Luxury Homes Going Once, Going Twice, Sold at Auctions
Many of this decade's Gatsbys are finding that bidding is the best way to buy a palatial home
MACKINAC ISLAND, MICH. — Looking for a summer cottage roomy enough to entertain 500 of your dearest friends, with a stable for nine horses and three carriages? Or how about a waterfront Florida estate with a dock for your 145-foot yacht?
Check the local classified section, and you probably won't have much luck. The hot spot for high-end home-buyers is the auction block.
Once thought of as clearinghouses for run-down or foreclosed properties, real-estate auctions are increasingly becoming an accepted way to buy all types of homes in the United States. But many of the world's greatest Gatsbys are finding that high-profile auctions are the best way to pick up another trophy estate or two.
"Auctions are nothing new. The Roman Empire was sold at auction," says Bill Hall, marketing director for an upcoming luxury home auction put on by Higgenbotham Auctioneers International Inc. of Lakeland, Fla. "But you have to find the right buyer. Sticking a sign in the yard is not going to attract a buyer like that."
While the luxury home market is as strong as it's been since the heady days of the late '80s, buyers for multimillion-dollar homes are still hard to come by. And auctions also give the well-heeled a chance to see what's out there without traipsing to every corner of the country.
The Higgenbotham auction is being touted as the world's largest auction of international mansions - $100 million worth is on the block. Bids were due June 20, and company officials are still sorting out offers. Two may have already sold.
The auction's 10 mansions include a 12,000-square-foot, pink stucco "summer cottage" on Victorian-era Mackinac Island in Lake Huron and a $20 million grand chateau in Fort Lauderdale, Fla., called La Mansion de Papillion.
THE Higgenbotham auction is an extreme example, but Joe Keefhaver, executive vice president of the National Auctioneers Association in Overland Park, Kan., says auctions still represent "a fairly modest percentage" of the real estate sold in the US. "But it has grown over the last decade."
According to The Gwent Group, a real-estate research firm based in Bloomington, Ind., auction sales of residential, commercial, and agricultural properties in the US accounted for 8 percent ($42.5 billion) of all real estate sold in 1995.
For wealthy buyers and sellers, though, auctions give sellers the advantage of creating urgency and bringing the most buyers to the table, says Mr. Hall. "People don't want to wait three to six years to sell. It can cost about a half a million to maintain a $10 million house."
The current Higgenbotham auction gives owners the right to reject the highest bid. And what owners want for a property and what buyers are willing to pay may not jibe any better at auction than it does with a traditional realtor listing.
Mr. Keefhaver says "absolute auctions" guarantee that the highest bidder wins. "The absolute auction tends to get more money because it ... comes across better to the public."
Auctions also offer a level of excitement that appeals to some buyers. During a live-broadcast auction of a Kentucky thoroughbred farm, the estate sold for $19.4 million. It was listed at only $10 million.
"The opening bid was $15 million," Hall says. Every time the camera came on, the bidding went wild.