- Steve Games, chairman of Pacific Sotheby's International Realty, has high hopes about his new auction division.
- PSIR, the auction division and Concierge Auctions are compensated by a negotiated fee from the buyer in combination with a seller's incentive.
- The marketing and timing aspect of auction sales mean that luxury buyers are more inclined to move quickly.
The grand, revered auction rooms of Christie’s and Sotheby’s in London, Paris and New York — which sell millions of dollars of fine art, antiques and jewelry every year — are testament to the fact that the wealthy like the auction process.
They want to see who they are bidding against, for their purchase process to be transparent and sometimes public — though some bidders might be phoning in — and when they make the winning bid, they want to feel smart and triumphant. They like to win.
So it shouldn’t come as a surprise that the wealthy are receptive to buying and selling by auction when it comes to property — often a second, third or fourth home.
A two-woman auction team
Australian-born Anna Houssels and Brittany Hahn, two real estate professionals who lead the new luxury auction division at Pacific Sotheby’s International Realty (PSIR) in San Diego, are making the most of this, closing five large sales in the last six months ranging from a $2.5 million home to luxury properties of more than $10.6 million, a total of $40 million in all.
The two-woman business team, who have worked across Australasia, where auction is the standard method for selling for all levels of homes, are operating in partnership with Concierge Auctions to build business in San Diego.
Concierge Auctions has a database of up to 375,000 luxury clients and top real estate agents all over the world to whom it markets high-end properties.
Steve Games, chairman of PSIR, has high hopes about his new auction division. He would like to see it be the leader in the country for luxury auctions.
“If we can make auction a success in San Diego and be the flag-wavers for it, that‘s what Pacific Sotheby’s International would like to do,” he said.
The auctions will feature properties at a variety of price points, although “always luxury in some way,” he added.
The luxury auction division is open to being the adviser to any listing agent, not only at Pacific Sotheby’s International Realty, he stressed.
“In a million-plus marketplace in San Diego, we are No. 1 — we are No. 1 because I tried with my luxury agents to sell everybody’s property. I believe in the cooperative brokerage system,” he noted.
Auction division works alongside listing agent
The PSIR arrangement is not disruptive to traditional buyer’s agents and listing agents, Games and his auction experts make clear. The auction process does not interfere in any way with the listing and selling agents’ original compensation agreement, as stated in their contract.
PSIR, the auction division and Concierge Auctions are compensated by a negotiated fee from the buyer in combination with a seller’s incentive, which typically ranges between 10 and 12 percent of the total purchase price.
Auction properties have accelerated marketing
Luxury properties have a tendency to sit on the market for too long, said Games.
By comparison, the luxury home up for auction is aggressively promoted for around four to five weeks — the intensified marketing campaign is local, international and domestic through online, social media and both local and international print media, and with open houses held between four and seven days a week, depending on the homes’ location.
A date is set for the auction so that buyers are not given a chance to procrastinate — auctions are held either at the property, at the brokerage offices or online, depending on the instructions from the seller.
There are two social events, often held during the evening, where potential bidders are encouraged to come and spend time at the property.
At the open houses and events, the listing agent, the Concierge Auctions project manager and both Houssels and Hahn are in attendance.
All this activity seeks to wake up buyers, said Houssels. And it works.
“What we have seen is a number of people come out of the woodwork who have known about a property but have been putting off taking action. Now they are stepping up — people are flying in from out of state as well as local people. It’s great to see that the auction is getting people to act,” she said.
The theater of a live auction can result in some excellent results. “We have seen some very emotional buyers. It really has created that fabulous competition, and it’s why auction is so exciting,” said Houssels.
Added Hahn: “The seller is so impressed when we tell them that 700 people have been through this house in the last three weeks, 18 people returned for another viewing and six people are doing due diligence. They understand that meeting the market is forcing buyers to compete.”
Games, in the real estate industry for 40 years, likes the way the auction process is more definite and clear-cut.
“One of the trying things about conventional sales is the counter offer process, so often it becomes a process where buyer and seller, using the real estate agent, are debating with each other,” he noted
What the auction does is keep the debate among the bidders — it allows them to fight it out among themselves.
Meanwhile, all the due diligence and inspections normally required in traditional transactions are completed and provided to the buyer prior to the auction, so everyone can proceed with a non-contingent sale.
“One of the biggest bonuses for the sellers is people are fully engaged. All the due diligence is done; you are not getting the wrong buyer tied up in escrow, and if that person falls out, you have to start again,” said Hahn.
Auction a possibility for the mainstream
Could the auction be for property at all levels?
Houssels and Hahn are in talks with the builder of a new apartment building to auction a number of condominiums, which will range in price between $400,000 and $700,000.
Due to the demographic of PSIR’s office locations, the majority of the auction business is the luxury market — however, this project would work well, said Hahn.
“To sum it up in a slogan, it’s ‘luxury at every level,’ and we like to showcase each individual project that we take on, regardless of price point, at the luxury level,” she said.
The association between auctions and distressed property in America has not been a problem for this luxury auction team.
Houssels is optimistic about 2017. “Because of the success of the last five auctions, we have caught the interest of sellers and agents. Brittany and I are very busy educating sellers and agents. We are very confident.”
Hahn added that they are also seeing people from previous auctions return for more.
“Once they get that first experience of an auction, they are encouraged and love the fact that it is so transparent,” she said.