BOSTON GLOBE - Residential Auctions can bring Fast Action
By Mark Wagner, Globe Correspondent
As seen in The Boston Globe
Bourne, MA - A cool, gray October day. A crowd of 125 well-dressed people stood idle on an elevated acre of land above Cape Cod Bay at Sagamore Beach. On this day there were no antique golf clubs or lawn chairs for sale. Only the house itself, a sprawling, many-gabled, Sagamore Beach house. Thirty-three registered bidders stood with bidder's cards in hand waiting for a shot at a dream.
The crowd was subdued and intense. Some had come from as far away as Virginia. They stood in a semi-circle on the lawn of the well-appointed beach house following the commands of the barrel-chested auctioneer. A video camera swept the crowd.
"The sellers of this house opted for an auction for time," recalls Bob Malcolm, the Cape Cod Realtor who convinced his clients the owners of this stately property, to sell by auction.
"For time. He sells and he has the freedom to do something with his life other than trying to sell a house. There was a risk. It takes a special person to do absolute auction. But the quality of the property was such that absolute auction creates a sense of urgency. We knew we'd get some excited bidders.
Malcolm and his clients collaborated with Jerome J. Manning and Co. Inc., auctioneers of Boston. After 90 days of intense marketing, it all came down to two minutes.
"As is. Where is. With all faults," Manning called out. Two minutes of intense competition later the beach house sold for $445,500 a figure well above the listing price, and above any negotiated price the owners had hoped to get for the property.
"It was the kind of house the town is proud of," Jerome Manning offered. "Auctions conjure up images of fire sales, the farm auction, properties in distress.
"In today's market, blue-chip properties can get better prices and faster results at auction Auctions create competition among qualified buyers and move properties quicker than the listing method " Manning said.
Those negative images grounded in America's past are becoming unfounded in today's changing real estate market. Consider these numbers from Gwent Group, an auction consulting firm in Bloomington, Ind.
In 1995, more than $42 billion of real property was sold at auction. Of that 16 percent was residential property. These numbers are more than six times the amount sold at auction in 1980.
Assuming this same level of growth by 2010 nearly $160 billions real dollars will be passing through auctions.
Manning, who has grossed near $1 billion in sales in 20 years of auctioneering, claims the auction method is taking over the blue chip and unique property market.
"It's becoming a regular occurrence. I receive a call from the owner of an executive home, or a property that is very unique. They have the property listed with a real estate broker but want to consider the auction method. Why? Because they have a specific date they want to sell by, and need to know they have that money in hand," Manning said.
Auctioneers like Manning share commissions with the listing broker, making the sale a win-win situation for auctioneer, broker and seller.
"Realtors have the listings," Manning says." In most of these instances, we would not have known about the listing if not for the Realtor. This is why we offer commissions to referring agents, buying agents and listing agents. Half a loaf is better than none."
In the unusual, specific and blue chip property market, owners and brokers are increasingly using the auction method of sale to move properties that the usual process of listing and showing and waiting can't move in a given amount of time.
And so the beach home at Sagamore Beach was the perfect subject for auction. It enjoys views up and down the coast from Provincetown Light to Boston. When the owners decided to sell, this past summer We hoped to avoid the contingencies of listing, waiting and finding a qualified buyer.
Bob Malcolm in collaboration with Manning, convinced the owners of the Sagamore Beach home to sell at auction. This became the second time this year J. Norton Realtors, the office from which Bob Malcolm sells, sold a highend home at absolute auction on Cape Cod.
"It is extremely risky, yes, but the seller gets his money on the day of sale. And the property might otherwise sit on the market for two years or more. They have the property off their minds and the money in the bank In both auctions this year, we got a higher price than our anticipated sale."
Paul Saperstein is a Boston Auctioneer who has been at the auction business for some years as well. He agrees that the current, listing, show and wait markets can rob sellers of some time and money:
"Unless there is a real impetus for a real estate broker to close a deal, often a seller hears 'tomorrow, tomorrow, tomorrow.' A contingency might spring up, killing the deal. These familiar refrains and snafus can last into the years." Says Manning, "If you have the right property for the right market, there's no tricks involved. The property moves quickly for between 86 percent and 126 percent of its appraised value. Rather than carrying one, two or three years value on a listed property, an auction converts a property to working value in sixteen weeks. And an auction is a true market forum.
In the circles where time is money, of where a moving date or job change looms large, auctions might very well be the most profitable way to move a property.