Tucson Condo Conversions – Auction Details and Investor’s Insight
Over the weekend I went with a prospective Buyer to Villas at Sabino Canyon. We went to preview some of the 2 and 3-bedroom units and were disappointed to find out that all but 2.5 Condos are not updated. This means that out of 58 Condo for sale at the Auction, 55 have basic interior – simple kitchen and bathroom cabinets, no granite, white appliances; 2 Condo are upgraded and one is half upgraded.
This is quite different compare to the previous Auction. Most of the Condos auctioned last year were nicely renovated with granite counters, tile and carpet flooring, stainless-steel appliances.
This however is not the ONLY difference with the last year Auction. It looks like J.P.King has a different style than Real Estate Disposition Corporation. Instead of Auctioning separate units from a certain base price, “16 Absolute sales” would mean the following to the Buyers:
• First 16 lots are comprised of ALL THE AVAILABLE CONDOS on the list.
• The highest bidder of the first lot WILL CHOOSE which Condo he likes to pick. This Condo is taken of the list.
• The same for the next 15 lots.
• The seller is committed to sell those Condos for the final bid price.
• For the rest of the Auction – 42 Condo Conversions left on the Auction list will be bid separately and it will be up to the Seller to Accept or Reject final bid price.
Nevertheless, the place seemed to be quite crowded with prospective Buyers and Investors and a brief interaction with one of them revealed the following:
The bids at the Auction are expected to be quite less than last year. The main reason of course is the overall Real Estate market deterioration. However, significant role will play Buyers’ increased difficulty in getting financing for Condo Conversions.
Most likely banks will require at least 40%-50% down payment, so everyone who is pre-qualified at 20% down doesn’t stand a chance. Lately, banks put Luxury Condo Conversions into HIGH RISK category. This statement didn’t sound as a specific to this particular development, Tucson or Arizona, but rather as a general observation or insider’s knowledge. After all, how much Real Estate market in Tucson is different than in Phoenix, San Diego, Las Vegas, and Miami? Each market has its own specifics, but all of them got overbuild, over-converted, overpriced… Now they are full of short sales, foreclosures, auctions. Though, some might rightfully argue that Tucson is in better situation than other mentioned places.
Nevertheless, banks are especially cautious right now about lending money to the troubled areas. And Catalina Foothills’ Luxury Condominiums community – Villas at Sabino Canyon – is definitely one of them. At the first auction Condos were selling at about 50% discount… Most of the current owners are “upside down” on the property… Over 50% of the units are rentals… Special Assessment might be needed to boost HOA funding…
If all this doesn’t scare you and you are well capitalized to take a gamble, do your due diligence and come to the Auction. Bare in mind that the last few paragraphs are based on what we heard from the investor who already owns a few Condos in the Villas at Sabino Canyon and will probably acquire more.
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Can you comment as to the prices at Sabino Canyon Villas sold last year and may this year. I have looked everywhere to find the price ranges. They seem to be hidden which makes it difficult for out of town in vesters. Nobody has returned calls.
Thanks
They went on an auction today for 72k and up, most being sold in the mid 70’s.
Here is the comment I got from Dan Hill – http://foothillshomesblog.com/catalina-foothills-insider/#comment-5810:
April 29, 2009
Dan Hill @ 12:47 pm
I clicked on your Villas at Sabino Canyon Aution report and could not understand how you could be so off on the high bids until I saw that the auction you were writing about was in May of 2008, not the one last night (April 28, 2009). If the May prices were a great deal, words are not yet invented to desctibe the low winning bids of last night. A fully remodeled 3 br / 2 bath condo for 120K. A 3 br that was mostly redone (needs carpet and ligh fixtures) for 85K, that is the one we got. And many of the 2 br /2 bath for 72.5 K. Some buyers bought as many as 6 units but they just auctioned off 16 and thenn closed the sale. Those of us who were there got a great deal. I was in Tulsa on the phone all the time with my agent in Tucson and she said about 80 people were there tops. If they have another one, my advice, GO.
Dear Dan and Mike,
Thanks a lot for posting the information about yesterday’s auction. Up until 5:30 p.m. I was debating if I should go to see it for myself, as I did last year. However, the concern of Swine Flu and expectation to see a few hundred people at the Auction played an important role. After all, I have 3 kids at home and the youngest one is only 5 months old. Meanwhile, the proximity of Tucson, AZ to Mexico is almost ensures that there will be at least a few cases of Swine Flu.
As such, I am very grateful to get any pieces of information about April 28, 2009 Condo Auction online and if there is anything else you’d want to share – please do so.
Regards,
Anjelina
Can you tell me the type of auction you are referring to in your article? Are these govt (county) tax foreclosures? Thanks
Dear Malcolm, the Auctions I referred to are not associated with government, taxes or foreclosures. Those Auctions are set-up by and between the owner and Auction company to sell the inventory in one shot, liquidating most of it promptly and helping the owner to get out of the project he doesn’t want or can’t afford to be in.
Just noticed 9 units are listed for sale at the Villas of Sabino Canyon. Does anyone know if a purchase at this complex is a good investment? With so much vacancy my fear is mixing renters with owners and property value decline.