What happens when an ex-managing director of Fortress hedge fund teams up with Sotheby’s in a real estate venture? Well, if you are switched on and know thy market you can probably guess – the vultures are leering!
George Graham, formerly of Fortress’s Drawbridge Special Opportunities Fund, joined a real estate auction house last month. The house works closely with Sotheby’s (BID) International Realty in order to sell off luxury homes.
As CEO of Concierge Auctions, (founded in 2006) Graham is looking to cash in in the luxury real estate auction market. He said: “There is a pipeline of multimillion-dollar properties that are underwater. In most of these areas the homes aren’t selling. There’s a multiyear supply.
So the pitch to a seller is simple: Tell them the home won’t sell for several years and in order to make any money, sell it at auction to get something.
The real focus for Concierge is on the lenders. When homes go into traditional foreclosures, banks usually have to carry the cost, therefore lenders are more open to negotiating short sales.
Graham says that home sales have stalled giving auctions free reign to claim their own price in the high stakes. He said: “You get market value without dragging out the process.”
Concierge is hoping Graham’s past in the industry will be beneficial and help to generate a substantial amount of business.
In July this year Concierge auctioned off a Boca Raton, Fla., mansion owned by the head of private equity firm Royal Palm Capital Partners. Having been on the open market for three years, the property price was cut from $24.9 million to $21.9 million. The final price hasn’t been revealed yet since the deal is still ongoing but it probably won’t cover the mortgage, said to be $12.5 million.
Photo credits: Abi Skipp via Flickr