LuxuryRealEstate.com Week in Review

4/18/05 - Is a Home Auction Right For You?

By   E-mail author

By Jen Schaefer

On Thursday, May 19, at approximately 2 p.m. Mountain Time, former Dream Team member Karl Malone's elaborate log-and-stone Salt Lake City estate-which features an Olympic-sized outdoor pool with 100-foot water slide and a state-of-the-art gym with steam room and sauna-will be sold to some lucky buyer.
     
Curious about how the NBA superstar is able to predict the sale of his house almost to the minute? No, he doesn't have psychic powers. Rather, Karl's home is being sold through J.P. King Auction Co.-and because the auction is absolute, the house is guaranteed to go to the highest bidder when the gavel drops on auction day.
     
Karl is one of an increasing number of celebrities to sell their homes through a J.P. King auction, joining the likes of former Red Sox/Met John Valentin and country singer Barbara Mandrell. But a home auction isn't only for people with a famous name. According to J.P. King's report on current auction trends, the number of luxury home sales nearly doubled last year, an increase the company attributes to several factors. One is that auctions are a fast and easy way for baby boomers to liquidate inherited property. Another is a greater understanding of the auction concept resulting from eBay.
     
According to Craig King, president of J.P. King, the most successfully auctioned homes have several things in common. These include an anticipated sale price of a million dollars or more, a high-demand locale and a design and amenities with broad appeal (one example that comes to mind is a park-style water slide, a la Karl Malone).
     
If this sounds like your for-sale home, using the auction method to find a buyer has many benefits, says Craig. One of the biggest is that an auction provides a solution to the often sticky problem of establishing a realistic market price for a luxury property. "In the case of Karl Malone's house, as with many other upscale properties, the house was built to suit Karl's needs, so it is difficult to calculate what it is worth to another potential buyer," explains Craig. "As a result, the seller runs the risk of asking too much or too little. An auction eliminates pricing problems because it establishes the real market price that day for the property."

 Other benefits to the seller include:
* Greater control over the sale process. Setting the auction date, terms and conditions allows you to make plans accordingly. For example, says Craig, "When Barbara Mandrell auctioned her estate in Nashville, she was able to purchase a new home beforehand because she knew exactly what day her former home would sell." Another plus: Since the property is shown to prospective buyers on one or two pre-determined days, the seller doesn't have to worry about showing the house on multiple occasions with little notice.
* A contingency-free sale. An auction virtually eliminates stalling tactics, insincere offers and contingences (such as approval of financing) that plague many sellers using conventional methods, so you are assured an on-time closing of your property.
* Maximum exposure. The 60- to 75-day time period of most auctions permits a more aggressive marketing strategy, providing maximum visibility for your property. "In addition to local, regional and national marketing methods, we use a proprietary database of more than 250,000 people who have contacted us on past campaigns with their buying parameters," says Craig.
* Elimination of carrying costs. If your property lingers on the market for an extended period, it can become a serious drain on you and your equity. Mortgage payments, maintenance, taxes and insurance can add up to thousands a dollars a month for some properties. An auction helps you eliminate those costs and will often net you the highest price possible.

Auctions Aren't Just Good for the Seller
Are you looking for the luxury home of your dreams? If so, the auction method has many benefits for you, too. What's more, even if you end up being outbid, attending an auction is a fun and exciting way for serious bidders to spend the day. "Auction day is an event," says Craig. "VIP treatment is provided for bidders, with such amenities as valet parking, hors d' oeuvres and live music depending on the nature of the property being sold." He adds, "Our auctioneers are among the best in the industry. Most auctions are over in 10 or 15 minutes."
     
Following are a few of the benefits a home auction has for prospective buyers.
* Commitment to sell. Since you know the seller is serious about selling the property, you can make an offer with confidence.
* Availability of information. "Because bidders should make all decisions by auction day, we make it easy to obtain detailed information well in advance," says Craig.
* No risk of overpaying. With traditional real estate methods, you may worry that you'll pay too much for a luxury home. But with an auction, you know what other bidders are willing to pay, so you know the sale price reflects the true market value.
* Fast closing. "99 percent of the time, sales are closed within 30 days," says Craig.
* Opportunity for a bargain. At every auction, there is the potential for getting a great deal. This feeling of suspenseful excitement adds to the electrified atmosphere on auction day.

For more information about J.P. King Auction Co. and to view some of the amazing properties that have been successfully auctioned, visit www.luxuryrealestate.com/jpking.html. Karl Malone's house can be viewed at www.luxuryrealestate.com/69267.

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