Do I Hear $20 Million?

03/22/2005
Do I hear $20 Million?

Page 86 - VACATION HOMES - Spring 2005
ROBB REPORT

If there is one trait that Auctioneers must possess, it is unbridled enthusiasm. The best Auctioneers have it in spades, especially when the topic is the surge in popularity of Auctions as a tool for selling high-end Real Estate. Business is not only good, it is positively booming.

"The stigma that an Auction is the last resort of a distressed property is long gone," says one Alabama Auctioneer. "Owners of Premier Real Estate are now turning to Auctions as a first choice when it comes time to sell," says the President of another Auction company.

Notable sales include a Barry Berkus designed Lake Tahoe waterfront mansion won on a $10.7 million dollar bid by San Diego Chargers Executive Michael Spanos. And last fall a corporate investor paid more than $28 million for a 44,000-acre ranch in western Colorado.

Why are high-end Auctions so hot? "They create sizzle. They can often draw a critical mass of prequalified high-rollers willing to pay cash on the barrelhead", says the head of the Gwent Group, a firm that tracks the Auction industry. According to Gwent, property Auctions, both commercial and residential, may have brought in nearly $60 billion in 2004 - more than fivefold increase since the 1980's.

Another sign of growing clout in Auctions: The National Association of Realtors (NAR) has added Auctions as one of its specialty skills for associates. While Auctions now account for only about 2 percent of all residential sales, the NAR predicts that number could increase to as many as one in three sales over the next decade! As if anticipating demand, the National Auctioneer's Association has grown from 6500 to 7000 over the past year.

One reason that owners of high-end properties are starting to prefer Auctions is because "We don't mess around. Things happen, and they happen fast. From the time an owner calls us, to the time they have money in hand can be as quick as 60 days." If you can sell your place any faster than that, then you either don't need us, or you undersold it, laughs a Nevada Auctioneer. Most big ticket property sits with a Real Estate Agency for months to years at a time.

Auctioneers say they can devote more personnel to a single sale than a typical Real Estate Office that has fearfully competitive agents. An Auction company can put as many as 50 employees making telephone calls and drumming up interest in a property. Many better Auction firms have enormous lists of qualified previous buyers that are able and willing to put up hard cash just for the privilege of bidding at the fair market value Auctions.