Property auction, Woman hand holding gavel wooden and model house on natural green background, ... [+]
The process of buying or selling real estate is never without its risks and rewards, and this range of possibilities is never more apparent than at the no-reserve auction of a home. Despite associations with foreclosures and “fire sales,” the majority of real estate auctions don't stem from these distressed scenarios but, instead, are a deliberate choice by sellers seeking an efficient, speedy way to sell property.
As such, the unconventional method functions particularly well at the higher end of the market, with high net-worth individuals opting for this ease of transaction and the excitement of the auction process. “As these auctions have become more common, people are increasingly considering it as a viable option,” says Eileen McGill of boutique New York City brokerage Elegran.
Landmarks like the Plaza Hotel make for trophy real estate that appeals to regular auction ... [+]
McGill, who is representing clients in the upcoming absolute auction of their Plaza Hotel apartment on Jan. 3, 2024, added that, while it is not the case for every property, auctions of particular luxury homes can yield the best results for both parties. “The real estate world is changing, and for particular properties, this format can be the most rewarding. It can be a win-win.”
The luxury specialist recently sat down to discuss the upcoming auction and why she believes luxury home auctions are growing in popularity.
For those unfamiliar, what is an absolute auction?
An absolute auction is exactly that—an auction that starts at zero and goes to the highest bidder.
Eileen McGill, Elegran
Why would a seller choose this seemingly risky format?
It’s a straightforward process—it alleviates a lot of the stress of the conventional listing method. Traditional listings are essentially an auction anyway, only the whole process takes a lot of time. There are a lot of back-and-forth negotiations but, with an auction, it all happens at once. Also, for a certain kind of property, an auction can be the best way to drive up demand and increase visibility.
The owners I’m working with now have done an absolute auction before and they said it was the easiest transaction they’ve ever experienced. Plus, they also got a higher amount than they thought they would get had they listed it for six months.
You said a certain kind of property can be best sold via auction. What kind of property is that?
Trophy properties that have a special, rare appeal. A home that’s like a Faberge egg, if that makes sense. Take the apartment we’re auctioning off, it’s in the Plaza Hotel and that building has been an iconic landmark in New York since it opened. There’s a pedigree to the building that is truly unique and it’s in a location that itself is iconic. These are the kind of properties that get buyers excited about, especially when it involves an auction.
From the agent side of things, how does the marketing of the property differ from a traditional listing?
You have to do your due diligence upfront. In most cases, the lead-up to auctions happens under such a tight timeframe that you have to really know your stuff and get as many eyes on the property as you can in a short period of time. There’s also a definitiveness to it. It’s not a wait-and-see process. Once that auction day hits, it’s like a starter pistol and at the end, you know the property is going to trade.
How have prospective buyers been reacting to the idea of the property’s auction?
I’ve been showing the property a ton and people seem to be enjoying it. One of the added benefits of the auction that draws in a certain kind of buyer is that it’s fun. Buying a home is always an emotional transaction and in New York it’s usually a lot of money involved, so if you can make that process easier, faster and more exciting, then that’s something I think people are looking for.
I think a lot of agents are going to be keeping an eye on this auction because they’ll want to see how they can make a method like this work for their clients.
