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While “location, location, location” may be Realtors’ mantra, “bargain, bargain, bargain” may trump that when 23 luxury East Palo Alto townhomes are auctioned off June 29.
The lofts and townhomes at Cummings Park, located in a corner of the Ravenswood 101 shopping center (near Office Depot), sit on the third floor of a mixed-use building, with retail on the first floor and office space on the mezzanine.
Beginning bids range from $299,000 for a 935- or 950-square-foot loft to $405,000 for a 1,262-square-foot townhouse. The units were earlier marketed at $549,000 to $679,000, but only eight sold, and six of them were below-market-rate units.
All bidders must pre-register and must be pre-qualified for a loan through Wells Fargo Home Mortgage or Bank of America (on site at Cummings Park). Each must bring $2,500 (a cashier’s check or traveler’s check) to the auction. Specific rules are outlined on the Web site, www.auctioncummingspark.com.
Ken Stevens, West Coast CEO and co-founder of Accelerated Marketing Partners, which is conducting the auction, says he expects to sell all 23 units in about an hour and a half.
That would certainly make John Hunter, owner/developer of Cummings Park Associates LLC, very happy.
“One of the pitfalls of development is you don’t know what the market will be when you are complete. This took an unusually long time to get from planning stages to fruition. Unfortunately, we got stuck in an unfriendly real-estate current climate,” he said.
A mortgage market in turmoil pushed Hunter into the auction route because he was required to sell 51 percent of the units to close the financing on the ones already committed.
Stevens said that rather than selling three or four houses in a month after reducing prices, with the auction, “it’ll probably take about three minutes a house.”
The seller can afford to offer reduced prices because he’s selling all 23 homes with 30-day escrows, allowing him to pay off his construction loans quickly. “The money he saves in interest payments he passes through to the buyers,” Stevens said.
“We’re being forced to make some pretty dramatic savings for buyers … to come and get incredibly high-quality lofts and townhomes at terrifically low prices. That helps us get over the hump, and the lucky ones get terrific prices,” Hunter said.
Cummings Park was five years in the making, with three years of the “entitlement” process dealing with both the City of East Palo Alto and the owners of the Ravenswood Shopping Center and another two years of construction, he said.
The project features a full underground garage, with one parking space for each loft and two for each townhouse.
“It’s probably one of the highest quality ones on the Peninsula,” Hunter said, noting “we tried to make the courtyard with a European flair. People are surprised when they walk up to the podium and see a little town.”
Outside each unit is space for a table and chairs and a small barbecue. Luxury appointments range from slab-granite counters and GE Profile appliances in the kitchens to Wi-Fi and maple or bamboo flooring.
Homeowners Association fees are about $400 per month.
Hunter predicts the auction buyers’ demographics will be similar to those who came looking during the regular marketing period — “mostly single, professional adults on the Peninsula who work between San Jose and San Francisco, in their mid-20s to mid-40s. … Some will be married but without children; some are first-time homebuyers and some move-downs — people who wanted to be close to activity, a safe environment, chic new digs,” he said.
One of the early buyers is Dyanne Ladine, a 20-year resident of East Palo Alto.
“I wanted to stay in East Palo Alto because I’ve been there a long time and I love it,” she said.
“It’s very attractive. I have a big window that looks at the sun coming up,” she said, noting that “there’s something environmentally sound about living in a collective environment.
“It does have a lovely courtyard. And I have a hummingbird,” she added.
Ladine says she’s already fond of the people at Jamba Juice downstairs, and the “new dentist is very friendly and nice.”
A full-service restaurant, The Firehouse Grill, will open soon.
“The retail part of the project is continuing to evolve,” Hunter said.
The second floor will house a nonprofit business incubator, which was part of the original conditions of approval, he added.
“Auctions work. Right now there’s a huge disequilibrium between buyers and sellers; buyers don’t know what to pay and sellers don’t know what to price,” said Stevens, whose company conducts more than a dozen auctions of new properties every year, all over the country.
“We put bare minimum price on units to attract enough attention to provide a marketplace. If we can get enough buyers in the room, we will get fair market value,” he said.
Hunter “ran out of traction in the marketplace. It’s not his fault. He decided to be pro-active and hired us,” Stevens said.
“The real-estate business is finicky. You never know what’s going to happen when you come to market. If I could have brought it to market a year ago, it would have been a different story,” Hunter said.
Hunter had previously developed a 54-unit mixed-use project, Nazareth Plaza, in San Mateo in 2006.
Stevens calls Cummings Park a mixed-use project that’s “probably ahead of its time. We’re seeing a lot of in-fill loft-type product. Cities are trying to encourage work-live situations. We’re seeing an awful lot of this type of development in other parts of the country.
“If we only get one bid, minimum bid and above, the person gets to own it.”
What: Auction of 23 lofts and townhouses
When: Sunday, June 29, 1 p.m.
Where: San Mateo Marriott, 1770 S. Amphlett Blvd., San Mateo
Info: http://www.auctioncummingspark.com, http://www.acceleratedmp.com
What: Cummings Park viewings
When: Daily, 11 a.m. to 7 p.m.
Where: 1765 E. Bayshore Road, East Palo Alto (in Ravenswood 101 Shopping Center)
Info: Call 866-443-6899
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