http://www.crainsnewyork.com/article/20100528/REAL_ESTATE/100529830#
Apartments hit auction block with $1 opening bid
A one-bedroom on 15th Street fetches $650,000, a 12% discount from original price—and exactly $649,999 above the starting bid; hard part is getting sellers to sign on to the tactic.
Share Print Email Add a comment By Amanda Fung Apartment auctions haven't quite caught fire in Manhattan as expected, so auctioneers at Bid on the City are dramatically lowering the ante. They will now be putting properties on the block at starting bids of a mere buck.
Last year, the e-Bay-like website for apartment and building sales began holding auction events, where properties were auctioned off at starting bids of as little as 35% off the original price. Now, to attract more buyers, it has decided to put properties, including posh Hamptons homes, on the block for starting bids of $1. The move comes after the Manhattan-based start-up briefly tested the idea earlier this year.
“We are very excited. Our $1 events are so much more successful,” said Vlad Sapozhnikov, co-founder and managing partner of Bid on the City. “It brings more traffic to our website and results in more bids.”
While apartments clearly do not sell for $1—there are bidding increments of at least $50,000 based on the original sale price and reserve prices—the one-buck starting point grabs people's attention. The hard part can be getting the property owner to agree to sign off on the idea.
For $1 auction events, the company attracts four to five times more bidders than at regular auctions, Mr. Sapozhnikov noted. Most recently, Bid on the City successfully auctioned off a one-bedroom at The Parker Gramercy, located at 10 W. 15th Street, for $650,000, a 12% discount from original price—and exactly $649,999 above the starting bid.
Bidders participate in events live at the company's 4,000-square-foot showroom at 226 Fifth Ave., at 27th Street, or online via the firm's website. Each property attracts roughly 2,000 daily page views and 30% of those visits are from overseas, according to Mr. Sapozhnikov. Bid on the City collects a 3% commission from sellers and a 3% commission from buyers upon closing.
Previously, Bid on the City held an odd reverse auction for Hamptons rentals, in which rents for the properties fell over time when no bids were offered, and the first person to bid on the property won the rental. Now Hamptons rental auctions will start at $1 and rise from there.
Next month, Bid on the City will launch its Westchester auction event, in which as many as nine properties will be up for grabs. Its next Manhattan auction will be devoted solely to studios and is scheduled for July 20. Coming this fall, the firm also plans to begin auctioning off high-end Manhattan rental apartments.
“Studios are in high demand and they will sell,” said Mr. Sapozhnikov. “We want to target first time homebuyers and pied-a-terre buyers.”
