Earlier today I received an email from 1400 S. Michigan – Tower II promoting recent price reductions with the subject line “Auction Pricing without the Auction!” Basically they are claiming that they’ve lowered their asking prices to the auction levels. Well, if you can buy a unit at the same price as at auction then that’s a pretty good deal because you can do so at a more leisurely pace and without all the auction mania going on. Let’s see if this claim holds water.

Unit 1312, 1 bedroom/ 1 bath and 692 sq ft has been cut from $253,990 to $182,990. That compares with unit 1812, which sold for $182,000 at auction. Well, that’s a higher floor but let’s assume there is some room for negotiation on unit 1312 – though developers don’t usually like to negotiate.

Unit 1508, 1 bedroom +/ 1 bath and 751 sq ft has been cut from $268,990 to $199,990. That compares with unit 2008, which sold for $204,000 at auction, which seems reasonably fair – lower price for a lower floor.

Unit 2707, 2 bedroom/ 2 bath and 1259 sq ft has been cut from $490,990 to $378,990. That compares with unit 2607, which sold for $336,000 at auction. So I would not say that unit 2707 is available at auction prices. This one is much higher.

Oh…and they might want to update their MLS listings. The bulk of their listings that are showing as active were sold at auction. I think that violates some kind of MLS rule.

Today I attended the condo auction for 1400 S Michigan Avenue – Tower II held at the W Hotel on Adams St. in Chicago – along with about 300 -500 other people. 43 condos were auctioned off in about 1 1/2 hours at an discount off of the last list price of about 26%. Here are the results sorted by exposure and unit number (you may want to check out the floorplans at the link above):

There are several interesting observations from this auction:

• You will notice that unit 500, which is a studio, actually went for more than the last list price. Regardless of what you think it was worth, we can only conclude that when this unit was on the market people were not aware of its availability. Otherwise the bidders could have bought it then for a lot less.
• I don’t show the auction sequence here but they auctioned off the higher floors first. In several instances the lower floors then went at a higher price – e.g. units 2512 and 2312. I’m thinking that either people incorrectly assumed that the higher bidders would be taken out in the earlier round or they developed remorse that they didn’t get the higher floor.
• It looks like the developer was trying to get about a $3K premium per floor. However, the auction only assigned a premium like that about half the time.
• Unit 2602 seemed overpriced relative to 1203 and in fact the auction gave it a bigger discount.
• I was surprised that the south and west views went for as high prices as they did vs. the north and east views.
• When they say get there an hour ahead of time you should if you want to get free food and good seats.

Another South Loop condominium development is looking to clear their unsold inventory via an auction. On November 15, 2009 Michigan Avenue Tower II will auction off 41 units in one hour at the W Hotel, starting at 1:00 PM. Check out the link above for information on the building, floor plans, and some historic sales data. The building is located at 1400 S. Michigan Avenue and offers nice views from the north (above the 10th floor or thereabouts) and east facing units.

Here is the list of condominium units up for auction:

These units are being auctioned off without parking. Indoor, heated parking spaces can be purchases separately at a flat fee of $35,000. Notice that most of the units being auctioned off have the less desirable exposures. Units are available for previews daily through November 14. Every time I’ve been to the building it has been swamped with potential bidders so I’m thinking there aren’t going to be any bargains at this auction. Then again, all these people could be bottom feeders, who will drop out once the bids rise $20K above the minimums.

Bidders will be required to register in advance of the auction and should check in by 12:00 noon on the 15th at the W Hotel, located at 172 W. Adams St., in Chicago. Bidders must bring a cashier’s check or the usual substitutes for $5000 along with a blank personal check, which will be used in combination to leave a 5% deposit (of the winning bid amount). A separate cashier’s check is required for each property that the bidder is approved to bid on. It sounds like they won’t let you into the auction without presenting the checks.

Bidders can work with realtors but their realtor must be present at the bidder’s first visit to the building and all must register in order for the realtor to earn the 2% commission.

There will be a practice auction at 7:30 PM on November 14, also at the W Hotel. Interested bidders would be well advised to attend this event as it will provide an opportunity to find out what the bid increments will be, whether or not you will be able to understand the auctioneer (why the hell do they talk so fast?), and get a feel for the overall process.