Did all the properties sell at last Saturday’s Hawaii Life/Premiere Estates auction of land and homes? Not yet. Was the multi-property auction a success? One answer is that time will tell, as the auction is on-going until December 30th. Another answer is that there are auction buyers, sellers, and agents on the Big Island, Molokai, and Kauai whose properties are in escrow or already closed, so they would have to say the auction worked for them.
Or take my listing that is in the ongoing auction. This oceanfront acreage with a darling cottage has had a tremendous number of showings and fielded several offers. We felt the auction would take our marketing and exposure to the next level, so we could sell by the end of the year. Tracking our stats on the Hawaii Life website alone, I can see that the property was viewed 276 times in September; 502 times in October; and 1,664 times in November. I’ve run print ads in glossy real estate magazines with absolutely no jump in phone calls, showings, or on-line interest!
On-going auction: 29 acres, cottage, unobstructed views, horse and farm property (MLS# 241049)
The interested reader can find dozens of blog posts relating to property auctions for luxury homes and land here on the Hawaii Life Real Estate site. The disciplined reader who starts at the earliest and reads in chronological order will find that, as an agent and observer, I’ve moved from a skeptic to an enthusiast to a seasoned veteran.
Hualalai and Kukio Real Estate Auctions—Success
The Hualalai Resort and Kukio luxury property auctions last year garnered a great deal of national press because of the celebrity angle: Cher’s house for sale! Were these auctions successful?
- From a buyer’s standpoint, some of the properties, especially Kukio homes sold “absolute” with no reserve, seem to have been good buys. Answer: Yes, if you are a buyer and know your comps.
- From a seller’s standpoint, their properties sold that day; other properties in the same neighborhoods that were on the market in January 2010 are still for sale as I write this in December 2011. Answer: Yes, if you are a seller and are committed to selling NOW.
- From an agent’s standpoint…well, let’s just say a few months later I got a call from prospective buyers who had come to the Big Island attracted by the auction publicity. They were not the successful bidders that day and although the auctioneers and agents showed them alternative, non-auction properties, they decided Kukio was perhaps not the best fit for them. But it left them with a taste for buying a home on the Big Island, and they flew over a few months later to look at the other Kohala Coast resorts with me. Answer: Yes, if you are a Hawaii real estate agent looking for ways to bring national attention to your market.
Kolea Home Auction—Success
Six months ago, my conclusion about this year’s auction at Kolea was that it had not done the sellers of the oceanfront home any favors. As of last week, I believe I was mistaken. The auction was a success, but it was only possible to evaluate in hindsight.
At the time of the Kolea home auction, which was an absolute auction with no reserve price, I felt that the presence of two neighboring homes that were on the market as bank-owned properties after foreclosure put a cap on the bidding price. One was already offered for an asking price of just under $4 million. The successful bid on the nicer home on Lot 7 in the auction turned out to be $3,850,000 (also keep in mind that in auctions, whether foreclosure or luxury auctions, the buyer pays an “auction premium” on top of their bid price). At the time, this seemed to be a disappointment, well below expectations.
However, Kolea Lot 7 was auctioned on March 21 and closed in July. The REO (foreclosure) on Lot 13 that I continued to believe was a best buy finally reduced its asking price to $3,695,000 in August…the bank accepted an offer in October and it closed this month for $2,750,000. In retrospect, the auction sold the house on Lot 7 for $1 million more for a smaller home, 7 months faster! And the house on Lot 4 is in escrow with its asking price reduced to $3,400,000.
Or to put it another way…buyers were already saying that these homes were valued lower than even the bank seller’s reserve price (the bank was getting and turning down solid offers that started with a “3”). An auction simply makes the demand curve more explicit.
I believe that once real estate buyers, sellers, and especially AGENTS become more familiar and comfortable with the property auction process, the more valuable a tool it will become…although not for every property. For sellers who want to sell now at what the market will bear and be sure they are not leaving money on the table, an auction makes sense. For buyers, it is still a chance to get a property at the bottom of the market. I have clients kicking themselves that they sat on the fence watching the Kolea homes and now will not have another opportunity at auction or foreclosure pricing.