Florida High-End Homes Sold at Foreclosed Homes Auctions

Posted on August 13th, 2009 in Florida

More and more homes priced between $4 million and $7 million are being sold at foreclosed homes auctions because they are not getting sold through regular channels, according to Jim Gall, head of Auction Company of America.

During the boom years, high-end homes were also sold at auctions, but the prices remained close to their original purchase prices, unlike these days when auctioned homes are getting sold at bargain prices. Also, in the boom years, publicity strategies were effective in bringing moneyed buyers to auctions.

In 2007, Sky Sotheby’s International auctioned off at the same time 20 luxury homes in Sarasota with an average price of $3.5 million. Chad Roffers, then the head of Sky Sotheby’s, said the auction of large numbers of luxury homes was not usually done.

The collapse of the housing market and the continued decline in home prices have forced owners of high-end homes to turn to auctions to sell their homes as they are pressured by the courts or their creditors.

In July, Concierge Auctions auctioned off 4 high-end distressed homes in Florida, including a $5.9 million eight-bedroom Ponte Vedra waterfront home which had been languishing in the market for two years.

Alan Kravets, head of auction company Sheldon Good, said he has been getting a lot of calls from residents of affluent communities such as Palm Beach, Aspen and the Hamptons. He added he has sold homes priced between $2 million and $5 million through auctions for owners who were not able to sell them.

To increase the chances of high-end homes getting sold at auctions, some auction firms market their auction as absolute auction, which means minimum bids are not set and the sellers agree to accept the highest bid, even if it is extremely low.

Auction Company of America applied the absolute auction strategy when it auctioned off the multimillion-dollar home of businessman Jack Warner on Little Torch Key.

Warner, now 61, bought the home in 1993. With a pool and clear views of Florida Bay, it was appraised in 2007 for almost $14 million. When his Indiana construction business closed and his Florida property investment firm became bankrupt, he was forced to ask help from the auction company to sell his home after failing to sell it at $5.9 million.

Warner hoped the selling price would exceed $3 million so he could pay all his remaining mortgage loans, but he silently accepted his fate when the final bid was only $2.5 million.

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