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55 luxury condos near Natick Collection sell at auction

Posted by Your Town  October 4, 2009 06:42 PM

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Going. Going Gone.

It was standing room only inside a balmy, excitement-filled Crowne Plaza Boston ballroom Sunday as 55 of Nouvelle at Natick’s remaining 178 luxury condos sold at auction.
 
Buyers walked away with units at 36 to 64 percent off the original asking prices for the condos, which are adjacent to the Natick Collection mall. One penthouse suite sold for $626,000, more than $1 million less than its original price.

Among the winners were people who weren’t in the housing market before the auction was announced in early September, like Michael Yee, a 33-year-old marketing professional.

“I was waiting until spring 2010,” said Yee, who got his 922-square-feet, one-bedroom condo for $281,000, far below its $514,900 original price. He plans to move out of his studio apartment in Brighton by the end of November. “Now I have to break it to my landlord.”

Prior to yesterday's event, which organizers estimate drew about 400 people, only 37 of the 215 units had been sold or were under agreement, despite all the hype surrounding one of New England’s few condo complexes connected to a mall.

Now, in addition to immediate Natick Collection access, the winners will get a host of upscale amenities that accompany their new digs: an on-site gym that offers yoga and pilates; valet dry-cleaning; a 1.2-acre rooftop garden with putting greens; and 24-hour doormen.

The auction is the latest twist in a saga that started two years ago when the ultra-luxurious condos hit the market. In recent months, the condos’ developer, General Growth Properties, has declared bankruptcy and been slapped with liens by contractors who are owed money for work at Nouvelle.

In a bid to push selling, General Growth hired the Boston office of Accelerated Marketing Partners to auction a portion Nouvelle’s unsold units.

“In the current market, auctions have often been an effective means of jump-starting sales,'' said Jim Graham, a spokesman for Nouvelle at Natick. "In the case of Nouvelle at Natick, we hope to spark new interest in what we believe is a great opportunity to own a wonderful home in a great location with five-star amenities.”

Rather than continue on with the traditional method of selling units one-by-one, General Growth is trying a different tactic: sell a bunch at once, figure out how much people are willing to pay, then coordinate prices on the remaining 123 units accordingly.

After winning at the auction, which was run by a small army of suit-wearing AMP employees, winners were ushered down a long hallway where they could relinquish their 10 percent deposits and sign purchase and sale agreements. The middle of the room was adorned with a lit-up ice-sculpture of the Natick Collection’s logo.

At the end of the day, General Growth took a huge hit on what they were originally asking— Sunday’s auctioned units sold for $249,900 to $626,000, down from asking prices of $479,900 to $1.7 million — but the payoff in millions was immediate.

New owners who got a great deal still have to contend with monthly condo fees, since the fees are assessed on the number of square feet—61 cents for every foot or $1,082 for a 1,774-square-feet unit. And taxes are assessed on the property's full value, not the selling price.

This wasn’t an issue for the Kaplans, a father and son team who purchase real estate investments through Kaplan Commercial Properties of Franklin. They bought two units and will try to find tenants immediately. “We’re really excited,” said Bob Kaplan, 70. “We’re going to have positive cash flow.” He and his son, Rick, plan to go after renters who want a cheaper alternative to luxury condos in Boston but don’t want to sacrifice amenities.

Jon Gollinger, Accelerated Marking Partners’ East Coast chief executive and cofounder, said he expects to see more developers auctioning in the future. "It was pervasive in the 1990s. I didn’t expect to see this again in my lifetime.”

He said that although the auction prices may not be ideal for General Growth Properties, the discounted prices were necessary to get the condos sold. “It may not be a number that the developer wants,” he said, “but it’s a number that he has to accept.”

Megan McKee can be reached at megan.mckee@gmail.com.

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26 comments so far...
  1. Anyone who paid $900K for a $400K unit is going to WALK AWAY from their mortgage to save a half million dollars on their mortgage. It's the easiest payday ever!

    If I liked living in this complex what I would do is buy the unit across the hall and then mail in my keys to the first unit. The bank can eat the difference, and it won't matter what happens to my credit since I already own a home. This kind of planned default is happening in California, Florida, Arizona, and will happen here, particularly among higher income households.

    Even better: Walk away and RENT for the next five years. This market still has far to fall, from the Ritz condos, W Residences, The Bryant, or these absurd concepts of luxury in the suburbs. The prices in this auction are not the bottom, just one stop along the way.

    Posted by puzzling October 4, 09 07:18 PM
  1. I was expecting low prices for this auction, but...WOW. I'm somewhat surprised they let the 1.5 million dollar place go for $500k! Quite telling if you ask me....

    Posted by TB151 October 4, 09 07:55 PM
  1. "And taxes are assessed on the property's full value, not the selling price."

    The amount an arms-length buyer pays IS the full value. The buyers will have a great case for abatements as the so-called "full value" is a fantasy number. The buyers may have to wait until the next reassessment since it may be hard to prove the assessed value was not accurate as of the last assessment (Natick does a full assessment every three years). I'm sure the town is going to have a serious problem on it's hands with all the buyers claiming their property is "overassessed" as the assessment is vastly in excess of what anyone would pay for the property.

    Posted by rob October 4, 09 07:58 PM
  1. $281,000 for a one-bedroom flat right next to a busy shopping mall? Sounds like these buyers got 64% off of something that was overpriced by 100%. Reminds me of when I went to a grocery store to buy some orange juice. It was on sale, but there were only 2 cashiers opened and the lines were very long, so I dropped it and went to another grocery store, where the same brand and type of OJ was not on sale, but still cost $1 less.

    Posted by Michael October 4, 09 08:05 PM
  1. Sounds like a good bargain but you have to wonder what might happen to the upscale stores at Natick Collection in this economy. What happens to the value of your condo when all those designer boutiques start closing?

    Posted by Tony91 October 4, 09 08:06 PM
  1. Natick Collection Condos Auction results

    Posted by polamaise.1@hotmail.com October 4, 09 08:24 PM
  1. What happens with respect to the condo fees and the condo association itself if it takes years to sell through the remaining units? Is there a risk that the bank forecloses on the common area? In that case, would the remaining units become rental and what would be the risk to existing unit owners, particularly with respect to the common area? Right now the developer is probably paying the condo fees for the unit it still owns. What happens if the developer goes bankrupt? Or the bank forecloses?

    Is this type of risk something that can be quantified and explained? Many out here probably are reluctant to bid as it really doesn't matter what the price is if all units don't eventually sell within a reasonable (one year) time frame. There must be a discussion somewhere with respect to these risks so the average unit buyer can understand the risk.

    Posted by George October 4, 09 08:52 PM
  1. As mentioned, the condo fees for these units are enormous - $1,000 for a 1700sqft condo? I would not be surprised to see the services get cut, and the condo fee reduced as more unit owners move in and vote out amenities.

    The article also talks about how taxes are based on the "full value" not the selling price. What does "full value" mean? Perhaps the author meant assessed value, which is likely to be greater than the selling price, but the owners would have a good case to get the assessed value reduced. Assessed value should equal roughly market value. The market determined today what these condos are worth.

    Posted by wrj October 4, 09 09:07 PM
  1. puzzling still can't afford anything and is bitter.... RE market hit bottom months ago... The "originally offered at" prices quoted in this article are almost 3 years old...

    Posted by rick October 4, 09 09:10 PM
  1. “I was waiting until spring 2010,” said Yee, who got his 922-square-feet, one-bedroom condo for $281,000, far below its $514,900 original price. He plans to move out of his studio apartment in Brighton by the end of November. “Now I have to break it to my landlord

    900 sq ft for 281K!?!??!!?!?!??!?! What an idiot. The condo is only worth 200K at most. And to get that price there had better be some gold in the fixtures. No one will buy a condo on rte 9 near a mall.

    Posted by apathy October 4, 09 09:10 PM
  1. Puzzling -- Mass is a recourse state. That means you don't get to just walk away. If the bank forecloses on your property and there is still a deficiency -- as there would be in your example (you owe more than the condo is worth) -- the bank can still sue you for the remainder of what you owe. Not only is your credit then completely shot, but you have a judgment against you and likely a lien at some point placed on your assets. It would not be a smart move.

    Posted by jlen October 4, 09 09:14 PM
  1. LOL! That guy paid $281k for a 922ft^2 one-bedroom condo. AND he gets to pay $560/MONTH ($6700/year) and rising in condo fees AND pay taxes on the full $515,000 asking price (probably ~$7500 a year).

    For that much, he could have bought a HOUSE, pay LESS for taxes, and used the condo fee for house maintenance! Haha, people are so dumb!

    Posted by Max October 4, 09 09:37 PM
  1. Who the hxxx wants to live next to a mall and a condo in Natick? What a waste of a development. IN a good economy, these units wouldn't have sold. General Growth should be ashamed of themselves.

    Posted by Tom October 4, 09 09:41 PM
  1. I agree 100% with Rob. The price that was paid at the auction is THE MARKET VALUE. Not what someone paid three years ago. I wouldn't buy one today for a penny more thanwhat someone else paid at the auction. Taxes are assessed on the new market value. Anyone who bought previously should demand a steep reduction in their assessment and taxes.

    Posted by Dan Murphy October 4, 09 10:07 PM
  1. This is the development that the Globe wrote about - about a year or two ago, with buyers talking very snobbily about how they don't want to hang out at a bar at Faneuil Hall. Those are the people that lost 60% of their value in one year. Ha Ha!

    Posted by Mark G. October 4, 09 10:10 PM
  1. And this story illustrates perfectly the whole problem of the real estate bubble of the past 10 years: Even with the enormous "discount" of the auction prices, none of these units.. NONE of them- were worth even what Mr. Yee paid. (which wokrs out to over $200/sf) But developers know there is no shortage of folks who will happily separate themselves from their money- until now of course. And note also Mr. Yee will be paying $605/mo in his fees, on top of his mortgage.

    And to the town of Natick- don't you dare "assess" these units at "market value", since clearly the market value was just determined at auction.

    Posted by Springfielder October 4, 09 10:13 PM
  1. For $300k, you can get a luxury 2bedroom 1000 sq ft condo in Newton near the Atrium and Chestnut Hill malls if you don't mind the equally high condo fees.

    Posted by stupidchoice October 4, 09 10:22 PM
  1. This is a bizarre statement:
    "And taxes are assessed on the property's full value, not the selling price."

    What basis for assessment would there be, other than the selling price, especially when a number of similar units sell at auction???

    Posted by Rodney October 4, 09 10:30 PM
  1. Not my cup of tea. I agree with Max that with that kind of money a person could be a house and use the condo fee amount to have maintainance work done around the property. How tough will it be to get a mortgage on a project which is in so much trouble?

    Posted by waterfront October 4, 09 10:34 PM
  1. Remember, that guy who thought he got a deal (or steal) on a 922 sq ft condo was a "marketing professional"; in other words, a "business major." Do you expect business majors to make financially responsible decisions? C'mon?!!

    Posted by robroy October 4, 09 10:36 PM
  1. Note to the author: I suggest you do an interview with the Natick taxation department and get their take on what remedies condo owners are entitled who now have documentation proving they are being taxed at a multiple of actual market value. You might also interview some owners of the higher square footage units and ask what their plans are to deal with this issue.

    Note to Puzzling: Walking away in MA only works if you are a dirtbag without assets to attach or a credit rating to ruin. As Jlen said, MA is a recourse state so the bank can put a lien on your next place (subordinate to the primary mortgage and implied condo fee superlien) and/or seize your bank accounts. How many buyers of condos at the old price fall into the category of assetless dirtbags with no on the book assets to documentable (ie, garnisheeable) income? My guess is not many.

    Posted by rob October 4, 09 11:00 PM
  1. "Sounds like these buyers got 64% off of something that was overpriced by 100%."

    Couldn't have said it better myself!

    Posted by Jonathan October 4, 09 11:05 PM
  1. The condo fee is quite large. Probably to subsidize all of the empty units. It is like that at the high rise condo's in Providence at Waterplace Luxury Residences. Lot of empty units. So, those who buy have to pay extra for the condo fee.

    Trying to understand how you can buy and then rent out one of these units and make positive cash flow after the condo fee plus property taxes.

    Posted by Tom October 4, 09 11:11 PM
  1. "And taxes are assessed on the property's full value, not the selling price."
    Rob & wrj - the paper got it right. In Natick, people are assessed for a lot more than houses are selling for to help keep the town's tax rate artificially low to attract more people. In Natick, if someone tells the assessors their house burned down so there was no house there on the January 1st assessment date, they are likely to get the response "but you intend to rebuild, don't you?" as a reason why they should be taxed as if there was a house. The head of assessing is also the chair of the Board of Assessors, so forget about a fair and impartial hearing before a neutral board. I would love to see the local cable company televise the abatement hearings so the public can watch the goings on. And it's only going to get worse if both the new high school AND multimillion dollar senior center are approved by the voters.

    Posted by GM October 4, 09 11:20 PM
  1. At the end of the day, these people own a condo. Condos are probably the silliest real estate investment you can make. They're cheap to build, and hard to resell, since there's always a new one coming on the market.

    And besides, would you have bought one of these if it was attached to the old Natick Mall? That's how old-hat the place will feel a few years.

    Posted by sg October 5, 09 12:05 AM
  1. I am intrested in buying a nice condo in auction. Please inform me.

    Posted by Sam February 13, 10 06:06 PM