If you are selling a high-end property and want a no-nonsense approach, a luxury auction may be an excellent option.
Once the provenance of distressed properties only, luxury auctions are fast becoming one of the most effective ways to sell properties worth millions of dollars quickly without drastically reducing their value.
Big Sky Sotheby’s broker Laura T. Sacchi has explored the luxury auction process on behalf of local buyers through Platinum Luxury Auctions, and says that for the right client, the luxury auction approach offers a number of unique advantages.
What is a luxury auction?
A luxury auction allows owners to sell high-end properties quickly and efficiently by working with a brokerage firm in partnership with a luxury auction company. After the seller pays an up-front marketing fee, the auction company launches into a rigorous valuation analysis, followed by an intensive marketing campaign and buyer screening to ensure a high probability that the property will go for a fair price that ultimately benefits the seller. According to Sacchi, the entire process can be completed in as little as 12 weeks.
Who should consider a luxury auction?
Sacchi says that the luxury auction process is intended for properties worth one million or more. Assuming a property meets that criteria, she says it can also be a great approach for a highly-desirable property that is already expected to bring in multiple offers because, she says, “you run a better chance of optimizing the seller’s price.”
What are the pros and cons of luxury auctions?
The number one concern of any seller considering a luxury auction is that their property will sell for a price well below its value, putting the seller at a loss. According to Sacchi, however, this scenario is highly unlikely; in fact, luxury auctions can provide a level of security that a traditional sale can’t offer. For example, auction properties are sold as-is, no contingencies, which means that once the auction is final, the seller can rest assured that it’s a done deal, and that the sale won’t fall through before closing. “That takes all the risk off the table for the seller,” Sacchi says.
What is a “reserve price?”
According to Sacchi, high-end sellers should think of a reserve price as a “teaser price” used on marketing materials in order to entice bidders to the table. The reserve price is used to generate interest and excitement and is not intended to be a true reflection of the property’s value.
How do luxury auctions guarantee a successful sale?
All potential buyers are screened and must pre-qualify in order to even participate in a luxury auction. Sacchi says that parties must prove they will be able to purchase the property if they are the winning bidder, and are required to put down a deposit of $100,000 or more in order to compete. She adds that the amount of work that goes into attracting, screening and consulting with potential buyers ensures that by the time the auction takes place, the auction company is confident that the property will be sold for a price acceptable to the seller
What are some of the advantages of working with a luxury auction company?
A major benefit of the auction process is that many of the costs that are usually passed on to the seller are transferred to the buyer. In an auction sale, the buyer pays a 10 percent premium, which covers the auction company fee as well as the broker’s commission, plus all title and closing costs. At the end of a successful sale, the seller has only paid for the up-front marketing fee plus the listing broker commission, often yielding the seller a higher net amount than they would earn from a traditional sale (in a traditional sale, the seller pays a full commission to the listing broker out of which the listing broker pays the buyer’s broker). In addition to their expertise and experience, luxury auction companies also have exclusive access to a large pool of buyers of high-end properties, as well as high-level marketing venues such as the New York Times and the Wall Street Journal.
What are the next steps for a seller considering a luxury auction?
“Tell them to call me!” says Sacchi. “With the help of Platinum, we’re happy and able to promote that type of business for the right client.” Laura Sacchi can be reached at 406-570-9651.