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NEWS & PRESS

11.18.1996
WASHINGTON POST - The Wealthy Bid Farewell to Realtors

By Amy Argetsinger - Washington Post Staff Writer
As seen in The Washington Post
 
 
D. Duncan Smith came by helicopter to see Toad Hall one last time before the auction. In the year since he obtained the historic waterfront mansion in a $2 million impulse buy, it was only his eighth visit.
 
"My wife always wanted a place in Annapolis," the television and radio executive explained last week, chatting by the 25-meter indoor swimming pool that overlooks the South River. But, what with the house in the Baltimore suburbs and the farm in Western Maryland, they simply couldn't find the time to come here.
 
"It just never panned out," Smith said blithely.
 
So here he was, prepared to hand Toad Hall off to the highest bidder at a potential loss, in what has become an increasingly popular way for the very rich to buy and sell their very expensive homes.
 
In the kind of circles where time is money-lots of money-an auction provides a blisteringly fast way to bypass the tedious details of the regular real estate market.
 
"People like Duncan Smith don't worry about what he'll get for it," said William Bone, head of the Gadsden, Ala., auction house handling the sale. "He just ain't got much time to fool with it.
 
As Bone spoke, a musician improvised a light jazzy tune on an electric keyboard and a waiter passed around hors d'oeuvres. Potential bidders some in Italian-made suits, others in preppy sweaters-made their way to the open bar. It looked like a cocktail party, but this was business.
 
Bane's National Auction Group Inc. used to bring in a decent buck bringing down the gavel on things such as condos and powerboats, most of them owned by folks desperate to get rid of them.
 
Four years ago, National Auction was asked to handle the sale of a sprawling Texas ranch. It was sold to the Rev. Sun Myung Moon for $8.1 million. Then a Dallas doctor wanted to unload his luxury home it went for $2.2 million to a prominent restaurateur. Soon, calls were coming in from across the country. There was the pink mansion in Dallas owned by cosmetics magnate Mary Kay Ash $2.2 million). The 126-acre Ragged Island in the Chesapeake Bay $1.87 million). The Rehoboth, Del., beach house ($1.8 million).
 
For National Auction and other auction houses, the post-recession 90s have provided a surprising boomlet in "high-end" or 'unique" properties, what Bone pegs as "trophy" homes. He auctions about 50 of them a year, at an average price of $2 million.
 
In Anne Arundel County, an area with more than its share of waterfront vistas, rolling horse pastures and colonial cachet, Toad Hall was the fourth such trophy auction in the last year. Still, observers said, the mansion stood apart.
 
Built in 1820 and sitting on seven acres once owned by the family of Declaration of Independence signer Charles Carroll, the rambling 19 room country house features five spacious bedrooms, four full bathrooms, three fireplaces, two kitchens and a wine cellar. Out front is a long, tree-lined driveway and a children's playhouse; out back is the three-room guest cottage and a sandy beach.
 
The pool can be covered with a hard dance floor, which is what former owner William E. Brock III did when the ex-senator from Tennessee entertained George and Barbara Bush.
 
In October 1995, after his unsuccessful run for U.S. Senate in Maryland, Brock sold the place to Smith, the chief executive of Sinclair Broadcast Group, the seventh-largest TV and radio station holding company. Within 90 days, Smith reconsidered and put it back on the market.
 
In eight months, Toad Hall had drawn only one serious inquiry. That's typical for the market of lavish, high-priced houses, many real estate brokers said and it's a reason more and more of them are ending up on the auction block. Jerome J. Manning, head of a Boston auction firm, explained that in the traditional real estate market, it's difficult to set a price for a trophy house because there's not much to compare it with.
 
Auctions, he argues, are "the true test of the marketplace" for such properties. If bidding stops at $1 million, he said, "It is absolutely impossible for you to convince me that we did not just sell that at its full market value."
 
Around the pool, many seasoned observers in the crowd predicted a high sale price. "Betcha it'll go for $1.3 million," said mortgage banker Paul A. Watts, who came to the auction hoping to offer the victor a financing deal.
 
Wouldn't $1.3 million be a $700,000 loss for Duncan Smith? "When you get up in that kind of bracket," Watts said, Where aren't a lot of things that are real losses."
 
As auction time neared, auctioneer Bone's squadron of gracious, beefy faced men in suits and American flag neckties scattered throughout the crowd. Each hovered by one of the 10 registered bidders to help interpret the auctioneer's rapid-fire babble.
 
A whistle blew, and the auction started. In seconds, the bidding went from $800,000 to $900,000 to $1 million.
 
"Million one one, million one one, gotta million do we get a million one one," pattered auctioneer Eddie Haynes. With that, seven bidders fell by the wayside. There would be no bargains here this day.
 
Quickly, it came down to two men. On one side of the pool was James Kimsey, the founder and chairman emeritus of America Online. Gray- haired and slim, with a young woman by his side, he kept his eyes on the auctioneer, smiling as if amused to be at the center of attention.
 
"Million five fifty, million five fifty, do I have a million five fifty?"
 
On the other side, former real estate broker and mortgage company officer Gary Hart with the craggy face and thick head of hair of his political namesake plunged his hands in the pockets of his camel's hair jacket and craned his neck to check out the action in the Kimsey corner.
 
"Million eight, million eight, got million seven seventy-five do I have a million eight?" He got it, from Hart.
 
All eyes turned to Kimsey. He and his companion leaned toward each other and shared a laugh.
 
"One eight-fifty, I'm looking for one eight-seventy-five, one eight- seventy-five, isn't this swimming pool great?"
 
Kimsey shook his head and quietly uttered, "No."
 
Hart's dark-haired wife jumped in the air and planted a Lipstick stained kiss on her husband's cheek. Hart and Kimsey shook hands and smiled with the look of two men who share a joke that no one else gets. With the 6 percent auction fee Bone's commission Hart's price came to $1,961,000.
 
"They aren't concerned about square footage," said Bone, speaking of the typical trophy auction bidder. It gets down to who's the toughest, who's the heaviest.... It establishes the pecking order."
 
The house emptied quickly, but a small group lingered on the back porch to watch Smith's helicopter thunder off over the river into the setting sun. The vantage point provided a spectacular view, one that just might have belonged to real estate investor Ed Wilson, who came to Toad Hall in a leather jacket and jeans.
 
"I was going to bid," Wilson said thoughtfully. "But at the last minute, my wife said, 'I like our house better, honey."