50 Palazzo Condos Sold at Auction on Panama City Beach

by August 2, 2008 • 24 comments

That’s right, you read correctly. 50 condos sold at the Palazzo Auction held on Panama City Beach totaling over $17 million in sold real estate. “The numbers were a little low, but we sold a ton and I feel confident that we did better now than we could of, say, six months from now”, said Developer Ron Durham.

What started out as a cloudy, looks like its gonna’ rain, day turned into a beautiful, not too hot with gorgeous deep blue skies, day. In attendance were over 250 people with 126 registered bidders from 14 states and Canada. Required at registration was a check for $15,000 per one-bedroom condo, $25,000 per two-bedroom condo, and $35,000 per three bedroom condo.

One of the buyersThe crowd was slow to start moving with only a small handful of bidders picking up the first couple of condos, but as the auctioneers began dictating the price by what the last highest bidder was, the feeding frenzy began. Upon determining the interior 1,475 sf 3 bedroom condos would sell for no more than $295,000, they starting selling them to anyone that would take one. After the 10% buyer premium, that is $220/sf – not too shabby.

With whistles blowing and auction assistants screaming in frustration, they fought for particular units they were wanting for their buyers, Imagine a school of great white sharks fighting over 10 tons of whale carcass.

“Tell him to stop, cut it off!”, Durham said, “we’ve got to see where we are, we can always come back, we just need to see where we are.” Ten minutes later, they resumed selling at fixed prices – $295,000 for interior 3 bedroom condos, $270,000 for 2 bedroom condos, and $220,000 for 1 bedroom condos.

Nancy Bender was overjoyed in her purchase. Upon winning her condo, she excitedly screamed and waved her hands in the air. “I’ve got friends and family that think my big house on the beach is an inn – I’m moving out and moving into my new condo so I can have guests when I choose, not when they choose.”

The least expensive exterior 3 bedroom 3 bath condo sold for $425,000. With 1,874 square feet, that comes to $227 a square foot before the buyer’s premium fee and $249 a square foot after the fee. The least expensive 3 bedroom interior condo sold for $295,000.

The least expensive 2 bedroom condo sold for $270,000. At 1,345 square feet, that is $200 a square foot before the premium fee and $221 a square foot after the fee.

The least expensive 1 bedroom condo sold for $220,000, at 1,026 sf, that is $214 a square foot before the premium and $236 per square foot after the premium.

Upon asking what his motivation was for buying today, one buyer said, “It was merely a mathematical equation, what were they originally sold for, what are they worth today, and what can I actually buy one for, I got a reasonable deal. This is an excellent long term buy.”

All in all, I’d say the auction was actually a great success. I’d say $220 to $245 a square foot is a great deal for a developer and a buyer to meet at. I actually find this very encouraging for this area.

High resolution pictures available upon request, email jason at pcbdaily.com.

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1 lbresort3 August 3, 2008 at 8:47 am

It was a good event. Loved watching the buyers scramble for the units they wanted. If you look at the sales sheets, an exterior 3 bedroom unit sold for $801k before the auction was even considered. The eastern ones went for $475k and $425k. Almost half price.

The view on the east side is really good with the corner windows looking all the way down the beach to the pass and the bay.

Looks like a well built project compared to others that are on the market.

The only draw back is the property fees. They look high compared to the size of the property. Maybe with alot of new owners there can be a reduction in fees by installing a good management program with reduced overhead.

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2 Carla August 3, 2008 at 11:48 am

What intrigues me is the developer’s initial comment: “We did better now than we could of, say six months from now.”

What does this mean?

Does he think the prices are going down even more? That’s the implication, isn’t it?

I wonder what he’s basing this belief upon? Any ideas out there?

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3 Nathan Abbott August 3, 2008 at 12:34 pm

The auction was a big success. It proves that if you price the units right, they will sell. Hopefully this will lead sellers to be more realistic to the current market conditions so we can sale the excess inventory on the market and look forward to a brighter future. Please visit the Palazzo website if you are interested in purchasing a unit from the developer. http://www.PalazzoCondominiums.com
We will try to negotiate a good deal for you. There are approx. 20 units left to sale.

Sincerely,
Nathan Abbott
Palazzo Sales Team
http://www.PalazzoCondominiums.com

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4 steve August 3, 2008 at 12:49 pm

I believe we are at bottom, as all new construction has halted, baby-boomers will start looking at the beach for retirement and second homes(especially low priced quality like PCB), and that airport is coming! I have three (just picked up Calypso & Shores of Panama) and want to buy more, as the prices are just so appealing. Rents cover all costs, i.e taxes, fees, insurance, utilities, and when the market turns up 2 years from now the gains will be realized and the rents and equity will trend up. There is hopefully too much pent up demand for the market to fall further, so I believe tred along for awhile and then the move up.

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5 Little Fish August 3, 2008 at 1:01 pm

Anyone know whether or not any of the west end 3/3′s were sold? Price?

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6 Nigel August 3, 2008 at 4:03 pm

Steve,

I disagree with you. With the prices coming down yes condos are being priced more attractivly but few are breaking even. Many of these condos have management fees in the $400-$800 range a month before mortgage, taxes, utilites, and booking fees.

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7 steve August 3, 2008 at 5:14 pm

Nigel, I pay cash . . read my post earlier, as I stated what it covered, which was NOT a mortgage, but in order to see your investment return be positive, one had to wait for a recovery and increased rentals and equity. All expenses are covered by the rent after mgmt fee. All three of my condos were booked over the summer and have been booked for this winter.

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8 lbresort3 August 3, 2008 at 6:48 pm

I think that the “bottom” depends on the condo, location, and community property. For what we bid on a east side 3 bedroom unit a Palazzo, we could not get a 10 year old 3 bedroom at Long Beach Resort that is still the best condo project on the beach. And the Palazzo is new and easier to get ready for renting.

As far as rental income, we will not low ball like a lot of people did this year at the really big units because the renters that are out for the cheapest usually do the most damage. If you are barely making it now, you won’t last til next season.

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9 Nathan Abbott August 4, 2008 at 1:58 am

Steve,
Please feel free to call me anytime later in the week as we will have an updated list from the developer on the remaining units left to sale at Palazzo with attractive prices for the buyer.
Sincerely,
Nathan Abbott
850-685-2851
Palazzo Sales Team

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10 Jason Koertge August 4, 2008 at 7:40 am

Thanks, Nathan, for keeping us all up to date.

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11 Nathan Abbott August 4, 2008 at 9:01 am

All of the West end units at Palazzo are sold and there are two East corners left. There may be some customers who bought preconstruction units at Palazzo that need to sale at a discounted price. If there is anyone who is interested in purchasing a unit, I should have an updated list of inventory with pricing by the end of the week. Please feel free to call me anytime I can be of service to you. The developer and really appreciate everyone’s positive comments and interest in Palazzo and feels the auction was a success even though they sold below replacment cost. Palazzo is a quality development and the units sold because the developer was realistic to the current market, it is in a great location, and is built with the finest materials. If other developers price their units right, it shows that we can sale a huge bulk on inventory which will help everyone with future resale. Thank you for your support!

Sincerely,
Nathan Abbott
Palazzo Sales Team
nabbott@resortquest.com
850-685-2851
nabbott@resortquest.com

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12 Craig August 4, 2008 at 2:15 pm

I am working with a Buyer who is interested in one of the east end units. Does anyone know of anyone willing to sell one of theirs that the got at auction?

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13 Ron Durham August 4, 2008 at 2:53 pm

The PCB Daily article referenced 1 bdrm units selling at $220,000; the 2 bdrm units selling at $270,000 and the 3 bdrm interior units selling at $295,000. These amounts did not include the 10% (buyer’s premium) commission added to the bid prices noted above. The actual sales prices were $242,000 for the 1 bdrm units; $297,000 for the 2 bdrm units and $324,500 for the 3 bdrm units.

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14 Jason Koertge August 4, 2008 at 3:33 pm

Sorry for the confusion, thanks for the correction, Ron.

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15 Barbara August 5, 2008 at 6:35 am

The developer’s comment about doing better now than six months for now could very well pertain to his debt service on the project and his bank. The longer he holds on the more he owes the less he walks away with. Mathmatics or just ask him. He can’t be that hard to contact.

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16 Karen K. Smith August 5, 2008 at 7:06 am

I was glad to see an auction company follow through with their auction with absolutes as promised. I was wondering how many would actually be sold and they surprised me. As far as cash flow for rental property that has for many years been a distant memory. Most of my customers use the rentals as a means to help with some of the expenses but unless as Steve does you pay cash your payments exceed what you would get in revenue. What you do have is an incredible place to live on the most beautiful beach in the USA with some of the friendliest people you will ever find anywhere. The beach has had my heart since I was very little girl and not much of anything has changed in over 40 plus years. To all of you who bought at the auction, Welcome to our beach and love it as much as we do!!!!

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17 Jthorn August 6, 2008 at 1:45 pm

I have been buying and selling real estate on the gulf for 10 years, and my associates and I are are all hearing it will be at least 5 years before the market bounces back. Yest it is a good time to buy if one can afford to cover costs and association fees, but those looking to make a “quick dollar” or relying on renters to pay their bills may have some trouble in this market.

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18 jamnolfin August 6, 2008 at 3:54 pm

Long Beach resort is the best development on the beach? What are you smoking, I want some. I think Calypso because of location. Whats LB close to, Walmart?

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19 kbain August 7, 2008 at 7:16 pm

Anyone else on this post that was a preconstruction buyer??? How do you feel?

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20 Chris Arnold August 12, 2008 at 10:24 am

It may be reasonable to assume that different condos will be the best solution for different buyers. It also may be likely that different condominiums will bottom at different times and that the bottom should be different for individual floor plans in a given building. It may be more likely that condos that rent out well may be more likely to bottom before ones that can’t differentiate themselves from the rest of the rental market. Many of us own condos on the beach. I made purchases as recently as last year. I am happy with my purchases, but have the clear understanding that in this market some could possibly sell for less than I bought. I also understand that when the market does turn that I will likely benefit from that. In the mean time I am very happy with my floor plans and choices. I am also very happy with my rental income which is key for me. I don’t like large carrying costs. I guess my point is that people saying the market might go down is not what is lowering your condo values. Those that can’t afford there condos (and there are plenty of them) are going to need to sell them one way or another. Until we absorb that supply, you are not going to see a rebound.
Another small suggestion would be to ignore original asking prices verse what they are actually selling for. I can take an apple and say that its original cost is $10. Now I sell it at $6 and look at your savings of 40%. If someone has similar apples down the street selling at $5, did I really get the deal of a lifetime? For those of you who are wondering, my apples cost so much because the overlook the ocean. :)

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21 Kevin Osman August 12, 2008 at 12:40 pm

Nicely put Chris. I especially like the apples comment.

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22 san diego condos May 17, 2010 at 3:30 am

this post Gave me a lot of information I needed to know and I knew things I would have never guessed on my own.

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23 Lilia January 12, 2011 at 1:29 pm

I love the idea of travelling to my beach condo and just having to get crib rentals for my kids.

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