Auctions were once used for foreclosures and distressed properties. Not any more. Residential auctions are moving uptown.
According to Concierge Auctions, the biggest player in high-end residential auctions, the number of multi-million dollar homes sold at auction has nearly doubled this year compared with 2017. Next year looks to be even stronger than this year.
“The trend for high-end real estate going to auction is definitely on the rise,” said Laura Brady, CEO of Concierge. “We’re seeing more sellers across the country, more than ever before, especially in the $10m, $20M–plus even $100M-plus category. “
So, what’s going on to cause this surge in high-end home auctions? Supply and demand. Real estate analysts agree that developers and investors have built a vast array of…a polite way of saying too many…massive homes aimed at wealthy buyers with sky-high price tags.
Just as broker-agent represented properties don’t always sell, homes on the auction block don’t always sell either. Sellers such as Michael Jordan and investor Peter Lynch listed their respective mega-mansions with brokers but neither property sold after two years of being on the market. Jordan put his home on the auction block but it didn’t generate the required minimum bid for purchase. His property returned to the “regular” listing market again in 2015 and there it remains…unsold. Lynch’s home in Arizona goes to auction next month in hopes of a better outcome.
Even though residential auction houses such as Concierge Auctions with its +500,000 potential buyers, sellers and real estate contacts worldwide have wider and longer tentacles than individual brokers and agents, the market for multi-million dollars houses is tiny. This year’s market has been smaller than ever since Russian, Chinese and Middle East buyers faded from the US housing market.
That being said, Concierge is on schedule to sell more than 20 homes ($10M-plus) this year, double the number auctioned successfully in 2017, and 2019 looks “to be even stronger,” said Brady.