Kolea Real Estate Auction Results

Monday’s auction of an oceanfront home and a penthouse villa at Waikoloa Beach Resort was almost overshadowed by other sales activity at the Kolea beachfront gated community. Although I can’t reveal the prices at which the two properties sold, I can say that the auction left attendees shaking their heads and muttering, “somebody just got a screaming deal”…although perhaps more so for the home than for the condo.

As an indication, when the listing for the oceanfront home went from “active” to “contingent” yesterday, the price was reduced from $8,995,000 to $4,900,000. The fine print in the auction brochure suggests that, at this point, the auction is not a firm sale that will close in 30 days, but a short sale subject to lender approval. If approved, it would be the first successful short sale of a single family residence at Kolea. (There are two neighboring houses that actually went to foreclosure.)

Although this Kolea oceanfront home was auctioned, 5 Kolea homes are listed at competitive prices

At close of official registration last Friday, the Concierge Auction manager told me that he was “right where he wanted to be” in terms of the number of bidders registered for the house. He was silent as to the condo, so the only thing surprising about the email I received at 7:30 p.m. Sunday night to encourage last-minute registrations was the timing. It read, “Don’t Regret! Waikoloa Penthouse May Sell for 1/2 off.”

This is one of those properties that after the auction my clients will say, “If I only knew!!!” Currently listed for $2.295M. The email went on to say that “people had been assuming a high bid of $1.7 million and playing themselves out of the opportunity.” That was certainly the case with my clients who had been evaluating participation. The structure of the buyer’s premium in the bidder’s package encouraged that perception, as the premium was set at 10% of bid price, or a minimum of $175,000, whichever was cheaper. What that meant was if, for example, a buyer wanted to spend no more than last year’s comp of 2F at $1,500,000, their top bid would be $1,325,000.

But even that price began to seem steep with Kolea 10F having been released as an REO (foreclosure) during the auction registration period at $1,390,000. It appears the serious bidding was on this penthouse facing Kolea’s Beach Club. Word from the listing agent is that an offer was accepted by the bank yesterday, and that bidding had hit at least $1,600,000. A year ago, when I had a buyer making an offer on multiple penthouse units, the premium for west-ocean-facing versus beach-facing units seemed to be about half a million dollars…when both Kolea 2C and Kolea 10F close, we’ll know whether that premium held.

As I took prospective buyers to see all the available options last week, some concluded that they were indifferent between a “penthouse” which at Kolea means a 3rd floor, and a 2nd floor condo of the identical 3 bed, 3 bath 2,147 sq. ft. floor plan. Someone else’s buyer must have concluded the same thing, because on the day of the auction Kolea 12E, a vacant, unfurnished, never occupied unit offered for $1,595,000 also went into escrow. When the sale closes, it will give market watchers (and appraisers) another data point, a 2nd floor versus 3rd floor price premium, as this was also not a distress sale.

In a sense, the auctions were successful. Each of these properties had been on the market for over 3 years, and with a 30 day push they were sold. But on the other hand, the Kolea auctions do not appear to have been as successful in terms of prices realized for sellers as the Concierge Auctions at Kukio or Hualalai Resorts. I have a few ideas as to why (hindsight is always 20-20 and I’ve spent 48 hours thinking hard about this!), but that’s a long enough topic to deserve its own blog post. Watch this space!