Petworth Home Auction Draws Over 60 Registered Bidders

by Prince Of Petworth January 22, 2013 at 11:00 am 36 Comments

Photo courtesy of Alex Cooper Auctioneers

Dear PoPville,

Thought you might find this story and associated picture interesting given the recent post concerning Petworth’s status as one of the hottest neighborhoods of 2012 in terms of real estate. Alex Cooper Auctioneers conducted a public auction on Wednesday January 16th to sell 514 Quincy St. NW. As you can see from the picture, the auction drew a huge crow including over 60 registered bidders.

The bidding started at $300,000 and ended up at $488,000. The home is a large, semi-detached home with 4 bedrooms, but needs complete renovations. The interest in this home really demonstrates how attractive Petworth has become for home buyers. The purchaser was not an investor and intends to live in the home following renovations. The family who sold the property had resided in it since the 1940’s, the family recollects that they paid around $20,000 for the property. The family was very pleased with the sale price.

514 Quincy St, NW via google street view

NSDulse

Can you guys tell me? Why did they go with an auction format to sell and not not list the property?
- S.Kirsch
  
  The auctioneer worked in conjunction with a realtor. The realtor approached the auctioneer because she anticipated too many offers to handle on her own. The realtor found that the volume of inquiries was unmanageble in a traditional listing process and found that it was more efficient to refer the property to an auctioneer.
  - joker
    
    Well, then I hope the realtor credited back the owners the entire 3% buyers agent fee they charge. Auctioneers charge a buyers premium (their fee) to sell places, this one was 6%.
    
    You auction houses that are otherwise unsellable. Houses that are in highly depressed (forclosure) zones, or are in such awful shape not to garner any interest in a typical sale.
    
    So what it sounds like is that a realtor ended up costing her clients 9% in fees rather than the regular 6%, (an additional $15,000) because SO MANY people were interested and the sale would have taken all of a week. in the Districts top 3 hottest housing neighborhoods, in THE nations hottest housing market, they couldn’t be bothered to deal with offers and list it.
    - Anonymous
      
      Why are you blaming the real estate agent? I don’t hear the owner jumping up and down, screaming in protest!
      - zero_sum
        
        I think the insinuation is that the sellers might not have known any better (aka they don’t have experience with this stuff and were just fleeced out of $15K). Or, this house has MAJOR structural issues that would have been discovered during a proper inspection. Hence, them giving 60 buyers (plus their inspectors & contractors and lord who knows…) 90 minutes to do a cursory walk through before placing down a nearly half million dollar bid.
        
        I think this was a super risky buy.
      - Anonymous
        
        those scenarios are opposites.
        
        fact is that the seller almost certainly benefited from this auction, as they would at any well-subscribed auction.
      - zero_sum
        
        “fact is that the seller almost certainly benefited from this auction, as they would at any well-subscribed auction.”
        
        I have no idea what this generic statement means.
        
        Did they sell their asset? Yes. So I guess they benefited? (Duh.) However, most houses are getting multiple offers in DC right now.
        
        Or are you insinuating that they benefited from some sort of information asymmetry?
    - joker
      
      Anon,
      
      The sellers didn’t benefit any more from the auction then they would have a standard realtor listing. I am sure you’ve seen the listings posted here and on Redfin in Petorth, Columbia Heights etc that were in awful condition literally being held verticle by a coat of paint that sold in short order for surprising (market +) pricing.
      
      I am blaming the realtor because the sellers went to the realtor to have him/her sell their house and in typical fashion agreed to pay them 3%.
      
      This realtor decided that was too much work for their $15,000 commission and simply had someone else sell it for them, costing them an additional 3% above and beyond what the typical seller spends on buyer/seller agent commissions.
      
      These folks admitted they had no idea how much they paid for the place, they strike me as just the kind of folks who wouldn’t really understand that it was going to cost them an additional 15K to sell.
      
      Lets put it this way…if you hired a realtor to sell your place in the hottest real estate market in the nation, and they came back to you a week later and said “I want to hire someone else to sell your place and it is going to cost you 9% total rather than 6% total because even though I won’t spend 10 minutes selling your place, and they aren’t going to get any more money for the place then I would simply listing it, I still want my $15,000 commission” I am sure your reaction (as well as mine) would be:
      
      “No, I hired you to do it, if you don’t want to do it, I will take my commission elsewhere”.
      
      And lastly, even if the seller completely understood what was going to happen, and was ok with it, the entire thing reeks of unbelievable laziness. You are going to be paid $~15,000 to spend a total of 40-80 (the absolute max) hours of your life (1 to 2 work weeks), answering emails, shuffling paper, and you still couldn’t be bothered?
      
      What a joke.
      - Marcus Aurelius
        
        Joker,
        You make a valid point. I hear advertisements from home auction places all the time. An auction is really an alternative to going the traditional realtor route. It is odd if the reason for going with the auction was not lack of interest but too much interest. Asking whether the realtor really earned her commission here is a reasonable question. Do auctioneers typically take care of all the post-sale paperwork that realtors do – contract of sale, escrow, etc.? If so, there is a justification for some commission. But probably not the ful commission.
      - Anonymous
        
        You could be lobotomized and make a killing as a realtor in DC. Just look at some of the descriptions and how they’re written, photos of the property with people in them, etc. I don’t see how people actually hire some of these morons and give them $12-18,000 in commission
        
        I don’t doubt that the hours are long for realtors having recently bought a house but a property will just sell itself these days
      - S.Kirsch
        
        Joker made an incorrect assumption that there was 9% in fees on this sale. There was no 3% buyer’s agent fee. The 6% buyer’s premium was the only fee on this sale and was shared between the realtor and the auctioneer. The realtor was a close friend of the seller’s family and was looking out for the best interest of the seller. The seller and realtor made an informed decision. The auctioneer’s buyer’s premium covered many of the auctioneer’s costs including marketing, contract, escrow, etc and will be involved with the realtor until the property settles.
Anonymous

The home is a large, semi-detached home with 4 bedrooms, but needs complete renovations

1720 square feet does not seem that large to me, but it’s all relative I suppose.
- Anonymous
  
  I guess its considered large for NW DC — often these types of SFH/rowhouses are craved up into 2 or more condos!
- sb
  
  1720 square feet doesn’t include the basement square footage, which this home almost assuredly has. (Basements aren’t taxable square footage in DC and thus aren’t included in the listed size.) So the real living space would be somewhere at/around 2500 square feet.
zero_sum

Quick question – does “registered bidders” mean that they must prove ahead of time that they have the cash-money to pay out immediately? Seems pretty risky to have 60+ people camped out in front of the house, bidding on the property. I’d be worried that the financing might fall through at the last minute when trying to close the sale. Does this also mean that there is no room for negotiations, if inspectors find fatal flaws?
- S.Kirsch
  
  To qualify as a “registered bidder”, one was required to bring a $20,000 cashiers check to the sale. This amount varies from property to property. There are no pre-qualifications or financial disclosures required. If the bidder’s financing falls through then they lose the $20,000 deposit. The house is sold as-is, there is no professional inspection contingency. The home was open for an hour and a half prior to the sale for the bidders to do a walk-through. It was readily apparent to prospective bidders that the house needed extensive renovations.
  - zero_sum
    
    Seems really risky. I hope the buyers have deep pockets, as there will undoubtedly be plenty of hidden surprises when pulling this place apart. Can you say cost overruns?
    
    I have a feeling that the seller got the better end of this deal.
    - Anonymous
      
      sellers almost always benefit from auctions
Steve D

Our friends owned the house on the right for the last 6-7 years or so before selling it and moving to Richmond to be near their grandkids last year. I imagine the floorplan is about the same for the duplex on the left. Amazing space inside with the bulb-out on the side of the house in the dining room that adds a lot of space. High ceilings, beautiful trim, one of the old Petworth houses that wasn’t a simple tract-home 1920’s budget special like so many in the neighborhood. Felt super spacious for a rowhouse. Not a terribly bad deal, though I have no idea how much work is required inside. Compared to sale of the house next door, they can do at least 120k of work before they get to that price level.
jdommu

What strikes me is not so much the winning bid, but the # of bidder. 60 people who bring $20k to an auction before even having the chance to see the interior. With that many potential buyers, I can’t imagine the recent boom in Petworth sales to slow down anytime soon. Way too much demand.
Jack5

Historical crime shouldn’t be a guiding factor in investing in urban properties. Creating a future outlook for area development, infrastructure, and crime prevention is the way to find a key opportunity. Petworth has a lot of room for growth in retail, crime rates are declining as neighborhoods see an influx of higher income neighbors. In order to receive a bigger return on investment, you have to predict the future, rather than relying on data from the past. It’s a new ballgame in Petworth. Areas like Capitol Hill will be stable growth and price-wise because they have always been low crime/high income neighborhoods, but for an investor starting out under $700k Petworth is the best place to spend money right now because the buy-in is a lot lower and the community is just emerging.

No risk, no reward. :)
jdommu

My wife and I bought in Petworth in 2011 shortly after we got married and just had a baby a month ago, so we are a couple who moved to Petworth to start a family. A few thoughts on schools:
A) There are at least 5 very reputable Charter Schools within a mile or so of Petworth, so we’ll play the lottery game when the time comes. Hopefully, in another 3 years, there will be more charters and a reformed lottery system that makes it easier to get into your top choices.
B) Bernard Elementary School is the in-boundary elementary school for many parts of Petworth, and it has a very good reputation for a DCPS east of the park and offers PS3 and PS4, so that is another strong consideration either as a backup or instead of a Charter.
D) VA or MD suburbs don’t offer PS3 and PS4 in public schools, so that is a bonus to staying in the city.
C) If we don’t get into a Charter we like or we decide not to do DCPS, then we would likely move to the suburbs when our daughter is ready for elementary school. At least that gives us another 5 years or so in DC, and at this rate, great appreciation on our first house. But, we are hopeful that we will be able to stay. We love Petworth and very much enjoy living in DC.
Anonymous

“As you can see from the picture, the auction drew a huge crow”

This made me laugh – I was disappointed that when I looked at the picture there wasn’t a large black bird.
qrst

With Petworth prices so high, any idea why 206 Emerson St (NW) is still on the market one year later? It’s price, for a corner unit, does not seem so high one year on (540k)
- JoDa
  
  Some guesses: This house is 3 blocks from the Metro, while the Emerson St. one is over a mile to the Petworth Metro and almost a mile to Ft. Totten; this place appears to have about 200 more square feet in listed living space (just over 1500 square feet in 4 bedrooms gives me slight pause as to the size of the bedrooms…which is exacerbated by the fact that the pictures I could find online don’t show any shots of the bedrooms); this place is closer to other amenities like shopping, etc. And maybe it’s an advertising problem? Some Realtors just do a better job of advertising than others. We’ve had 2 homes sell in my neighborhood in the last few months. The first one sold at (fair) list within a few weeks. The second sold SUBSTANTIALLY above (a just slightly low) list within days. I’d say the first one was actually nicer and a better deal (plus bigger, an end unit, and has a bigger yard). I’d guess the Realtor for the second one just did a better job marketing it.
Jon

This place was on the market…they did waaaay better than their asking price at the auction, it appears: http://www.redfin.com/DC/Washington/514-Quincy-St-NW-20011/home/10059321
- Anonymous
  
  I’m guessing the “volume of inquiries was unmanageable” because it was listed at $200k!
- JS
  
  Uh, no. It says right there in the listing that 200K was the opening bid, not the asking price.
mscooper

Hello my name is Matt Cooper. I was the auctioneer for the property and as a disclosure I am obviously an employee of Alex Cooper Auctioneers. After reading through the thread I can confirm that S. Kirsch was correct in stating that we did not charge sellers any commission nor was there an additional 3% paid to another realtor. All of our commission and the cooperating realtor’s commission was paid from the 6% buyer’s premium.

The reason the agent introduced me to the sellers to talk about potentially auctioning their home was not at all about wanting to do less work! She is close with the family and after participating in a few of our auctions she came to conclusion that in her opinion the auction format and our brand following would produce better results than just putting it on the market. We worked very hard over a 30 day marketing period creating a campaign with traditional print media, direct marketing and digital advertisements. While I could not keep exact track I would estimate I fielded well over 125 inquiries prior to the sale.

The sale did indeed have over 60 registered bidders. The sellers were absolutely ecstatic with the resulting sales price and were pleased with the auction marketing process.

To answer Marcus Aurelius’s question: Do auctioneers typically take care of all the post-sale paperwork that realtors do – contract of sale, escrow, etc.?

Yes we do. While I cannot speak for all firms we have a full time settlement coordinator that works with both the buyer and seller after the auction to handle all of the details up to settlement. Based off of decades of feedback we have determined this is a very valuable service for both our buyers and sellers. It gives both our buyer’s and seller’s a full time contact to work with for post sale matters. We are fortunate enough to have a settlement coordinator with 20+ years experience in the real estate industry on staff.
- zero_sum
  
  Very interesting and thank you for chiming in, Matt. As a seller, I could certainly see the benefits of this approach. As a buyer, I wouldn’t go near it with a 10 foot pole, unless I had massively deep pockets (which I don’t). Especially when it came to the inspection part, that’s just way too risky.
  
  It’s an investors world.
- Marcus Aurelius
  
  Thanks for answering my question and providing an informative response! Definitely an option worth considering for a home sale.
Will

“The family was very pleased with the sale price.”

But wait, that can’t be so, otherwise all the articles telling me that older/long-time residents are being forced-out of DC would be wrong!
- Anonymous
  
  Not a deep thinking person, are ya?
George

I just watned to say Kudos to Alex Cooper Auctioneers and Matt Cooper for stating his affiliation and providing his feedback on the process.

My two cents..second guessing real estate transactions is Monday Morning Quarterbacking. You’ll never know if the previous owner or seller is happy unless you go ask them.
amanda

It is always amazing to me how many schmucks will immediately post their super-opinionated, usually rudely put “facts” about some situation they know virtually nothing about. Ie, “Joker”, who is so sure he/she knows all about the transaction–and of course was totally wrong. Dang, folks, how about a little humility and respect?
- Anonymous
  
  True, but adding insults to a complaint about rudeness is a bit less effective.

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