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Discusses the options sellers and buyers of luxury real estate have when it comes to luxury property auctions.

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Gary Gilbert

Gary Gilbert

I have been involved in multi-millions of dollars worth of luxury real estate auction transactions advising both sellers and buyers.

Art, Cars and Luxury Home Auctions.

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Monday, 11 June 2012 Category Luxury Property Auction

Happy Monday to all. Today, let's take a look at a common bond shared by art, cars and luxury homes. Of course I'm referencing that fact that all three of them often use the auction component as a sales tool.  Sure, all are sold via the traditional method as well but for the most part, especially for high-end art and collecible cars, the auction method is the preferred method of sale. Now I'm no art expert but I do know that when a Renoir, Picasso or Dali piece is offered, it is not placed in a window somwhere with a price tag on it but instead is offered at auction. The same goes for vinage and collectible cars which are often sold at something like the Barrett Jackson auction in Scottsdale.

So, why would a luxury home be any different? Well for starters, there are many, many more of them, a simple supply and demand scenario.  However, by offering a property at something like a luxury real estate auction, the home takes on a different perspective in the minds of buyers.  A deadline has been created forcing affluent buyers to react, something that was not a factor prior. Add to that the excitement and egos a luxury property auction brings out on sale day with all attention is focused on the one luxury property which has previously been just one of many competing for attention.

Are all luxury homes candidates for a luxury auction event? Of course not.  However, many are.  It really depends on the seller which as most of you know in my opinion is the single most important aspect of a successful auction event. 

Are you or is your client that seller?  Let's jump on a conference call together to determine the answer to that question.  In the meantime, feel free to contact us anytime with your questions including the ever important one regarding the best luxury real estate auction companies competing for your business.

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Luxury Home Auctions are Most Popular by Far.

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Thursday, 07 June 2012 Category Luxury Home Auction

When it comes to luxury real estate auctions, the asset class of luxury homes is by far the most common that is auctioned.  Other auctions do occur with some frequency, ones like luxury ranch auctions, luxury condo auctions or event luxury yacht auctions, but not to the degree that higher-end homes do.

No matter where the luxury home being auctioned is located across the country, the story behind the auction is pretty much the same.  The most common story I hear on almost a daily basis is that of a home owner who has had their property listed for an extended period of time.  There may have been a few, if any, offers that probably included contingencies.  Their home is just one of many similar homes competing for the same buyer profile.  Sometimes, the home may be very niche or unique in some way making it even more difficult to find a buyer who would appreciate such.  The seller, and sometimes their agent are looking for a new and fresh approach, something that creates urgency on behalf of affluent buyers like a luxury property auction.

Does this sound like you or your client?  If so, lets begin a dialogue and strategize your next move.  A good place to start would be here with Real Estate Auction Options.  We are familiar with all of the firms competing for your business and are able to provide you the leg work and research that goes with selecting the luxury auction firm best suited for you or your client's needs.

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International Luxury Real Estate Auctions

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Wednesday, 06 June 2012 Category International Real Estate Auction

Good day from Panama City, Panama.  I have written about the glut of condos here in the city before and looking out at the skyline this morning reminds me of how overdue a market like this is for something like a multi-property condo auction.  Later this week I will travel to Costa Rica to visit with potential luxury home sellers whose market also has cooled significantly. 

So, how common are international luxury real estate auctions?  They are not as common as we experience in the US but lately have picked up in numbers. I'm starting to see developers finally warm to the idea, egos and all. Individual sellers who have finally come back to reality regarding pricing have picked up in numbers as well.

The business model is pretty much the same with the big differences being whether the event is held live, onsite or online/telephonicially. As most of you know, I am a big proponent of the live, outcry event.  However, for an an international property, a live, outcry event may be succesfully substituted for a remote bidding platform.

More about this topic later as I have potential luxury home auction candidates to visit with this morning.  In the meantime, please
contact us anytime to discuss international luxury property auctions, domestic luxury real estate auctions and everything in between including the luxury real estate auctions companies competing for your business.

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Absolute Luxury Real Estate Auctions and Pre-Sale Strategies Revisited

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Tuesday, 05 June 2012 Category Luxury Home Auction

Based on all of your inquires and comments, I feel the need today to revisit a couple of topics that were touched on in yesterday's post. Those topics are that of absolute luxury real estate auctions and integrating a pre-auction sale strategy with the absolute component.

To recap- properties sold pre-auction do occur organically.  It doesn't happen often, but it does happen. Usually when it happens, it occurs because a potential buyer who has had previous interest in the property sees that the property will be auctioned thanks to a comprehensive advertising and marketing campaign the best luxury real estate auction companies will conduct.  They now have a deadline and may not be comfortable in a competitive bidding scenario.  They simply contact the auction firm, present their offer which is presented to the seller and the seller makes their decision taking into consideration the recommendation of the auction firm.

Regarding the "absolute" (selling to the highest bidder regardless of price) methodology:  Like pre-sales, absolute auctions can, and do occur organically and legitimately. It is the ultimate call to action and the superior method of marketing something like a luxury home auction. Buyers bids their interest thinking that if they are the high bidder, they will be the new owner once closed, period.  Sadly, the new model of a few of the firms deemed credible is to advertise the sale as "absolute" only to cancel the sale if an acceptable pre-sale bid or sale day bid is not achieved. You can imagine how the high bidder feels when they are notified that their bid has not been accepted.  Not only is it unethical practice but it is common that litigation comes into play, something that no one wants to be a part of.

Keep your questions coming about this or any other luxury property related topics.  We want you to know your options when it comes to selecting the best partner for a future luxury auction you or your client may be considering.

 

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Is a Luxury Real Estate Auction Pre-Sell Strategy Really an Auction?

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Monday, 04 June 2012 Category Luxury Property Auction

Today, I want to discuss the topic of properties that sell pre-auction.  Specifically, let's take a look at a new strategy that seems to have surfaced which is that of a property never making it to the actual luxury real estate auction but instead selling before the auction ever takes place.  To take it a step further, let's look at the case in which this is a planned, deliberate effort on behalf of the luxury real estate auction company, not just coincidence.

So, why would a model like this be used?  I feel that the luxury property auction company does not feel strongly that the property will sell on sale day and they have a better chance of getting it sold pre-auction using negotiation tactics similar to those used in a traditional sale.  The auction's date-certain event and large advertising and marketing campaign makes buyers aware of the event and forces them to react.  Once a potential buyer comes forward, the auction firm goes into hard core negotiation mode and tries to make the deal happen pre-auction.  They probably convince their seller that an offer is a great one and encourages them to "take the money and run".  Is this really in the best interest of the seller?  For the most part, I say no.  If the auction firm is not confident enough in the seller's expectations and the desirableness of the property, they should probably pass on the business all together.  Granted, if the pre-sale offer is substantial, I am all for this model.  However, most times I feel this is not the case.

Additionally, many of the luxury auction firms that are embracing this model like to advertise the auction as "absolute" or selling to the high bidder regardless of price.  This creates maximum interest among potential bidders.  However, if the property doesn't pre-sell, makes it to auction and then the event is cancelled if the bid are not acceptable to the seller, the credibility of the auction firm is questioned as is the luxury auction method in general.  Please be very aware of this pitfall and consider it a red flag. I am familiar with an auction firm who passed on auctioning a very nice home only to be taken on by another firm who is advertising the sale as "absolute".  I will be curious to see how this works out but I have pretty good idea of what will really happen.

Let's don't lose sight of what an luxury auction really is and why it works well with the right seller and the right property.  A live, outcry event brings out the egos and emotions in affluent buyers forcing them to bid their interest.

To discuss this topic in more detail or to discuss any other  luxury real estate auction topics, please contact us anytime.

 

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Athletes Are Good Candidates for Luxury Home Auctions

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Thursday, 31 May 2012 Category Athlete Real Estate Auction

Happy Friday from one of our favorite markets (and cities) Austin.

One of the groups that I recently overlooked in my posts regarding who is a good candidate for a luxury real estate auction is that of professional athletes.  More times than not, these individuals purchase a significant luxury home or luxury condominium in the market they call home for the time being. I say for the time being because for many of these individuals, one year or even less is the time they can expect to spend in the property before being traded or burning out.

So, what happens when it is time to sell the luxury property they recently purchased?  More times than not, they will simply list their property with a luxury agent in their market.  Also more times than not, that property will sit for an extended period of time with few if any legitimate offers.  On a side note- I have seen things like indoor regulation basketball courts to indoor batting cages added to these properties which mean nothing to a non-athlete considering purchasing the property.  The more niche and unusual the property, obviously the more difficult and the more time it takes to sell via the traditional method, especially in a crowded marketplace.

So, what is a professional  athlete to do?  Many of you have the wherewithal to ride out the time (sometimes years) until the property sells but only after a series of price reductions.  A better option may be that of something like a luxury home auction.  The high-end auction method forces other affluent individuals to react thanks to a date-certain event.  A cash, contingency-free closing can be expected as well.

I have had the honor of meeting many of you professional athletes and your agents as well as professional entertainers and would love to have the opportunity to work with you on the sale of your luxury property.  Let's take control of the sale process. Please contact us anytime to begin the dialogue including the luxury real estate auction company best suited for your specific needs.  I can also be reached at 404.784.5759.

Gary

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Politics and Luxury Real Estate Auctions

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Thursday, 31 May 2012 Category Luxury Property Auction

Today, let's take a look at a rather unconventional topic when it comes to that of luxury real estate auctions.  I'm talking about politics.  Yes, politics, specifically at the Presidential level.  Lately I have heard from more than a few potential sellers considering a luxury home auction their concern about the upcoming Presidential election and how it may or may not have an influence on their decision to conduct an auction post or prior November 2012.

While I applaud a seller for scrutinizing every aspect of such an important decision, this is one that I feel really isn't going to have any type of significant impact on whether or not someone will bid their interest in a luxury property.  Think about it- you or your client has discovered that their dream home or dream ranch is coming up for auction (thanks to a comprehensive advertising and marketing campaign conducted by a good luxury real estate auction company).  It is something you or your client really wants and your are preparing to bid at an upcoming auction.  Now imagine, several other bidders who feel the same way.  On sale day when all of those affluent, end-user, cash buyers assemble and bid their interest, do you really think they are saying to themselves in the heat of the emotional bidding "I'm not going to bid an additional $25,000 or $50,000 to get what I really want because one political administration or another is in office".  I don't think so.

If you as a seller or if your client is tired of few, if any, legitimate offers that probably included contingencies and are ready to take control of the sales process by using a date-certain event to force affluent buyers to react, then a luxury property auction may be exactly what you are seeking regardless of what happens in November.

To dig into the mechanics and psychology of luxury real estate auctions, please contact us.  We are happy to advice you on this most important decision including analyzing the handful of companies out there competing for your business.

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Luxury Property Auction Strategies Questions Answered

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Wednesday, 30 May 2012 Category Luxury Property Auction

Today, let's answer the questions that were mentioned yesterday regarding strategy.

When does the luxury property auction need to occur? Is is better to hold it on a weekday or on the weekend?  For something like a luxury home auction being purchased by an end-user buyer, I would say that Saturday is the preferred day.  Those folks are typically working during the week and it is easier for them to conduct business on a weekend.  For someone who is also an end-user buyer but who views purchasing something at a luxury real estate auction as a business decision, a sale held during the week may be more attractive for them.  They are probably spending their weekends on the golf course or with their family on the slopes or at the beach.

Does the auction need to be an absolute auction or a reserve auction? This is a biggie.  For the right seller with the right property, an absolute (selling to the highest bidder regardless of price) is the ultimate call to action and most always generates more tours, more bidders, and ultimately higher prices.  It needs to be a legitimate absolute sale opposed to one in which the luxury real estate auction company advertises the sale as absolute only to cancel the sale if the numbers achieved are not high enough.  For a reserve auction, I prefer to see a published minimum bid sale or a suggested opening bid number used.  That published number, sometimes called a "teaser bid" needs to be low enough to generate interest.

Where is the buyer most likely to come from and how will the luxury property auction company reach those buyers? Each market draws more buyer than others.  For example, Austin draws large numbers of buyers from Houston while Colorado draws large numbers of buyers from Texas.  The auction firm seeks the input of the seller and the agent, if one is involved, regarding where their buyers are coming from historically.  Once that is determined, the advertising and marketing campaign is focused, but not limited to, this area.

How is commission split between the auction company and the agents if involved? A good auction firm will embrace the existing agent.  If there is not one, they should engage one in the area where the luxury property is being sold.  Don't rely on solely a representative from the auction company. All firms offer different levels of compensation but I suggest a model in which the agent's commission is the same as what is already in place.  The agents on both sides need to be motivated and offering them a reduced commission is not the way to make that happen.  For most firms, the buyer's premium (an amount the high bidder pays in addition to their high bid price) is the way the auction company and the agent is paid.

Should the event be a live, outcry event, online, telephonic or some combination of all? I always prefer the live, outcry event unless the property is international in nature or may be very remote here domestically.  There is nothing like the egos and emotions bidders experience when competing against one another, something that is lost electronically and telephonically.

We are ready to advise you on other questions you may have on luxury real estate auctions.  Please contact us anytime to begin our journey.

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Luxury Real Estate Auction Strategies

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Monday, 28 May 2012 Category Luxury Property Auction

I hope everyone had a nice Memorial Day holiday.  Today, let's take a look at some of the strategies involved in any good luxury real estate auction.  At first glance, most may feel that an auction is an auction- a seller offers their property, bidders compete and the highest bidder wins.  Generically speaking, this is true but there is a large amount of strategy and psychology in an auction that goes on behind the scenes.

In no particular order, here are some of the more important decisions that need to be strategized:

When does the luxury property auction need to occur?  Is is better to hold it on a weekday or on the weekend?

Does the auction need to be an absolute auction or a reserve auction?

Where is the buyer most likely to come from and how will the luxury real estate auction company reach those buyers?

How is commission split between the auction company and the agents if involved?

Should the event be a live, outcry event, online, telephonic or some combination of all?

Let's take a look at the answers to these questions in tomorrow's post.  In the meantime, if you have additional strategy-related questions or if there is anything else you have questions about, we are here to answer those questions.  Please reach out anytime.

 

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Luxury Real Estate Auction Commissions vs. Traditional Commissions

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Friday, 25 May 2012 Category Luxury Property Auction

A happy Friday to all.  Today, let's take a look at a seller's commission at a luxury real estate auction versus that of a traditional sale.  Before we look at the math, let's determine the typical commission structure for each model.  In the traditional real estate sales method, the commission paid by a seller is most always a flat percentage which for luxury properties may average 5% to 6%.  Let's call is 5.5% for the sake of this example.

Most luxury real estate auction companies' business models require the seller to pay upfront in advance the expense of the advertising and marketing campaign including other items like due diligence efforts, signage and sale day expenses.  For most firms, this is the total commission required of their seller.  However, I have recently noticed one firm in particular who is asking for the seller to pay this expense in addition to surrendering a point or two of additional commission from the proceeds.  Beware of this arrangement and consider it a red flag.

So, what is the normal total amount required by seller for something like a luxury home auction?  It varies from firm-to-firm.  For a $2mm-$5mm domestic luxury property, the number could range from $50,000 to over $100,000.  For the sake of this example, let's say an average of $75,000.

For the sake of this example, let's assume an average sales price of $3.5mm.  The traditional method with a 5.5% commission would cost the seller $192,500 versus the average $75,000 if sold and closed at auction.  Please keep in mind that these are generic examples but I think you get the point.

In addition, think about the ability of the luxury property auction method to sell and close a property cash, contingency-free  in 90 days versus months or even years it may take to sell the same property using the traditional method which usually includes contingencies.

Would you like to discuss this topic or others?  We are here to help and ready to answer your questions.  Please contact us anytime to begin the discussion including the pros and cons of the auction companies competing for your business.

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Who is Luxury Firm Real Estate Auction Options and What Exactly is it that We Do?

by Gary Gilbert
Gary Gilbert
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Thursday, 24 May 2012 Category Luxury Real Estate Auction Companies

Occasionally I am asked "What is Real Estate Auction Options and what exactly do you do?"  "Are you a luxury real estate auction company that conducts auctions?"  Let's take a look at this subject today.

Real Estate Auction Options is a firm that provides complimentary advisory service to those considering selling their luxury property via a luxury property auction.  We also provide complimentary advisory services to those considering bidding for property sold via the "high-end" auction platform.  The majority of our efforts are focused on working with sellers, both owners and agents representing sellers.  We have a a wealth of experience in the luxury auction field and have been involved in multi-millions of dollars worth of transactions that included the luxury auction component.

Our typical client is someone who is not distressed and does not have to sell .  They have probably had their property listed for an extended period of time.  The reason they are usually selling is due to downsizing, retiring, moving, allocating assets or there may be health issues.  They like the idea of using a date-certain event to force affluent buyers to react on their terms allowing them to close a certain chapter of their life.

A typical client is also someone who has entertained the idea of auction.  They either think about looking into the idea themselves or they ask their agent to do so if listed.  They see the value of contacting an expert like us to do the work for them which includes analyzing their specific situation and making a recommendation as to what their next step should be including a recommendation of what firm would be best suited for their needs.

To learn more about me and my firm, here are a few links you may want to visit:

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Good Markets for Summer Luxury Home Auctions

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Wednesday, 23 May 2012 Category Colorado Real Estate Auction

Well, summer is here and for those of you in certain markets considering a luxury home auction, your selling season is right around the corner.  Of course I'm talking about those of you located primarily in the mountainous markets out West.  Colorado luxury real estate auctions, Montana luxury real estate auctions and Wyoming luxury real estate auctions are the first three that come to mind for me.  Of course, I love the Rocky Mountain region but realize that this applies to other markets as well.

I have found that the most popular months to sell for those of you in the Rocky Mountain region seem to be August, September and October.  Regardless of what US market you are in, given the fact that a luxury real estate auction marketing campaign, including showings, usually takes 60-75 days, the time is now for you or your client to get started.  What should my or our next step be?

Well, you can do like most which would probably be conducting an online search for the term luxury real estate auction companies. You can call the handful of those firms that appear to be credible and ask questions.  Someone may even travel to your location to meet you and view the property (consider it a red flag if an auction company representative asks you to pay for their travel).  Or, you can simply let us do the work for you by receiving advice from us here at Real Estate Auction Options.  We are familiar with all of the firms competing for your business, their business models, and the pros and cons of each.  We have the luxury real estate auction experience and knowledge to guide you through this most important decision.  Let's get started by contacting us now.

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Online and Telephonic Luxury Real Estate Auctions

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Tuesday, 22 May 2012 Category Luxury Property Auction

As most of probably know, I am a big fan of the live, outcry event when it comes to properties sold via luxury real estate auction. A live event allows bidders to get caught up in the emotion an auction creates with egos playing a big part.  Another reason that I prefer to see live, outcry events used is that in the case that the reserve price is not met during the live bidding, representatives from the luxury real estate auction company have the ability to go into hard core one-on-one negotiations with bidders there onsite.  You would be surprised how many auction sales are closed in this manner.   A seller may be close to what their reserve price is and may decide to pull the trigger there on sale day, something they may not be able to do with remote bidders.  When else are they going to have cash, contingency-free buyers at their home who have just determined the true, fair market value of their property?

So, when do I like to see remote bidding used for something like a luxury home auction?  I always like to see it used in conjunction with a live, outcry event.  While I prefer any and everyone who can be there in person, I don't won't to eliminate any possible bidder.  A good candidate for an online and telephonic only auction would be someone who has a very remote property.  Another candidate could be an international seller.  The advantage of this model for a seller would be reduced upfront expenses.  The majority of upfront expenses (and usually the total cost for the seller) is advertising with travel being a moderate line item as well. Let's take a look at your line item for travel if you have already received a quote from an auction firm.

Do you have questions about this topic or about the process of selecting a luxury real estate auction firm to handle the sale of your property?  If so, we are here to help.  We have years of experience in the high-end auction business and are familiar with all of the business models and pros and cons of firms competing for your business.  Please contact us anytime to begin the dialogue.

 

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Legitimate Absolute Luxury Real Estate Auctions Work, and Work Well

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Monday, 21 May 2012 Category Luxury Real Estate Auction Companies

Good Monday morning to all.  Today, let's take a look at the power an absolute luxury real estate auction has when conducted legitimately.  What do I mean by legitimately?  I mean an absolute sale in which the seller and the luxury real estate auction company are committed to selling the property to the highest bidder with no games being played.  What games could possibly be played when something that is supposed to sell to the highest bidder should do such?  The first may be when a seller and the auction company agree to advertise the auction as an absolute only to cancel the event if the bid prices are not acceptable to the seller on sale day.  Some luxury property auction companies may demand a "no sale fee" from the seller should this scenario play out.  Not only is this a shady business practice but the biggest concern may be the possibility of litigation brought forth by the high bidder.  In general, this gives our industry a bad name with those witnessing such feeling that absolute auctions don't work which actually do when working with the right seller and the right auction firm.  Another instance where games may be being played are when something like a luxury home auction is advertised as absolute with the hopes that the property will never make it to auction but instead will sell pre-auction.  I want you to be very aware of these type of proposals and consider such a red flag.

Contact us anytime to dig into the subject of absolute auctions in more detail.  We are happy to navigate this and any other issues you may experience in your search for the best luxury real estate auction company suited for your specific needs.

A legitimate absolute auction is powerful.  We consistently see more inquires, more property tours and most importantly more registered bidders which means higher bid prices.  When a buyer knows that if they are the high bidder and that they are dealing with a credible auction firm, they tend to bid more aggressively knowing that if they bid again, they may ultimately be the new owner.  A very successful absolute luxury home auction was held Saturday by one of the more credible, ethical firms bringing in a high bid of almost $4mm.  There were 19 registered bidders with around 2000 people who toured the property during the pre-auction showing period.  The sellers were very pleased and expressed such via a testimonial.

 

 

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by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Friday, 18 May 2012 Category Luxury Home Auction

How time flies.  Is it already Friday?  While I doubt most of you that work traditional jobs are asking "Is it already Friday", time really does fly for me and many others out there who work in more non-traditional careers like real estate.  Do you know who else experiences the feeling that time flies?  Sellers of luxury homes who sometimes lose track of time when it comes to the length of time their home has been on market.

Are you one of those sellers?  Have you had your luxury home listed for at least one year?  Have you had any legitimate offers?  Are you trying to sell this luxury home so that you can close a chapter of your life which may include downsizing, moving or retiring?  If this sounds like you, then perhaps you should consider something like a luxury home auction.

An auction creates urgency on behalf of affluent buyers by using a date-certain event to force them to focus on your home which is competing with numerous others on the market.  How does 60 day marketing campaign with a cash, contingency-free 30-45 day closing sound?  Talk about time flying...

Where should you begin your search to learn more about luxury real estate auctions?  You've come to the right place.  We will do the homework for you and determine the luxury real estate auction company best suited for your needs.

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How Bidders Are Qualified at a Luxury Real Estate Auction

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Thursday, 17 May 2012 Category Luxury Property Auction

I am often asked by someone considering a luxury home auction how bidders are qualified.  For some sellers, it is purely a financial concern while for others, they may be very selective about who they allow in their home.  For most, it is a combination of both.

For a seller and for a luxury real estate auction company, making the auction as buyer-friendly as possible is very important.  Equally important is making sure that the buyers are qualified, having the ability to close the transaction should they be the high bidder.  In other words, buyers need be required to jump through some hoops, as long as those hoops maintain a buyer-friendly aspect.

Most firms require that bidders produce some type of certified funds in order to be able to bid.  I have seen that amount range from $25,000 to $100,000 or more depending on the asset being offered.  Once a bidder is declared the high bidder, he or she is typically required to tender a deposit to be held in escrow.  These funds are usually non-refundable.  The auction company would take the bidder's check required to bid and in addition require the high bidder to produce the balance of the deposit in the for of certifiable funds.  The percentage that seems to be standard in our industry is 10%.

So, does anyone ever not close within the typical 30-45 day post-auction day period forfeiting their deposit?  It is rare but it can happen.  Should that happen, the auction company, the seller, and the referring broker (if applicable) may divide the high bidder's deposit and simply go to the backup bidder(s).

Do you or your client have questions about luxury real estate auctions including information on the handful of companies competing for your business?  If so, please contact us with your questions.  We are happy to advise you.

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Video Answering Some of the More Frequently Asked Questions Regarding Luxury Real Estate Auctions

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Wednesday, 16 May 2012 Category Luxury Home Auction

It seems like almost daily that I get asked the same general questions regarding luxury home auctions.  Questions like:

Why would someone consider a luxury real estate auction?

Who is a candidate for such?

Often people associate the word "auction" with distress.  How does the luxury method overcome that stigma?

Is there a reserve price at these auctions or does the property sell to the highest bidder?

What is the commission arrangement?

I noticed that there are a handful of luxury real estate auction companies competing for my business.  How do I select the best firm?

How do I learn more?

You can see the answers to these questions in the video by clicking here.

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When it Makes Sense Not to Move Forward with a Luxury Home Auction.

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Tuesday, 15 May 2012 Category Luxury Home Auction

I visited this subject twice yesterday with potential sellers so I thought today would be a good time to discuss it here.  The subject involved whether or not there are times when it may be in everyone's best interest not to move forward with something like a luxury home auction.  Not to sound like a broken record but you probably know how I feel about working with sellers who are unrealistic on the true value of their home, someone who may be hung up on comps, appraisals or may have some kind of magic formula they use to determine what they perceive to be an accurate number.  Our preferred method of determining the true, fair market value for luxury real estate, or anything for that matter, is to assemble buyers who have the ability to purchase the luxury asset in a cash, contingency-free manner and let them bid their interest.  When the last man or woman standing is the high bidder, their high bid price determines the true, fair market value.

It doesn't do anyone any good to move forward with a luxury real estate auction when the seller is not realistic on the value of their property.  The seller loses because they have forfeited the expense money required from them on the front-end and is right back where they started.  The agent, if applicable, and the luxury real estate auction company loses because without a "buyer's premium" (the way they are paid in most cases), there is no commission for them.  Finally, the luxury property auction method in general is perceived not to work by observers who may be considering such for their property, even though it does work, but only with the right seller with the right property.  Sadly, there are luxury real estate auction companies who have what I like to call a "throw it up against the wall and see what sticks" philosophy.  If it works, great.  If it doesn't, they will just roll on to the next sale in the next market and hope for better results.

Are you or is your client someone who is realistic on the value of their luxury home?  If so, let's open the dialogue.  We are here to advise you on this most important decision.

 

Tags: luxury real estate auction, luxury real estate auctions, luxury property auction, luxury property auctions, luxury real estate auction company, luxury real estate auction companies, luxury property auction company, luxury property auction companies, luxury home auction company, luxury home auction companies, luxury estate auctions, luxury real estate auction sites, luxury property auction sites, luxury real estate auction commission, luxury real estate auction costs

Am I or is My Client a Candidate for a Luxury Home Auction?

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Sunday, 13 May 2012 Category Luxury Home Auction

Has the topic of conducting a luxury home auction crossed your mind lately?  Maybe you are an agent whose client has asked you to look into the idea or maybe you as the agent have mentioned the idea to your client?  If so, you have come to the right place to have your questions about the luxury real estate auction method answered.

Let's get started by answering a few questions:

You are probably not a distressed seller, correct?

Has the property been listed for an extended period of time?

Are you trying to close a certain chapter in your life and the sale of your luxury home is keeping you from doing such?

Are you downsizing,  moving, or retiring?

If you or your client answered yes to all or most of these questions, then you or they are probably a good candidate for a luxury property auction.

Our job is to help you make your best, most informed decision when it comes to selecting the best luxury real estate auction company to handle your sale.  Please contact us anytime to begin the discussion.

Tags: luxury real estate auction, luxury real estate auctions, luxury property auction, luxury property auctions, luxury real estate auction company, luxury real estate auction companies, luxury property auction company, luxury property auction companies, luxury home auction company, luxury home auction companies, luxury estate auctions, luxury real estate auction sites, luxury property auction sites

The Commission Arrangement and Budget Quotes for Luxury Real Estate Auction Companies.

by Gary Gilbert
Gary Gilbert
I have been involved in multi-millions of dollars worth of luxury real estate au
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Friday, 11 May 2012 Category Luxury Real Estate Auction Companies

Happy Friday to all.  It's been some time since I have written about this topic but since it keeps coming up in conversations with potential sellers, let's discuss it again here today.  Of course, I'm talking about the commission arrangement including the advertising and marketing component required of the seller.

The standard commission model includes the seller being responsible for the funding of the advertising and marketing costs associated with the auction.  That amount is required to be paid upfront, in advance and with most firms represents the total commission paid by the seller.  I say with most firms because lately I have noticed one firm in particular whose model includes the seller paying the standard advertising and marketing costs in addition to paying a commission on the sales price.  I want you as a potential seller and/or agent representing a potential seller to be very aware of this type of commission arrangement which can be excessive with the luxury real estate auction company possibly earning a double-digit commission compared to a more typical net commission in the 4-6% range.  I have mentioned this story before but feel it is appropriate to mention it again here since we are on the subject.  Recently we spoke with a seller considering a luxury home auction, a very savy, sophisticated Wall Street person.  He said of the auction company I mentioned above after digging into their commission model "I think I may be in the wrong business".  Needless to say, he recognized that there are better options out there for him which I would be happy to discuss with you.

Regarding budget amounts:  For a luxury home in the $2mm - $5mm range, one will find that the quotes from the handful of players in the luxury property auction world will range from $35k to well over $100k.  Unless the property is international, or it its a multi-property auction, I don't see many reasons that that budget amount should exceed $100k.  A well capitalized, sophisticated luxury firm should be able to keep those numbers in the $35k - $75k range.  Let's work together to really dig into a budget and what is necessary and what probably is not.  What are the travel expenses?  Is the marketing being done a profit center?  Is an auction manager really necessary? How is the agent involved?

We are here to help when it comes to making this most important decision regarding your or your client's luxury property.  Please reach out to us anytime to begin the discussion.

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