- June 23: Forest Ridge, a condo complex across from Loon Mountain at the southern edge of New Hampshire’s White Mountain, holds a foreclosure auction on more than a dozen units.
- June 29: Waterville Valley, N.H., three exits south on I-93 from Loon, conducts a no-minimum-bid auction — an “absolute” auction, they call it — on 103 units of the luxurious, year-old Golden Eagle Lodge, a 139-unit condo hotel near the resort’s Town Square.
- July 7: In Vermont, 43 units (31 from the Killington-Pico area, 11 from Ludlow — near Okemo Mountain, but not in any way owned or managed by Diane and Tim Mueller’s staff — and one from Woodstock) are placed in reserve auction, i.e., minimum bids must be met.
The ski industry, or any real estate cynic, may look at these recent auctions, and the undeniable string of ones to come, and reach the inescapable conclusion that ski area real estate in New England is moving at a glacial pace.
Well that’s true, as any realtor in any ski area market would agree. No one disputes the sluggish market.
What the auctions do is help move some of the previously immovable properties. However, they also attract other properties that might not have been for sale.
“The North Country market has softened,” says Sandy Murray, manager of the Century 21-Montgomery Co. office near Killington, Vt., “and, frankly, in some cases, the market has continued to slow down. There are about 400 properties [for sale] in the Killington area and last year less than 10 percent sold. The condo market is in excess of three years [before selling].”
“What an auction does,” says Bob Montgomery, vice president of Resort Real Estate Auction Co. of Killington who recently sold his Century-21 business, “is give the seller another way to sell thier property.
“I know people hear the word ‘auction’ and they think of a foreclosure,” he goes on, “but it’s no longer just a foreclosure by some bank. What it does is tell you what the market might be on any one, given day for your property. You bring prospective buyers in, listen to their bids and you may sell it … or maybe you don’t.”
Montgomery had been involved in a similar non-distress auction situation a couple of years ago, which was semi-successful. “I had one or two property owners here [at Killington] ask me about interest in their houses, and I told ’em about this or that, and one of ’em said, ‘Well, yeah, but that’s the same stuff you’ve been doing for a couple of years and, in my case, it’s not working, so what are you doing that’s new to sell my place?’ It got me thinking about the auction,” says Montgomery.
Since the auction, Montgomery says, he’s been approached “by several banks and owners asking ‘when’s the next one?’ We’re looking at it, working on a few things.”
The Killington auction wound-up peddling 28 of the properties — on sale-day or within the next five days, Murray says. Shapiro, who was involved in both the Killington and Loon sales, says even though it was a foreclosure, the Loon auction “got between 78 and 90 cents on the dollar, which is above the norm, because they were attractive properties.”
The Good News at Waterville Valley was that all 103 units sold; the Bad News was that they didn’t fetch the prices that Tom Corcoran, president of both WV and Golden Eagles Associates (with partners — and WV execs — Bob Fries and Bob Ashton), had sought.. They hoped for $13-million and wound-up with about $7-million.
“No, I don’t think there are any regrets. Sure, we’d have liked to get more money,” says Corcoran, “and I know there are some people who say we shouldn’t have put all the units up. But we had 1,400 people, we had 362 registered bidders, and we had discussed the options many times beforehand. It was our feeling that once we started, we wanted to have it over with; once you start, if you don’t finish it, you’re in trouble.
“We decided that if we were gonna do it,” Corcoran says frankly, “we wanted to complete it. We wanted to cut our losses, take our lumps now and get out from under so we didn’t get hit harder down the road.”
“Even if you don’t sell your property, an auction helps identify a potential buyer,” Murray says. “Once that happens, you can work your way into a sale many times.”
Bill Shanahan, director of development at Sunday River Ski Area in Maine, one of the hottest ski area real estate markets in the Northeast in recent years, says, “There’s no magic to selling real estate at a ski area. It’s not a complicated formula. Price is part of it — our one-bedrooms are in the low 70s with resales in the high 60s — but it’s also a total package.
“Our real estate sales track our skiing, which has been growing every year. If we didn’t have skiing at Sunday River, we’d be dead in the water; but having ski-to, ski-from units — and just about all of ours are — is part of it. We’ve had people who bought here five, six, eight, 10 years ago and they’re ready to sell … but they usually still buy their next unit here.
“In fact, we’ve found a market we hadn’t expected in those families where the kids have become teenagers and they may not want to come skiing every time, or maybe they’re in college,” says Shanahan, “so the parents may buy a smaller condo.”
The auction format still gets sideways looks from many people, but it’s growing in popularity and use. The National Association of Realtors, according to Montgomery, has endorsed the potential of auctions and even named an auctions committee.
“We’re still not used to it in many parts of this country,” the Killington developer/realtor says, “but in Australia, they sell more than 50 percent of their buildings through auctions. In some cases, they start building and simply say they’re going to hold an auction for the properties on such and such a date.”
Not that auctions are the cure-all for slow-moving properties. Dogfood properties won’t always sell, even at deeply reduced rates.
Murray says one outcome of the early-July auction in central Vermont was that owners whose property didn’t go have faced reality and dropped their prices. That’s caused a blip of resurgence in the marketplace; as prices tumble, even with a sluggish economy, prospective buyers will take a look.
There are a couple of factors at play in the realty market, she says: the rewritten tax laws of 1986 which reduced writeoffs for vacation homes and condos, the 1987 collapse on Wall Street, the sluggish economy and an overbuilt situation in some cases.
“Rewriting the tax laws meant a change in the buyer from someone who bought with investment in mind — how much return am I going to get from rentals and so on? — to someone who plans to use the property themselves,” Murray says. “Tightening the writeoffs, though, created a problem because you may have had someone who bought with the market at its peak; then the laws are rewritten and they go from a condo that cost $200,000 and was 90 percent financed to one that’s worth only $130,000 or maybe $150,000 — even though they’re still carrying a $180,000 mortgage.”
Also to be considered during an auction is how much to put on the block. Corcoran and Co. elected to put all 103 units of the Golden Eagle Lodge up for sale; others prefer to hold back and tweak any demand with a smaller supply.
The early units went at considerably below what Corcoran had hoped for, but as the supply dwindled, he says, prices on remaining WV units became a bit more competitive. “We made a bit of a come-back on the final units as people upped their bids when the number of available units got smaller,” he says.
Corcoran is quite candid in discussing the bind he and his two partners, who also are top execs at the resort, found themselves in with the Golden Eagle. They had all 139 units presold within eight days; however, between the original agreement and scheduled closings, Wall Street did its October 1987 faceplant, which torpedoed many of the agreements.
They opened the luxury property a year later, in time for Winter 1989, as part of a $30-million expansion at Waterville. “We still were able to sell some of the units but we didn’t get all of them sold … and the debt structure was killing us,” he concedes, “so we decided to get out from under before the Golden Eagle drained us.”
Units that had gone for $90,000 to about $265,000 sold from $50,000 to $149,000, according to one report. “There were some outstanding bargains,” Corcoran says.
Montgomery concludes, “Every area has its own personality. You really don’t know what’s gonna happen until the day of the auction. I don’t think there’s any doubt that we’re going to see more of these auctions, especially the multi-property, multi-site auctions as opposed to just one site or one bank.”
