Classic to auction 10 upscale homes at its Flying Horse development

Classic Cos., which has constructed thousands of homes in the Pikes Peak region over 20 years as Colorado Springs’ largest local builder, is doing something it’s never done before — auctioning some of its inventory of homes.

A sign of continuing tough times for the housing market  or a clever device to generate interest and sell homes?

It might be a little of both.

Classic has hired Sheldon Good & Co., a New York-based national auction company, to sell 10 upscale homes that the builder has constructed at its Flying Horse development on Colorado Springs’ far north side.

The auction takes place May 23.

Classic, both a builder and developer, wants to sell the homes because it  needs to pay some bills, company Chairman Jeff Smith said candidly.

“We just need to pay off some bank debt,” Smith said, declining to say how much.

The auction is not a sign of desperate times for the company, Smith insisted.

Classic suffered through the local and national housing downturns the past few years; at one point, Classic officials said they had laid off 40 percent of their 240-person payroll But Smith said Classic has contracts to build 53 homes so far in 2010  — right at its budgeted number for the year.

Still, the decision to auction homes is a by-product of the problems the recession and housing downturn created for homebuyers, Smith said.

Classic built 25 pricey homes as part of its Village of Sonoma, which is one of the neighborhoods at Flying Horse, east of Interstate 25 and North Gate Boulevard. About two-thirds of the 25 homes were sold in 2005 and 2006, Smith said.

But as the real estate market began to tank, he said, buyers who had contracted to purchase the remainder of the 25 Sonoma homes backed out of their deals because they couldn’t sell their existing homes.

Classic has been renting eight homes for the past 18 months, Smith said.

“This is a good way to engender some activity” and to pay off debt, Smith said. “The lending environment has been challenging over the last two years and continues to be. ... It’s just a business strategy to sell off some inventory.”

Years ago, auctions were thought of in a negative light — the widow at the courthouse steps losing her home via a forced sale, said Jim MacDonnell, Sheldon Good’s executive managing director.

Today, he said, developers, homebuilders and others are using auctions as a tool to spark interest.

“We represent developers all over the country and developers are clearly motivated to sell,” MacDonnell said. “This is just an alternate marketing concept. There’s no distress with Classic. They want to move some product.”

One of the properties to be auctioned is a more than 10,000-square-foot custom home that sits on Flying Horse’s Tom Weiskopf-designed golf course. Minimum bids for the home will be $2.6 million — a 41 percent price cut from Classic’s original asking price of $4.4 million.

Other homes will carry minimum bids that are substantial discounts from  their original asking prices.

“I think it’s a fantastic opportunity for people who considering buying at Flying Horse,” MacDonnell said.

Classic bought what was known as the Flying Horse Ranch in 1999; the city annexed the property four years later. Classic has built hundreds of homes on the 1,500-acre development, which includes the 200-acre Weiskopf golf course and the Club at Flying Horse.

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Contact the writer at 636-0228.