

    By the time anybody wants to actually sell anything at a price where actual demand exists, no one will believe them because the lies have gone on for so long.

    Rate this comment: Thumb up 0

  7. 7
    CCG says:

    By softwarengineer @ 1:

    Cash Reserves

    Once the owner of this sorry investment runs out of cash to stall and wait for a ghost rebound in real estate prices, they’ll wish they would have sold now for 30-40% off….IMO, it will likely be 40-50% off next year for Condos.

    The persistent/brainless hope still exists for real estate price increases in Seattle, using/propping up things with Fannie/Freddie lax lending standards with little down payments preventing a deluge of foreclosures, but alas, government debt limits and a shot chronic job market make this brainless/hopeless plan to prevent foreclosure deluges a pipedream.

    It’s time to just bite the bullet.

    As with a hopeless alcoholic, when reality finally arrives it will be imposed externally (i.e. an intervention, the cops, etc.) It will never be recognized voluntarily.

    Rate this comment: Thumb up 0

  8. 8
    Aaron says:

    I’d definitely pay $160K for one of their units. Depending on when the auction is, I may attend just to see what they’re like. I’ll even bid $160K… maybe $161K.

    I dislike the idea of a fake minimum condo price. Everyone knows they’re not going to walk away with a unit at $160K, but if the sellers really expect $350K, why even waste the time of the optimist with a $250K budget?

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  9. 9
    Cheap South says:

    By Aaron @ 8:

    I’d definitely pay $160K for one of their units. Depending on when the auction is, I may attend just to see what they’re like. I’ll even bid $160K… maybe $161K.

    I dislike the idea of a fake minimum condo price. Everyone knows they’re not going to walk away with a unit at $160K, but if the sellers really expect $350K, why even waste the time of the optimist with a $250K budget?

    Also, look out for those HOA monthly fees in “Luxury Condos” like these. They seem to run between $400-$600. After 5 years you’ve paid about $30K in fees, and you might not think the pool (?) and gym were worth the money.

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  10. 10
    Ross says:

    By Aaron @ 8:

    […] Everyone knows they’re not going to walk away with a unit at $160K, but if the sellers really expect $350K, why even waste the time of the optimist with a $250K budget?

    Because “auction psychology” can take hold of certain people once they are at the event, and they will blow their budgets to “win” the auction. They are anyways bidding their lender’s money – so what do they care.

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  11. 11
    ivan says:

    The Olive 8 advertising photo in the New Homes Saturday section of the paper today seems to have been doctored to remove that awful phone company building that is the view from the southwest facing units in this building.

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  12. 12
    The Tim says:

    RE: ivan @ 11 – Could you post a scan or a photo of the ad?

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  13. 13
    ivan says:

    RE: The Tim @ 12

    I have to retract my assertion. Looking at google street view, there is a corner you can strategically stand at and not see the phone company building.

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  14. 14
    Enso owner says:

    RE: Condoseeker @ 2

    (full disclosure – I’m an Enso owner)

    Enso is actually in a relatively good position. They have over $45 million in closed sales. They can afford to sit on the remaining 30% for a while.

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