With the announcement of the May 24 Concierge auction at Kukio, the most exclusive community on the Big Island of Hawai’i, the question arises: do real estate auctions “work”. As a luxury real estate agent and blogger, I’ve moved from a skeptic to an enthusiast to a seasoned veteran.
Concierge broke ground here with the Hualalai Resort and Kukio property auctions in 2010, which garnered a great deal of national press because of the celebrity angle: Cher’s house for sale!
But were these auctions successful?
From a buyer’s standpoint, some of the properties, especially Kukio homes sold “absolute” with no reserve, seem to have been good buys. Answer: Yes, if you are a buyer and know your comps.
From a seller’s standpoint, their properties sold that day; other properties in the same neighborhoods that were on the market in January 2010 are still for sale. Answer: Yes, if you are a seller and are committed to selling NOW.
Initially, my conclusion about the 2011 Concierge auction at Kolea was that it had not done the sellers of the oceanfront home any favors. With hindsight, I saw I was mistaken.
At the time of the Kolea home auction, which was an absolute auction with no reserve price, I felt that the presence of two neighboring homes that were on the market as bank-owned properties put a cap on the bidding price. One was already offered for an asking price of just under $4 million. The successful bid on the nicer home on Lot 7 in the auction turned out to be $3,850,000. At the time, this seemed to be a disappointment, well below expectations.
However, Kolea Lot 7 was auctioned on March 21 and closed in July. The REO (foreclosure) on Lot 13 finally closed for $2,750,000 after multiple price reductions. In retrospect, the auction sold the house on Lot 7 for $1 million more for a smaller home, 7 months faster!
An auction simply makes the demand curve more explicit. I believe that once real estate buyers, sellers, and especially AGENTS become more familiar and comfortable with the property auction process, the more valuable a tool it will become…although not for every property.
I have clients kicking themselves that they sat on the fence watching the Kolea homes and now will not have another opportunity at auction or foreclosure pricing. Opening bid on Kukio Lot 57: $3,950,000. What’s a good buy on this home? I’m sharpening my pencil now!
Guest Blogger Beth Thoma Robinson is a Hawaii real estate agent with Hawaii Life Real Estate Brokers. Contact her for all of your Hawaii real estate needs: 808.443.4588 or Beth@HawaiiLife.com