Auction aficionados are well aware that each of the public administrators in the city’s boroughs holds auctions usually three or four times a year to unload properties of owners who died without a will.
Every time I publish a post about an upcoming auction along with the minimum bids, I can count on Internet chatter to the effect that the apartments and townhouses going on the block don’t add up to bargains. To commenters, the minimum bids invariably seem too high.
I got to wondering how the public administrators decide on the minimum. Kings County Public Administrator Bruce Stein characteristically would not come to the phone.
More accurately, one “Raymond” in his office, who identified himself as “an investigator” gruffly told me, “We really don’t give out that information over the phone.” Right. So much for serving the public.
But the offices of Queens County Public Administrator Lois Rosenblatt and Manhattan’s Ethel J. Griffin were helpful, disclosing that they decide on upset prices in more or less different ways.
Susan Brown, deputy administrator in Queens, told me that her boss first asks appraisers for their assessment of the value of the properties and then sets the minimum bids at a price that is 25 percent lower.
In the event there is a mortgage on the orphaned property that is higher than the 25 percent discount, Rosenblatt will take that into account. “We will never sell for the less than the principle amount of the mortgage,” Brown related.
The process in Manhattan also starts with an appraisal. But the office’s Patricia Brim says that the appraised value is just the starting point for the public administrator.
According to Brim, Griffin weighs issues such as the housing market at the time, the neighborhood, the building’s condition and so on, though an appraiser is supposed to take those factors into account.
Whether the resulting minimum bids represent a bargain, then, is essentially anyone’s guess.
Also debatable is whether an appraiser’s number is the most reliable one.
Check this blog soon for my thoughts on why an appraiser’s estimation may not be the best gauge of an individual property’s market value.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022