Published: Saturday, 8 Aug 2009 | 8:32 AM ET

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LITTLE TORCH KEY, Fla. — Jack Warner leaned against his home bar and checked his watch before resuming his blank stare at the white tent outside his multimillion-dollar dream house, with its swimming pool and views of the Florida gulf, soon to be sold at auction.

Source: Antaresmansions.com

“My whole life happens in two hours,” he said. “I feel like I am playing the part of Old Yeller,“ wondering if he will survive financially or perhaps just be put out of his misery, like the fictional dog. An auction, and having people traipse through a house in previews before bidding, smacks of desperation. But increasingly, people with multimillion-dollar homes who need to raise money are discovering they have few alternatives, as the luxury real estate market is especially moribund.

“We are seeing more people with homes that were on the market for $4 million to $7 million that are not selling and they are calling us,” said Jim Gall, president of Auction Company of America.

Mr. Warner, 61, bought his house and an adjacent property that once had a trailer park on Little Torch Key, north of Key West, in 1993. It was appraised at nearly $14 million just two years ago. But after losing a large amount of money, he liquidated his construction business in Elkhart, Ind. Last year, another company he owned, Lucky’s Landing, which essentially owned his Florida real estate, filed for bankruptcy protection and its assets came under court oversight.

When no buyer emerged at the listing price of $5.9 million, Mr. Warner asked the United States Bankruptcy Court in Miami to approve the property’s sale at auction. He had a lot riding on the request. To avoid personal bankruptcy , he said, the sale had to generate more than $3 million, roughly the remaining amount of the mortgages.

The gavel ultimately came down at $2.5 million. Mr. Warner’s hopes withered as he uttered softly: “O.K., I’m broke.”

Even in the boom years, luxury homes occasionally sold at auction. Perhaps a house had a celebrity background that might drive people to bid up the price, or maybe a savvy marketer saw a way to drum up publicity for a unusual property. Miramar, a Gilded Age estate in Newport, R.I., was commissioned by George D. Widener, a railway magnate who died on the Titanic. It was sold at auction in 2006 for about $18 million after languishing on the market for about three years.

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Henry R. Kravis , the New York financier, prepared his 3,300-acre property near Meeker, Colo., for auction in 2004 after it had been on the market for two years. Just before the auction, though, he struck a $16.5 million deal with Greg Norman , the pro golfer and golf course designer.

As the real estate market began to soften in 2007, a few attempts were made to auction large numbers of high-end properties. For example, Sky Sotheby’s International Realty held an auction of 20 homes with an average value of $3.5 million in Sarasota, Fla. “But that strategy was unusual,” recalled Chad Roffers, then the president of Sky Sotheby’s.

Then the housing market collapsed. Now, owners of trophy homes have to decide whether to take the plunge, and in some cases they are being pushed by creditors or the courts.

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