If you’re in the market for a vacation home in Southwest Michigan, drive over to New Buffalo this Memorial Day weekend and drop by the three-day open house at the Diamond Point development, where 11 townhouses and one single-family home are going up for auction on June 6th. You will need to bone up on the rules of this particular auction, run by Global Real Estate Auctions. It’s a complex auction—not one to enter without first studying both the properties and the rules— but it could result in a few sharp bidders snagging new homes at impressively low prices.
The developers of Diamond Ridge, situated on the 12-acre site formerly occupied by the Diamond Bowl bowling alley and steakhouse, planned to build 49 townhouses and eight cottages. So far, they have built 13 townhouses and sold two of them, and built four cottages and sold three of them. All the built but unsold units are included in the auction.
The first three rounds of bidding are “Buyer’s Choice,” meaning that the bidding isn’t for one particular property, but for the right to pick any of the properties. That’s where it gets complicated. John DeMato, the CEO and president of the Westmont-based Global Real Estate Auctions, explains that on the block are some units that are finished and some that are not; some finished units that are rented out and so provide an income stream; and some units that are not only finished but fully furnished. The winning bidders in each of the first three rounds can sort through all those options and pick what works for them.
The three chosen properties will be sold absolute—which means the sellers will accept whatever price the auction turns up. The Diamond Point townhouses were originally priced from $389,000 to $499,000, and the cottages were $379,000 and $389,000. There is no minimum opening bid.
After the first three rounds, DeMato says, the developer-sellers will decide whether to proceed with more rounds of absolute sales or to start selling with a reserve, where the seller holds the right to accept or reject the final bid within a specified number of days. But they can also call off any additional auctions if the first sales “aren’t at price points they like,” DeMato says.
The developers, according to DeMato, still intend to build the rest of the planned townhouses and condos. “Their purpose is to stimulate the market, sell a few units, and get some money to the bank so they can get over this slump,” he says.
There is no way to predict what prices the successful bidders will pay, but DeMato points to one precedent. Last June, when he was with Inland Real Estate Auctions, he was part of the auction of 20 condos in the Light Harbor Preserve development, also in New Buffalo. Nine units sold, at an average price of $365,000, he says. They had originally been priced at $620,000 to $680,000.
The Diamond Point open houses are May 23rd, 24th, and 25th, from 11 a.m. to 3 p.m. Eastern time (that’s an hour ahead of Chicago time). The June 6th auction is at 1 p.m. (also Eastern time) at the Marina Grand Resort, 600 West Water Street, in New Buffalo. Interested bidders will need a bidder’s package. To get one, call 877-920-1326 or 630-920-1327.