Finally sold! Well, maybe
Frustrated home sellers are turning to auctions. While the gavels are hot, the prices often aren’t, and some houses still fail to sell.
By CHUIN-WEI YAP
Published September 22, 2006
For Nancy Zwart, taking ads out to sell her Heritage Pines home in northwest Pasco County amounted to nine months of nothing.
“A couple people looked at it,” Zwart said. “One man made an offer, then changed the settlement date 44 times.”
Frustrated, Zwart and her husband turned to E. Peter Spatz, of Pasco-based North America Auctioneers.
They hoped the home auctioneer would get them $250,000 for their three-bedroom house. They got $235,500, and were grateful.
Home auctions are on the rise across the Tampa Bay area, bringing into bloom one of the free market’s oldest price-setting methods, and one that its practitioners say is almost an art form.
The latest quarterly study released by the National Auctioneers Association said residential real estate is the hottest auction sector so far this year.
Home auctions are up 4.4 percent in gross sales nationwide so far this year, compared with the same period last year. They account for the bulk of a 6 percent rise in all auction sales in the same period, the report said.
“It’s up 10 percent in the Tampa Bay area,” said Marty Higgenbotham, president of the National Auctioneers Foundation, which funds the study. Higgenbotham is a Lakeland-based auctioneer with high-profile sales in the Tampa Bay region.
Some of the spike is from flashy auctions of big houses, like the one Higgenbotham conducted in April for former corporate raider Paul Bilzerian’s mansion in Avila in Hillsborough County.
But getting under the gavel is catching on across the spectrum of square footage.
“Last year I was getting 10 calls a week,” said Michael Peters, president of Clearwater’s American Heritage Auctioneers. “This year, I’m getting 10 to 15 calls a day. … We’re closing just about every one of them, and that’s about 15 a month.”
There is a catch: Houses may come in at a price lower than what the seller hoped for, underscoring the market’s appetite in an immediate and often sobering way.
Auctions also can be set with a minimum price, but sellers can opt for absolute auctions, which means the highest bid — no matter how low — wins.***
On a Saturday morning in early September, about 15 people, some clutching bid cards, perched on chairs on a lawn at an American Heritage auction in New Port Richey.
Standing behind a podium at the Richey Drive home, Peters’ voice dribbled bids in snappy rhythm.
Bernadete Tyszka , who was watching, said it was her first time at a home auction. But she was not bidding.
“It’s primarily to educate ourselves,” she said. “I thought it was very interesting and the auctioneer did a very good job. … But you really need to do a lot of legwork on your own, and make sure you have the money to bid. You can get into an auction frenzy and overbid and really get into trouble that way.”
For all its associations with the free market, the auction is a pricing mechanism that appears to take a back seat in boom time. Those were the days when merely putting a sign on the front yard guaranteed a rash of calls and a swift sale.
But when the market sours, auctions become a way to move properties otherwise destined to languish on the shelf.
Mozell Asalina was struggling to sell her 6.4-acre mini-ranch in Dade City.
“I stuck a sign out, listed with brokers, advertised in the newspaper and the real estate book,” she said. “We had lookers but no buyers.”
One auction later, she sold for $41,000 less than what she wanted, but she got her buyer. “I just wanted the quickest way to sell it,” Asalina said.***
Things don’t always work out, though.
Peters’ auction at Richey Drive ended without a sale. At one of Spatz’s auctions in mid-September at Calusa Trail in Holiday, after one property undersold by about $25,000, the seller changed his mind and placed a minimum price on a second property.
“Sellers are not always going to get what they think they are going to get,” Peters said. “But they weren’t going to get it (by a regular sale) anyway.”
“We are not a magic bullet for moving the market,” cautioned Bill Holloway of Bay Area Auction Realty in Pinellas Park. “A lot of sellers still haven’t come to grips with how the market has changed.”
Still, Holloway said the number of calls he has received this year has quadrupled, an estimate echoed by Spatz.
Auctions now are a buyer’s market in full swing.
Sergio Gomez bought David Slavinsky’s home in Wesley Chapel’s Lakes of Northwood at an American Heritage Auction. About 200 people showed up and seven people bid, Gomez said.
Slavinsky, who is Peters’ son-in-law, hoped for $350,000. The sale closed at $311,000.
“We were driving around like 20 times looking for a home,” Gomez said. “I’ve seen other houses around here that were going for $340,000. We got a really good deal.”
Auctions can pique interest in certain properties .
In Tampa, a “For Sale” sign sat outside 6409 Bayshore Blvd. for a year. It was not until an American Heritage Auctioneers sign went up that buyers paid attention.
“I was driving past it for one year,” said Dr. Daniel Diaco, who bought the 1.43-acre lot at the auction in July for $489,500, about $200,000 less than what the seller had hoped to get. “And I live adjacent to it.”
Big houses lead the auction boom in a cascade of downsizing, Higgenbotham said.
“You find that there’s a tremendous growth in auctions for million-dollar homes here,” he said. “The call volume we’ve been getting on those are up 30 percent or more this year, compared to last year.”***
In the rise of the home auction, auctioneers are noticing another trend — the speculators are gone.
Through the 1990s and until 2001, Peters used to only get bidders whom he describes as “end users.” Then, as the stock market boom faded, speculators who turned to real estate started to pack his crowd.
But by January this year, the “flippers” started fading out, he said.
As the market cools, auctioneers say their technique still yields a better price than the non-auction market.
“Say you have five offers” in a regular home sale, Peters said. “In my case, I have five buyers — and then I pit them against each other.”
Another advantage to the home auction: “Just being able to walk around inside, without someone breathing down your neck,” said Mike Citron, who auctioned his Hudson Beach home in Pasco in April.
But auctioneers can also be pickier. Spatz, for example, prefers houses that are a little less of the cookie-cutter variety.
“They all look the same,” he said, of large subdivisions. “I got no story to tell.”
As with most novel markets, home auctions are an exercise in buyer beware. Peters warned that many operations listed in the Yellow Pages are of the here-today-gone-tomorrow variety.
“Look for longevity,” he said. “Go to the auctioneer’s office. Many so-called auctioneers work out of the back seat of their cars. See what they’ve sold and closed. Look for the settlement statements, signed between the buyer and seller and the title agent.”
In a sagging market, auctions may just be the way to snap a little old-fashioned fun in the recovery.
“We’re the oldest profession in the world,” Spatz quipped. “Some people may think we’re the second oldest. But somebody had to set the prices.”
Times photographer Julie Drapkin and researcher Carolyn Edds contributed to this story. Chuin-Wei Yap can be reached at email@example.com.
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