When a multi-million dollar mansion is put up for auction, that’s usually not a great sign.
It could mean that the home has been on the market for years because of poor prices, or because it’s an unusually unique property that hasn’t found the right buyer, or because the seller has a debt to pay.
Therefore, luxury homes that are auctioned, sometimes appear as the black sheep of the listings, certainly require a careful approach.
But luxury auctions are growing in popularity, in part because they are useful for sellers in difficult situations and because they can help create buzz around the property. In 2019, Concierge Auctions reported luck That the company was experiencing an average annual growth rate of 35 percent each year, the auction house set a record in 2021 with more than $3 billion in historical sales and $3.4 billion in competitive bids processed.
Aaron Kerman of Compass’s Aaron Kerman Group told Inman that agents who want to satisfy customers who go to auction should keep a number of factors in mind.
Luxury real estate agent and CNBC star Impossible List He sold a string of ultra-luxury homes at auction recently, from the massive mansion “The One” to a famous doctor’s debt-ridden mansion of Botox, both of which have sold for tens and hundreds of millions—so Kerman knows a thing or two about unloading tricky real estate at auction without a hitch.
Here are his top recommendations for other agents considering luxury selling at auction, from supercharged marketing to choosing the right auction house, and more.
Ensure that the buyer and property are suitable
“Auctioning luxury homes isn’t for everyone,” Kerman told Inman. “It’s a very unique chip. I always tell people it kind of depends on the situation and the sellers and where they are.”
Kerman explained that luxury auctions are usually best for sellers who have high expectations for a property’s value – and have yet to receive any offers that meet those expectations.
Since it’s not unusual for luxury properties to take several months even a few years to sell, auctions also make sense for sellers who face time constraints on when they need to sell. Often with ultra-luxury properties, this happens when sellers get carried away a bit when developing the home and fall into debt in the process. Therefore, auctions come in handy once they reach the point of facing bankruptcy – they need the money quickly, and the auction is the one that delivers them exactly.
Boost Marketing and Advertising
Kerman told Inman that once the agent and seller decided that an auction was the best course of action to sell a property, it was time for the agent’s marketing strategy.
At this point, Kerman will do everything he normally does to market any other property to sell, but aims to do twice that in half the time to bring in as many potential buyers as possible to auction. Kerman said he likes to keep the atmosphere elegant in his marketing materials on these types of properties, because they are always at the top of the market.
“I do everything we do as agents, but in a very tight amount of time,” he said. “Double Marketing, Double Advertising, Double Show”.
Since agents usually have about 45-70 days to prepare for the auction, they need to move quickly and prepare to get their marketing efforts going. This means disseminating local, national and international marketing via print and television news outlets such as The Wall Street JournalAnd the BloombergAnd the Rob’s reportand FOX Business and CNBC, in addition to its online advertising campaigns and targeted marketing efforts.
Building a strong international customer network for luxury
Properties of this size that Kerman recently put up for auction – those fetching between $47 million and $126 million – are prime candidates for investment by international buyers looking to put their money into relatively stable investments (such as real estate) abroad from their countries.
That’s why it’s so important to build a network of super-luxury international clients, who can prove extremely valuable when it comes to auctioning off a multi-million dollar property.
“In high-end Uber [properties]”I tend to travel to Europe and the Middle East to try and find billionaire buyers who are looking to buy,” Kerman said. “I have a huge database with some of the wealthiest people in the world…but we also do technology advertising around the world targeting the wealthy.”
Kerman explained that the team’s Estate Dynamics suite of technologies uses artificial intelligence based on the team’s data sets in order to predict which buyers might be attracted to a particular home, allowing it to conduct targeted communication with individual international buyers who are most likely to express an interest in it. The house is up for auction.
Instill urgency in potential buyers
One of the cards the agent has in his back pocket when putting up a house for auction, is that he is actually organizing a bidding war, which can drive up sellers’ sales prices.
But agents can also instill a sense of urgency in buyers they hope to attract to the auction by reminding them that this is a limited time offer. And once the bidding starts – they are out of luck, all bidders must be pre-screened and a refundable deposit submitted to escrow.
“I have the power to say, ‘Look, this house is selling with or without you on this day, so if you want to be a part of it, now is the time because you know it’s going to sell,'” Kerman said.
This is where selling a luxury home by auction can be a huge advantage for the seller – because buyers face anxiety not normally found on the open market at the level of ultra-luxury.
“This is probably part of the challenge of selling luxury homes,” Kerman noted. “Generally speaking, there is no sense of urgency for buyers because buyers feel they are alone.”
For agents representing buyers in the auction, it’s also a good idea to remind them of the urgency at hand, Kerman said, while keeping them at their comfort level.
“The scope of what we do is we work with our buyers to nudge them, bring them to their level of comfort and not lose. It’s a nerve-wracking experience. It takes a lot to get on my nerves…but [auctions] You always do that, because in 10 minutes, you’ll literally be seeing the possibility of a multimillion-dollar home selling.”
Prepare the seller mentally
Ultra-luxury sellers – like regular home sellers – take great pride in their homes, but there is often more ego, especially if they have a hand in the design of the property.
Therefore, it is very important to prepare sellers for what is to come at the auction, which is often a lower price than the seller expected or hoped for.
“You just have to calm them down,” Kerman told Inman. “At the end of the day, it is a learning process. We need to tell them that at the end of the day, the market is talking about the value of any given home, [which] It’s the highest price it will be.”
And the cards on the table, sometimes [sellers are] I’m not happy.” “Sometimes they aren’t, and that’s the problem when you don’t have much time. So I always say to developers and future developers, ‘Be really careful what you develop, because God does not allow the market to change, or God forbid it takes time. You don’t want to be in a position to sell, because that’s when people are disappointed… “Once it’s auctioned, its place of arrival is out of the seller’s control, and they have to be prepared for that.”
Choose your auction house wisely
Kerman added that it’s also important for agents to deliberate on which auction house they choose to conduct the transaction, because not all properties are created equal.
“Make your partnerships – I mean with auction houses – wise,” he told Inman, “because it’s a complex game and some are better than others.”
Kerman used Concierge Auctions for the latest luxury auctions. He likes that they have their own outlets to distribute marketing to the property, and that the process is completely transparent – even with bids coming in, which can help create a stir among potential buyers.
“[And] We don’t want to jeopardize [client] Kerman warned, which is why he said it’s especially important to choose the right auction house to run everything smoothly.
Send an email to Lillian Dickerson