CHICAGO — An investor who bought a 90-unit condominium project in Corpus Christi, Texas, from the Federal Deposit Insurance Corporation, resold them at auction a few months later and pocketed a $1.5 million profit. So why didn't the FDIC auction the properties itself and save taxpayers that money?
In fact, government auctions are commonplace, but ``not all auctions are alike,'' says Scott King, vice president of the J.P. King Auction Company. After being in the real estate auction business for 75 years, his company has learned how to structure auctions to bring the top dollar, he says.
The government, he says, insists on setting minimum bids and requires certified funds. Mr. King says both are unnecessary and only make potential buyers less interested in attending. Drawing people to an auction depends on the perception that bargains are available.
That means, as happened in Texas, that the government may get 40 cents on the dollar on the troubled condo project it had taken over, only to see someone else get 70 cents just two months later. ``They're leaving a lot of money on the board,'' he says.
King has auctioned 95 condo projects in five years, averaging 70 units each. From 500 to 1,500 buyers attended each auction, and 90 of the projects sold out. At his auctions, more than 50 percent of the units are sold regardless of price. And he takes personal checks.