Deer Lodge, a 187-acre property in Santa Barbara, Calif., was sold via auction on May 21. The massive estate boasts 13 sprawling structures, a vineyard, a tree house, a fort and a zip line.
Even more impressive is its pedigree of ownership throughout the past 123 years, including members of the John Deere family for seven decades. The most recent owner was Dan Burnham, a retired chairman and CEO of Raytheon Company. He and his wife Meg Burnham bought the property in 1997 from the award-winning comedian and actress Caryn Johnson, better known as Whoopi Goldberg.
Before the auction was held, four people had preregistered for it, and some placed pre-bids, says Mike Brady, listing agent of Santa Ynez Land Sotheby’s International Realty.
The price the house sold for will be revealed when the sale is closed in about 30 days.
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Once associated with foreclosures, auctions have become more popular among luxury homeowners in recent years as some business executives and celebrities, who often owe no money on their properties, choose to forgo the traditional list-and-wait method.
“Just like auctions of the world's finest art, cars and antiques, real estate auctions continually prove to be the smart way to buy and sell luxury properties,” says Laura Brady, president of Concierge Auctions. The auction house, which specializes in luxury homes, has sold 22 properties in the first quarter of this year alone.
Previously, it successfully auctioned houses owned by the singer and actress Cher, the former Arizona Cardinals quarterback Kurt Warner and the head football coach at the University of Alabama, Nick Saban.
One of the reasons that luxury homeowners opt for auction, Ms. Brady points out, is that “the property is one of a kind, so it is very hard to put a value on it.” Through auction, it can start at a relatively low price to attract more potential buyers. Properties auctioned off by Concierge Auctions have five to ten bidders on average.
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Mr. Brady says the Burnham family decided to sell through auction to look for national exposure for such a unique, high-caliber property. ”We are redefining luxury real estate marketing and auctions prove to be a strong platform,” says Mr. Brady. In the last five weeks, he has showed the property to 22 potential buyers from across America.
Another advantage of an auction is that it’s “time definite,” says Pam McKissick, CEO of Williams and Williams, a 110-year-old real estate auction firm headquartered in Tulsa, Okla. The firm, through its subsidiary Luxury Group Auction, auctions one luxury home every couple of weeks. A large number of its clients are seniors who live in the northeast and want to move to high-end luxury facilities. “Often times there is a waiting list for luxury nursing homes, and once they get accepted, they have a time frame to sell their homes,” adds Ms. McKissick.
Furthermore, auctions can be streamed online, allowing buyers all over the world to bid on a property, says Ms. McKissick. More bidders almost always push the price higher.
But not everyone interested in the property to be auctioned can participate in the bidding war. Ms. Brady says bidders are required to wire a deposit between $100,000 and $500,000 depending on the property in addition to a reference from banks or other financial institutions to prove their wherewithal. The money is refunded if they don’t have the winning bid.
For Deer Lodge, “the bidders are very discriminating, educated and influential. They look for quality in real estate—just like with fine art,” says Mr. Brady.
The property, originally listed for $14 million, sold without reserve, which means there was no minimum bidding price. Before the auction, Mr. Brady was asked whether he was concerned the highest bid might not meet expectations. “The quality speaks volumes. We do believe someone will pay fair market value,” he said.
Write to Fang Block at fang.block@dowjones.com