Wednesday, February 21, 2018
Business

Going once -- frothy market leads more owners to auction off their houses

TAMPA — Dan and Tekla Ulrich have received several offers for their vintage duplex looking out at the Marjorie Park Marina on Davis Islands. None of the offers has suited them, so on this steamy evening they are waiting for the start of an auction at which they hope their home of 40 years will finally sell for the price they want.

But first, they must spend an hour watching potential bidders troop through, critically eying every nook and cranny.

"Oh, this is sweet," one woman coos. "Bathroom in the bedroom, it's en suite."

"It has a view of the water," her companion notes, "but the rooms are kinda small."

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Outside, others are filling chairs under a white tent. A crowd of dog walkers, stroller pushers and assorted lookers-on begins to gather, creating the air of a neighborhood block party. At 7 p.m., camera phones come out as auctioneer Michael Peters steps to the podium and explains that two properties are being auctioned — the Ulriches' duplex on Columbia Drive and a duplex around the corner on Bering Street.

Then the bidding starts. The Bering Street duplex goes for $630,000 and Peters starts taking bids on the Ulrich place.

"Do I have 640?'' he asks, rat-at-tat auction lingo for $640,000. A hand in the audience waves almost imperceptibly. "I have 640, now 645.''

Nothing happens for several agonizing seconds.

"GUYS,'' Peters implores, nodding toward the water. "Look where you are!''

***

In the wake of the housing crash, the word "auction'' too frequently has meant the forced sale of homes whose owners can no longer pay their mortgages. Since 2012, nearly 43,000 homes have been sold at foreclosure auctions in Hillsborough and Pinellas counties.

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But now, with the real estate market strong again, a small but growing number of owners like the Ulriches are voluntarily going the auction route even though they have substantial equity in their homes. For that type of seller, auction's main appeal is the prospect of a fast sale on a fixed date with multiple bidders driving up the price. And because the preview period is often limited to just an hour before the auction, they don't have to worry about frequent showings.

The reasons leading to auction, though, vary widely.

"We look for people with immediate need to sell and close — relocation, divorce, probate, inheritance," says Steve Doran of the auction division of Berkshire Hathaway HomeServices in Tampa. "They're not desperate but motivated."

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The process can take as little as three weeks, and about 90 percent of the company's auction sales go through. "The reason it's so high is if we don't see a high probability of success we pass," Doran says. "I don't want to waste my time or theirs." The seller typically pays a 6 or 7 percent commission plus a marketing fee that he says is usually less than $1,000.

Doran and partner Vincent Gepp have been conducting auctions for local Berkshire Hathaway franchises for 13 years, but moved in-house six years ago as demand grew. They auction five or six homes a month on average, with sales last year totalling about $20 million.

Two auctions are on tap this month — a lakefront estate in Lutz on Aug. 12 with a "suggested'' starting bid of $450,000, and a five-bedroom home in Trinity's Champions Club community on Aug. 19 with an opening bid of $400,000.

According to the Multiple Listing Service, the latter home had been on the market for several months before it was finally set for auction. Doran estimates 90 percent of his business comes from agents with properties they haven't been able to sell.

But, "the best auctions are the ones never listed (in the MLS) because it's not stale," he says. "It's new to the market, it's fresh and exciting."

American Heritage Auctioneers, a family-owned company selling the Davis Islands duplexes, takes a somewhat different approach. The seller generally pays marketing costs — the amount varies by property — but no commission. The company instead charges the winning bidder a "buyer's premium" equal to 10 percent of the sale price.

American Heritage gets new-to the-market properties as well as ones that have sat for a while on the listing sheets of Century 21 Beggins, one of Tampa Bay's largest real estate firms.

"We have a program where (sellers) list first with Beggins and after a certain period of time we work together to get the sale going," says Mathew Eberius of American Heritage. "But we don't take it to auction if the seller has a really pie- in-the-sky number. We deal with realistic sellers."

For sellers who want to avoid hefty commission or marketing fees, the online real estate site ForSaleByOwner has partnered with the online auction site Xome to offer a Super Seller package. As part of the service, the home is listed in MLS with an auction date although a local real estate agent will take pre-auction offers and help with negotiations. If the seller accepts an offer, the auction is cancelled. If not, the auction goes ahead, with the winning bidder paying a 5 percent premium

"The main thing with auction is that it's an accelerated marketing plan," says Michael Saylor, a Xome agent in Seminole who is also a licensed auctioneer. "Once you put a date and time on it you are notifying the market to get prepared and come and submit the highest and best offers."

Auctions typically have reserve prices — the minimum amount the seller will accept. The seller can accept a bid below reserve but typically won't.

Over the past few years, sellers rejected the bids at highly publicized auctions on three luxury homes — the Avila mansion of former Tampa Bay Rays owner Vince Naimoli; the Clearwater estate of champion powerboat racer Hugh Fuller and the St. Pete Beach resort that once was the winter home of beer and baseball magnate August Busch. All three properties subsequently sold, although it took well over a year.

***

Barely five minutes after the auction starts, Peters has pushed the bidding on the Ulriches' Davis Islands duplex as high as it will go.

"SOLD for $652,000!"

But not quite.

Peters and his American Heritage colleagues confer with the sellers. The Ulriches and the owners of the other duplex are longtime friends and hoped that both parcels would sell at the same time. And they hoped for a total of at least $1.4 million.

"If anybody wants to buy both…'' Peters says, but the crowd is quickly dispersing.

Carrie Smith Helms, a Tampa Realtor, is among those who leave frustrated. On behalf of what she calls "a very well known major development company," she and her partner had previously made the sellers a written offer of $1.2 million — less than the high bids combined but a starting point for negotiations, she says.

Helms doesn't like auctions. Buyers and sellers alike "have much more negotiating ability in a typical market than in an auction market," she says.

But the Ulriches are happy with the auction company and confident that negotiations with the high bidder or bidders will soon result in a sale.

"We feel we will have gotten more for less cost," 'Dan Ulrich says. "We'll walk away with more than we would have through a traditional sale."

As of today, they were still waiting to hear.

Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate

   
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