With the softening of the upper end of the real-estate market in many markets as of late, sellers are turning to a new approach to attract the attention of a larger pool of buyers — auctioning off their properties.
“Sellers are facing increased competition,” said Jonathan Miller, chief executive of appraisal firm Miller Samuel in New York. “Homeowners look for other ways to market, and auction offers compressed marketing efforts.”
There is no data tracking luxury homes sold through auctions, but insiders say that the business is picking up.
Concierge Auctions, a New York City-based luxury real estate auction house that has been in business since 2008, has sold 22 properties in the first quarter of this year alone. “A lot of clients understand high-end homes, like finest cars, cannot have limitations,” said Krystal Aeby, vice president of marketing at Concierge, “they choose auction as their first choice.”
“There are two things happening,” Trayor Lesnock, president and founder of Florida-based auction house Platinum Luxury Auctions, said: “First, auction is used by more brokerages and secondly, auction houses are expanding geographically and reaching out listing agents more aggressively.”
With the current market situation, auctioning off a property is not only for existing homeowners, but new luxury developers should also consider doing so, said Johnny Din, an adjunct assistant professor at the Graduate School of Architecture, Planning and Preservation at Columbia University.
“It’s a difficult market for luxury residences right now and owners are reducing prices,” Din said. “Any channels the sellers could use to market their product, they should take advantage of.”
According to Laura Brady, president of Concierge Auctions, the auction process usually starts with sellers and their agents calling auction houses or the other way around. There typically is a 30-day open house period. Interested buyers can prebid before the auction date while all bidders are required to fill out proper paperwork and make a deposit before bidding. Depending on the property, deposits range from $100,000 to $500,000. The money is refunded if they don’t have the winning bid. The auction can be done live or online. The highest bid will be accepted, but the price is not released until the home is closed in another 30 days.
Shown here is the living room of apartment 16A at 535 East 86th St.
Concierge AuctionsConcierge Auctions, for one, is auctioning off its first New York City luxury home Thursday: a 2,200-square-foot luxury apartment in Manhattan which was listed for $3.29 million earlier this year. The starting bid is $1.999 million.
The four-bedroom, three-and-a-half-bath apartment has historically protected, direct views of the East River through large picture windows that highlight an expansive living room, while the grand dining room features French doors leading to a generous terrace overlooking the 86th street cityscape, dotted with charming historic brick townhouses.
The luxury co-op building is just a block away from the Carl Schurz Park, the East River Promenade and Gracie Mansion, which is the New York City Mayor’s official residence.
“The seller has entrusted multiple properties to Concierge Auctions as an efficient way to sell,” said the Manhattan property’s listing agent, Joe Peraino of Douglas Elliman.
The Mediterranean-inspired estate is seen at night.
Platinum Luxury AuctionsAlso on Thursday, a Mediterranean-inspired estate in Fort Lauderdale, Fla. originally built for Dick Yuengling of the eponymous beer empire, is also calling for bidders through Platinum Luxury Auctions.
The property, located in Las Olas Isles, one of the most desirable waterfront communities, has a dockage that can easily host a 140-foot yacht, or several small-to-midsize vessels. It offers nearly 11,800 interior square feet, with six bedrooms, seven full and two half baths. There are two main living levels, with an additional entertainment lounge and terrace forming a partial third level.
The current owner, a pharmaceutical executive, is building a new home in Fort Lauderdale, according to Mr. Lesnock. The starting bid is $4 million, but the property was recently listed for $10 million.
While Mr. Lesnock acknowledged that luxury auctions are on the rise, he also believed that auctions follow the overall luxury market trend. “Auction is designed to reflect market price,” Lesnock said. “It is challenging to find buyers when the market is cooling off. ”
Write to Fang Block at fang.block@dowjones.com