A narrow three-story house at 537 Hancock Street in Bed Stuy, pictured above, with a foreclosure judgement against it of $334,279, sold for $900,000 at auction in December.
A three-story three-family house at 284 Schaefer Street in Bushwick, closed for $910,000 that month. Close to the cemetery and apparently built in the early 20th century, the house had a lien of $10,702.
Townhouses in Bed Stuy, Crown Heights, Bushwick that would have sold for $200,000 or $300,000 in 2011 are now going for $600,000 to $900,000 at auction — tripling in four years. (That is for average houses, usually three stories and about 3,000 square feet.) The prices of large commercial properties have also risen.
Prices started to skyrocket at the end of 2012. By 2014, auction prices of many properties drew close to market rate prices, with little to no discount.
One reason, according to one auction veteran we spoke with, is the pool of buyers is increasing, because online info makes the auctions easier to find.
“New investors plus end buyers coupled with the recent steep increase in Brooklyn property values has made getting something cheap at the auction almost impossible,” Mordy Getz of Transition Acquisitions told us. The Williamsburg-based company specializes in acquiring and improving distressed residential and retail buildings in New York City.
“Once upon a time, auctions were a place for sophisticated investors,” he said. “Investors had to physically go down to the county clerk and search newspapers for upcoming auctions. There are two asset classes at auctions: Townhouses and investment properties. The fact that only sophisticated investors attended caused the price of both assets to be very cheap at auctions. With the Internet age more and more people easily find the info thereby increasing the pool of buyers. That in itself is pushing up the prices.”
He continued: “This public info has even brought some end buyers into the game for townhouses. End buyers always pay a premium, more than investors/flippers. That has caused townhouses to go for full price lately. Investment properties have also become more expensive due to the large pool of investors.”
Considering the properties are purchased blind, with no site visit or tenant info available, “it’s crazy that auction prices became so high,” he said. “Add the adrenaline rush one gets from bidding — and you have a bunch of drunk bidders,” he said, speaking metaphorically.
Photo by Christopher Bride for PropertyShark