The glut of hyperpriced mansions and luxury properties sitting on the market across the country has led sellers to turn to an unlikely solution: auctions.
Real estate auctions, once used for foreclosures and distressed sellers, is moving upmarket. The number of multimillion-dollar homes being sold at auction has nearly doubled in the past year, according to real estate analysts and auction companies.
The most expensive home ever offered at auction came back on the block this week. The property, called Playa Vista Isle, in Hillsboro Beach, Florida, went on the market in 2014 for $139 million, making it the most expensive home listed in the country at the time. It was later listed for $159 million, then pulled from the market in 2016.
It stretches over 58,000 square feet, with 11 bedrooms and 22 bathrooms. It has a private IMAX theater, a 3,000 bottle wine cellar, a 20-car garage and columns and carvings with more than 500,0000 pieces of gold leaf. The pool alone has over 150,000 gallons of water. At over 5 acres, it has 500 feet of oceanfront and two yacht docks.
Concierge Auctions, the biggest player in high-end real estate auctions, said it will sell at least 20 homes this year that were listed for more than $10 million — double last year's total. And next year is already looking even stronger.
"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 $10 million, $20 million-plus and even $100 million-plus category.
Concierge, for instance, just auctioned off a property on Lake Como in Italy that had been listed for $112 million (100 million euros). The auction purchase price hasn't been disclosed.
A home in Palos Verdes, California, which had been listed at $53 million and featured a massive underground complex with a spa, pool and tennis court, recently sold at auction for around $23 million.
An estate that had once been the most expensive home listed in Dallas, was on the market for $50 million and sold at auction for $36 million. The investor Peter Lynch is selling his golf property in Arizona at auction next month, after failing to attract any buyers for two years with a price tag of $14 million.
The reason for the surge in high-end auctions is simple supply and demand. Developers and investors have built a vast supply of massive homes aimed at wealthy buyers with sky-high price tags. But the market for those homes remains relatively small, especially since Russian, Chinese and Middle East buyers have faded from the U.S. market. Brokers say that while the buyers are there for big homes, they are waiting for prices to fall.
Granted, auctions don't always work. Michael Jordan put his Chicago estate up for auction in 2012 but failed to get his minimum price and it's still on the market.
A home in Sands Point, New York, that had been listed for $38 million was scheduled to sell at auction last month but failed to attract enough bidders.
And many of the price drops can be dramatic — making some sellers reluctant to sell at auction. But many of today's high-end homes, like works of art and collectibles, are unique without real comparisons. So the auction allows them to find a real market price.
"Because of how much inventory there is in the United States priced at $10 million or more, there are a good deal of sellers that may have an overinflated view of what their properties are worth," Brady said.
For sellers, auctions give them a chance to sell the property in a fixed time frame. And Concierge's data-base of over 500,000 potential buyers and sellers and real-estate contacts worldwide gives sellers a bigger buying pool.
Bidding on Playa Vista Isle started Monday on ConciergeAuctions.Com and concludes Thursday night.
Technically there is no reserve, meaning there is no minimum price at which the seller will sell. But Brady said interest is already high and dozens of bids are expected. In order to bid, however, buyers need to wire $250,000 into an escrow account, which they get back or apply to the purchase price if they win the bid.
"This is an amazing property, it's not going to sell for $10 million or some unrealistically low price," Brady said. "It cost $100 million to build. The buyers that are coming forward are smart, they understand the value. It's up to my team to explain what was put into the property, the value of the property and the land, so it's going to sell at a fair market price."
Correction: This story was revised to clarify that this is the first time the Hillsboro Beach mansion has been up for auction.