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PLAYA DEL REY, CA-An auction conducted by Los Angeles-based Intellimarket sold 39 of 41 units at the newly built La Playa Court condominiums at 8238 W. Manchester Ave. in one day recently, and the L.A.-based auction firm hopes to expand on its success in moving condominiums by conducting auctions of distressed commercial assets. Dan Lee of Intellimarket tells GlobeSt.com that the company sold the La Playa Court condos on behalf of El Segundo-based GTO Development, which built the project from the ground up after razing apartments that formerly were on the site.

The auction sold $20.6 million worth of condos at prices ranging from $448,800 to $746,640, with several of the units selling at more than $100,000 higher than the minimum bid price. On average, they sold for about $60,000 more than the starting price. “The home that had the least appreciation still sold for $18,800 over the asking,” Lee notes.

Lee also notes that condos were sold via a simultaneous electronic auction, a bidding system that allows prospective buyers to view the highest bid that has been submitted on each home or condo unit at one time, rather than one at a time as in a conventional sequential auction. He says that buyers and sellers alike have embraced the simultaneous auction system, which employs a large screen where all of the properties and the highest current bid for each property are displayed on the screen at one time. This differs from a conventional, sequential auction in which homes or condos are sold one at a time, from first to last.

Lee points out that one of the biggest problems buyers face in a sequential auction is that, since they are often interested in three or four properties–and usually have a favorite that’s first on their list–they can never be sure if they would be better off bidding higher for the unit that is being auctioned at the current moment or waiting for a unit that is farther down the list.

By showing all properties and all high bids at one time, the simultaneous auction provides bidders with crucial information to help them decide whether to bid higher on a particular property or switch their bidding to a different unit. As Intellimarket’s web site points out, “With full transparency to the pricing of all assets, prospective buyers make educated and confident decisions when placing their bids.” The web site also notes that giving the buyers the opportunity to bid on multiple items and switch their bids to different items results in a higher volume of bidding, which produces better returns for the seller.

Lee explains that Intellimarket co-founder Bill Stevenson, who was co-founder and former president of Beverly Hills-based Kennedy-Wilson, found in his 20 years of conducting sequential auctions that buyers typically were unhappy with the sequential bidding process and sellers did not maximize their returns. In 1997 Stevenson, in collaboration with Caltech professor Charles Plott, created the system that Intellimarket employs.

Intellimarket’s next step is to expand into auctions of distressed commercial assets via a system known as the Combinational Auction Method, or CAM, which is designed for commercial properties. The CAM system allows bidders to either submit single bids on individual assets or single bids on portfolios or combinations of assets.

“The CAM system, in real time, can calculate whether the individual or portfolio offers are higher,” Lee says. He says that Intellimarket is pursuing the CAM system in discussions with lenders and mortgage brokers, hoping to apply it to the growing number of distressed commercial assets that are expected to hit the market in the coming months and years.

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