First Brazos Place. Then Bel Air. Now the Sage.
This week the Sage Condos in South Austin — 1702 South Lamar — announced that they will be selling the remaining 23 units through an auction on August 22. This is the third major auction in the Austin market. In May, the Brazos Place auctions saw strong demand. The second auction, for the Bel Air condos in far south Austin, is scheduled for this coming weekend.
While it remains to be seen how the successive two auctions fare, there is a big difference between Brazos Place and the other two projects. In particular, Brazos Place was a moderate high rise in a prime downtown location: the other projects are not downtown condos and not tall. In fact, the Sage is about a mile south of the city on Lamar and the Bel Air is far far south, located on Congress Avenue south of Ben White. While the Sage may likely attract people who want to live close to downtown, far South Lamar living is very different from being downtown. The opportunity for both sites is to attract people who want to live in a centrally located condo at a bargain basement price.
The Sage auction is unique on a couple of dimensions. First, 10 of the 23 units are selling without minimum bids and reserves: the auctioneers will take the highest bid no matter how low. The developers will have a minimum bid for the other 13 units. Prior to the auction, the units were originally priced from $299,000 to $469,900.
According to the Downtown Austin blog, “The auction of the Sage Condos will use a different system than the auction at Brazos Place or the Bel Air. Rather than auction each individual unit, the auctions are for the right to choose which unit you want. Everyone bids and the highest bidder gets to choose the unit he/she wants. The auctioneer repeats this process until 10 units are sold.”
This sort of auction is suspicious, it much less straightforward than the typical auction where buyers bid on the unit they would like to purchase. While this auction method may be effective, it’s suboptimal for buyers who may be attached to a particular unit, floor plan, or view. For these buyers, the only way to ensure their choice is to be the top bidder. We’ll see how it works: it is a very risky move for a struggling mid-rise project on South Lamar.