1 - Main Aerial

This enormous, luxurious estate at 3420 Ranchero Road will hit the block with Heritage Auctions on March 14, but read below if you want an exclusive tour tomorrow!

We all know about Ranchero Road up in Plano, one of the toniest addresses you can have.

The area is literally in the heart of Plano, off Parker Road, between the Tollway and Preston. The lots are gigantic, wooded, with tanks and ponds and natural surroundings that lure you into believing you are in the country, especially at night. Shhhhhhh.

(more…)

Heritage Auctions home 1If you are on our email list, which you should be because we have some very cool parties, then you know that I am a panel speaker tomorrow evening at Heritage Luxury Real Estate Auctions 2nd Tuesday... along with Ben Jones, Brad Kimple, and those fantastic Heritage folks Nate Schar and Scott Foerst, who know everything you’ve always wanted to know about real estate auctions, but were (maybe) afraid to ask. Or maybe not!

Everything you wanted to know real estateTee hee. I remember when my dear mom bought that book, she was trying to be so private, and it slipped out of the bag in the middle of the bookstore, and I picked it up!

Well, tomorrow night, we are pulling out the stops and talking all about LUXURY REAL ESTATE AND AUCTIONS! And you can ask us anything you want!

Tuesday, September 10, at the Heritage Auction Gallery, 1518 Slocum Street, Dallas from 6:00 to 8:00 p.m. Hope to see you there! Refreshments provided, so you never know what might happen... please RSVP to RSVP@HA.com or let your fingers do the talking: 214.409.1050

Heritage Auctions home 1Fasten your seatbelts, get that reserve ready! I have told you all about real estate auctions, and I predicted we would be seeing a whole lot more. Real estate auctions are a great way, in fact, maybe the only way, to unload big, kinda albatross-y homes, as well as your standard multi-million dollar fare. Best example, of course, is Champ D’Or which sold at auction last March 31 in Hickory Creek.; whose contents were just sold off last week. That puppy had been on the market for about ten years. Often the owners are high net worth individuals who dabbled, or rather, over-dabbled in building, went a little too high end, or built in a location that turned out to be just plain WRONG!

Well, guess who figured this out and has jumped in to help? Our friends over at Heritage Auctions right over there on Maple Avenue. Did you know that Heritage has slipped right up on Sotheby’s and Christie’s (and, some say, moving up on) to become the world’s third largest auction house? Yes, right here from Big D. Now the venerable art and collectibles auctioneer has announced the addition of Luxury Real Estate auctions to its growing portfolio of 30+ Auction categories.

The Heritage folks are so smart: not only will this net them more fine art and collectibles to sell, it will net them the very dirt and walls that surround all that stuff like, for example, the contents of Champ. Brilliant stroke!

The timing may also be more than perfect: two of the country’s top real estate auction houses are embroiled in nasty finger-pointing lawsuits. North Carolina-based Grand Estates Auction has charged New York based (and Sotheby’s sort of affiliated) Concierge Auctions of using sham bidders and other fraudulent tactics to inflate its transaction volume, and is seeking $23 million per claim. Concierge sold Champ D’Or here last March and more recently, an estate in Plano. Grand Estates, based in Charlotte, and two couples/home sellers alleged that Concierge published auction results for sales that never went through or involved “shill” buyers. The buyers, in collusion with the company, allegedly failed to register for the auction or pay a $100,000 registration deposit. The suit says deposits were returned in many of the sales. Further, Grand Estate says Concierge allegedly misrepresented its sales numbers and used web crawlers to inflate its Internet traffic. (Say what?) Of course, Concierge had already sued Grand Estates, alleging the firm set up fake email accounts to publish “false and defamatory” stories (what we call troll comments) about its competitor and steer business to Grand Estates. While these two duke it out, Heritage ought to sail right down the runway.

Unlike traditional real estate listings, sellers with Heritage Luxury Real Estate Auctions work with the team to maintain control over the entire sale, setting the date, marketing strategy, and terms of the auction. Relax agents, that team includes YOU. Selling at auction, of course,  creates a competitive bidding environment, where fully-qualified and motivated buyers participate in a transparent, non-contingent sale — all within 60 to 90 days’ time frame from beginning to closing.

Do not, repeat, do not confuse auctions with foreclosures. The Luxury Real Estate auction format accelerates the selling process, creates a sense of urgency with buyers and eliminates carrying costs while the vetting process brings in something every Realtor would kill for:  fully qualified buyers.

Experts tell me that homes that sell at auctions are homes that are simply not going to sell the traditional way: list, sign, MLS, wait for buyer. They may be too specialized, or overbuilt, or in the wrong location, or the sellers have grown tired of waiting. (Sound like Champ?) But never mind all the negatives: if a home is highly desirable and you can get a lot of people excited about it in a short, defined period of time, and you market the bejesus out of it, you can sell it.

More and more sellers, in fact, are coming to auction houses first so they don’t have to hassle with the time and inconveniences associated with listing a property the traditional way.

The Directors of the new Luxury Real Estate category are Nate Schar, who will be working from San Diego, Scott Foerst in Atlanta, and Amelia Barber, holding down the fort in Dallas, where Scott and Nate spend half their time anyhow. Scott  and Nate have a 13 year history of selling multi-million dollar properties by auction throughout North America totaling more than $250 million in sales. Previously, Nate was an asset manager at one of the Midwest’s top wealth management firms, and Scott served as architect and senior project coordinator with both commercial and residential construction firms in the Southeast. Both came to Heritage from — surprise! — Grand Estates Auctions. Amelia comes to Dallas by way of The Hill as in Washington, D.C. where she was a lobbyist. Amelia also managed operations for a national financial trade association.

“Heritage is the first fine art and high-end collectibles auctioneer to offer Luxury Real Estate auctions in this specific format, a perfect fit with our portfolio of services catered to high net worth individuals,” said Paul Minshull, Chief Operating Officer of Heritage Auctions. “These auctions will put the seller in control and provide liquidity in a timely manner.”

The properties presented by Heritage Luxury Real Estate Auctions will be marketed with customized advertising plans regionally, nationally and internationally, including Heritage’s 750,000+ bidder members from more than 186 countries. (How do you spell high net worth? HERITAGE.) The auctions will be marketed out the wahzoo to qualified buyers.

“Our sellers are finding this process a tactful and savvy means of resolving their traditional selling dilemma,” said Scott. “Auctions help maximize the full market potential of Luxury properties.”

So I asked Nate, Scott and Amelia: will this be vacation or primary homes?

“Vacation properties about 80% of the time,” said Nate, “There’s a lot of vacation homes out there and available, thus more inventory to sell.”

Many of those homes are free and clear with zero mortgage debt. Heritage will not be selling private planes and yachts, at least not at this time.

But there will be some primary residences in the pool. The trio plan 18 to 24 auctions per year, with the first one set to rock and roll this fall. I’m off to Maine next week — I’ll take this one!

 

Heritage Auctions home 2

 

 

 

 

 

 

 

As I told you last week, Champ D’Or is going to be auctioned off in a special, select residential real estate auction on March 30. The auction will be handled by Concierge Auctions, who only deal in the highest of high end properties, as I may also have mentioned. And if you are starting to suspect that auctions are the way more White Elephants Highly Customized High End Luxury Homes are going to be sold, you are absolutely correct. In fact, auctions are a great way to sell some properties.

“But you have to have a property that has the wow factor,” says Pat Kirby, with Grand Estates Auction Company. Though Pat has his real estate license only in Texas, GEA and their broker partners can coördinate sales pretty much anywhere in the U.S., Canada, and The Caribbean. Pat and the GEA team specialize in selling only via auction, which they have been doing for more than 13 years. Pat says he never desired to be a traditional agent, preferring the predictable hours at GEA. He lives in Dallas, so Pat is my go-to guru on residential real estate auctions.

The homes that sell at auctions, he says, are homes that are simply not going to sell the traditional way: list, sign, MLS, wait for buyer. They may be too specialized, or overbuilt, or in the wrong location, or the sellers have grown tired of waiting. (Sound like Champ?) But never mind all the negatives: if a home is highly desirable and you can get a lot of people excited about it in a short, defined period of time, you can sell it. There are buyers out there, qualified buyers, and Grand Estates Auction Company finds them. Increasingly, they are taking properties that have never been listed before. More and more sellers, Pat says, are coming to auction houses first so they don’t have to hassle with the time and inconveniences associated with listing a property the traditional way.

“We sell properties at absolute auction,” says Pat, “meaning there is no reserve (base price), meaning buyers determine the true market value of that home. If you have a reserve price, that’s just a fancy way of disguising the list price. I see ads in the Wall Street Journal all the time that list a reserve price. That just doesn’t get buyers excited.

The adrenaline rush comes when you have a fabulous home, says Pat, and you sell it at no reserve to the highest bidder. Buyers get caught up, thinking they are getting a REAL DEAL! It’s the same adrenaline rush that makes women fight over La Perla brassieres at Neimans Last Call. If you know something will be there for weeks, meh, you wander off and peruse handbags. But if you know there are other gals who will snatch that C-cup number with the imported lace bows ON SALE, you say, charge it NOW.

That’s how the checks get written. Another plus: auctions have a way of culling out the folks who can really afford a multi-million dollar property.

Scottsdale property

Scottsdale property pool & grotto

Grand Estates starts with 60 to 90 days of a ****load of marketing. A recent auction of an amazing contemporary home in Scottsdale — retractable roof, observatory, 4700 square foot indoor gymnasium, a backyard zip line, an eight car garage, ridiculous — got press all over the Phoenix news. Here’s how they saturated the market in Phoenix/Scottsdale: advertised nationally in Forbes, Wall Street Journal and other national media outlets, plus targeted marketing in Chicago, Los Angeles, Vancouver, Calgary, and Mexico. Print, online, direct mail, social media, public relations, signage. They plugged into their golden database of buyers. Timing was key too—the auction was planned to coincide with the world famous Barrett-Jackson collectible car auction and The Phoenix Open golf tournament –yep, that’s why I go to Pebble Beach. Pat and the GEA team (it takes all 15 employees of Grand Estates to sell each home) sorted through more than 500 phone calls that came in from all the advertising, picking through inquiries to bring together a room of highly qualified people, which he did. More than 350 groups of people trooped through the house over the course of 5 days prior to the auction before they bid on it.

Here’s what’s sweet about auctions: there is a time pressure cooker that most agents would kill to have. What if, say, an agent had a week to sell a home? How incredibly efficient would that be? First you market the bejesus out of the place. Oh and get this: the homeowner PAYS for all that marketing, yeah. Like top Realtors, top Auction Houses have contact lists of gold. Or platinum. Pat Kirby tells me his contact list is so juicy and dripping with high net worth names and contact info he literally has it insured. He has developed it over years of placing ads in financial publications (Barrons, Bloomberg, the WSJ) that caught the eye and produced feedback from every Wall Street executive, investment banking titan and Hedge Fund manager he could find. These are the folks who have the requisite $100,000 (just to register) cash sitting in the bank and don’t bat an eye at putting down a 10% non-refundable deposit on auction day if declared the winner. They are itching to buy a ski place “for pennies on the dollar” in Park City or Spanish Peaks or a Scottsdale home on a Fazio golf course with an infinity pool overlooking the mountains or a beach place in Maui. Not every buyer is your typical Hamptons-walked-out-of-a-Ralph-Lauren-ad type buyer. One buyer, said Pat,  came in wearing Bermuda shorts and a tight, gross $10 tee shirt but had $2 million cash in the bank!

“Looks can be deceiving,” he says, “that’s why we vet our buyers very carefully.”

The ideal buyers want the deals, have the cash, and can afford to hold the property until the cows come home. Folks like John Paulson and Jamie Dimon might be on this list, or their buddies.

An auction works very well if you pick the right situation.

“Trying to auction a few Highland Park McMansions all the same wouldn’t get people all that excited,” says Pat.

But the Schlegel Penthouse at the W… now that would create some excitement.

Pat has concerns about the Champ auction. For one thing, the estate has had SO MUCH publicity, all the agent and brokers who have tried literally everything to sell it. Everybody’s known about the house forever, he says. Taxes in Denton are outrageous… plus the trend in last few years has been away from the 20,000 plus square foot homes.

Ya think?

“It’s hard to say how well it will do,” he says. “If they can gather enough qualified buyers and force them to compete, they might pull it off. I’d be curious to know what the price expectations of the seller truly are.”

Concierge, he says with a twinkle, is a babe in the biz, learning as they go, kind of like President Obama. Maybe, he says, they’ll get lucky on this one. The company was formed by former Sotheby’s agents, hence the alliance with Sotheby’s corporate. (And now you see the connection to Briggs-Freeman Sothbeys, capiche?) But selling at auction is a totally different can of worms than traditional real estate sales, says Pat. Realtors might think its similar, it’s not. Realtors often are included — as they will be at the Champ sale.

“The broker who repped our buyer in Scottsdale said, ‘this is such a different animal than what I’m used to.’,” says Pat. “You are basically hiring an advertising agency to sell one property at a time. You are using the auction methodology to drive prices up. There needs to be lots of marketing methodology to create interest in the property. Then you are pinning one (qualified) person against the other to drive the price of the property as high as it will go.”

Sounds like walking a really delicate tight rope.

So, I asked, at Grand Estates you never have a reserve? Sometimes, yes. Depends on the situation, said Pat. Every situation is different and tailored for the particular property for sale.

And there are many ways to do an auction. There are sealed bid auctions, published reserve auctions, non-published reserve auctions, absolute auctions, and seller confirmation auctions. There are even Dutch auctions, better known as reverse auctions, where the auctioneer starts at a high number and go backwards until someone throws their paddle up in the air, like a game of chicken. Pat says an absolute auction works best.

So what will happen to our precious Champ? And why didn’t it sell in almost ten years of marketing in the hottest real estate market of all time?

Champs is in the wrong location, says Pat. They broke, he says, the cardinal rule of real estate: location location location. The owner cannot recoup the investment. Put $50 million in a home in Hollywood Heights: you’re not going to get it back.

Pat remains bullish on the Texas real estate market. In Texas, he says, we learned our lessons back in the 80’s, which is why we didn’t fall as hard this time. We didn’t let our prices go nuts like other cities did, and our economy is better than most. He tells me about a call he had last week from a guy in the smack center of Michigan, in a place called Lupton. Has a 12,000 square foot home, has $10.9 million in it, wants out. He’s in the middle of the fricking state, no runway for a Lear — a Lear needs at least a 5500 ft runway. No Lear, hell, there’s not even a commercial airport nearby.

“We can’t help this guy” says Pat.

So how do these auction agents make money? We have established that a real estate auction takes a buttload of investing in advertising, PR and marketing. (Concierge, the newbies, have hired Rubenstein PR for the Champ Sale to make sure every corner of the high net worth earth knows about it.) But that is covered by the seller, who often finds the marketing costs cheaper than the carry costs of the property — insurance, taxes, mortgage payment, etc. Consider this: it cost Dallas brokers at least $100,000 in marketing costs every time they listed Champ. Pat recently completed another similar lickety-split sale in Sea Island, Georgia, where the seller did not want to even try selling traditionally: he just wanted out. Auctions are huge with second or vacation homes. Auction houses charge a 10% buyer’s premium. This is a fee added to the high bid.  It’s paid by the buyer, and goes to the seller to offset expenses/commissions  — for GEA it’s 10%.

Pat Kirby says we will see more huge homes sold at auction. He believes that for these homes, traditional selling is not going to work. An auction is much more proactive, overturning all the rocks out there.

“It’s like fishing,” he says. “Fishing with dynamite. You bring all fish to the surface, take the biggest fish and put them together on auction day.”

In traditional selling, you sit and wait and wait and wait for a nibble on the line. If one comes, great. But you may never get a bite!

The auction, if done well, marketed correctly, gets far more exposure for a single property than a regular sale. The producer of the ten o clock news could care less about a $1.5 million home on the market unless it happens to be the late Mary Kay Ash home. Or Champ with that Chanel closet and bowling alley. That’s what it takes to get on all news casts, pull 500 inquiries yielding 350 groups previewing a property and end up with QUALIFIED BUYERS.

It’s Psych 101: buyers need a deadline, a sense of urgency. It’s a trigger to make a sale happen in a specified period of time and generate tons of inquiries.

“Our job is to sort through them,” says Pat. “Everybody signs in, we ask how they heard of the auction when they sign in. Then we research them, along with all the people we have been talking with prior.”

Oh and this is not a contingent sale: you bid, you buy. In Scottsdale, it came down to 12 qualified, registered bidders bidding against each other. Serious business: many there with their FA’s.

Scottsdale sold for $4.62 million, Who knows, says Pat, what they could have sold it for the traditional way. Who knows if they could have gotten anything higher? The agents got their commissions, marketing fees paid by seller. Grand Estates claims over a 93% success rate with 60 to 90 days to prepare.

“People are so used to not paying anything to sell a home,” says Pat. “I mean they are paying it, but the costs are hidden. “

I love this house — love the authentic mid-century modern, the size (2200 square feet) but more than anything, I LOVE the location: 10614 Royal Springs. And let’s face it, folks, what is the most important thing about real estate? LOCATION!. You can tear down, re-paint, but you can never move the house.

In fact, I am writing a story on real estate auctions and know what? Most homes that are auctioned off are in terrible, God-awful locations! Tells you something. This pup is on over one-third acre, up off Rosser, west of Midway, south of Royal in a divine, tree-rich, family neighborhood with a cool creek flowing behind it. The home was designed by noted architect Thomas Scott Dean in 1957. Great thought and care went into restoring. Two distinct living areas with walls of glass overlook the green spaces and creek. The “so fifties” extended gables wrap around the back and side of the house, creating an extraordinary outdoor living space. The formal living area has multiple sitting areas and a fireplace as part of exposed brick wall. Den is cozy enough and all you need. There are three bedrooms accessed by a single hallway — I must say, Dean maximized spaces brilliantly in this floor plan, in fact, you need to see it if you ever build. Both baths have been updated with stunning glass tile and a nod to the mid century modern cabinetry. Kitchen look authentic but updated, and there is a two car garage. At $419,000, listed with cute Tom Hughes over at Briggs Freeman Sothebys, I’m more than impressed and predict it won’t last.