- The Washington Times - Friday, June 15, 2001

When Phil and Susanna Zaffere decided to sell their elegant beachfront home in Delaware, they didn't want to wait a year or two for a buyer amid the likely parade of flip-flop-wearing, house-hunting hobbyists.

"Time is money," says Mr. Zaffere, who saved families thousands of hours of cooking with his invention of Stove Top Stuffing in the 1970s. He put the Rehoboth Beach manse into the hands of William Bone, president of the National Auction Group, who gathered a well-heeled crowd in the home's poolside kitchen and sold it for $1.9 million by the end of the day.

"We had value there, and we wanted to sell it quickly because we weren't using it," says Mr. Zaffere, who also has homes in New England, St. Croix and Oxford, Md., where he now resides. "There was no way we were going to sit and baby-sit that place waiting for a buyer."

Auctions, traditionally considered the last hope for selling a "distressed" or undesirable house, are starting to be seen as a practical, even fashionable way to sell such high-profile properties as the Zafferes' home.

"When you've got a home worth over $1 million, it's the only way to sell, in my opinion," says Lynn Gardner, corporate auctioneer for Fairfax-based Long & Foster. "With that price, you have to reach well beyond the usual house hunter. Auction is a tool that works well for that."

The past 18 months have seen a slowdown in real estate auction activity because traditional sales have been bringing in multiple offers within just hours of listing, Mrs. Gardner says. Now that the housing market has slowed down a bit, however, sellers grow impatient, she says. For many, that makes auctions more attractive than ever.

For one thing, auctioned homes are sold "as is." That means no warrantees or guarantees, no carpets or appliances to replace, no walls to paint. Sellers can wipe the slate clean and even get rid of their furniture on the auction block at the same time.

A buyer usually is required to come to the auction prepared to put down 10 percent of the selling price, a chunk of change so large that few ever back out, says Bob Chenery, a Danville, Va., real estate agent and auctioneer who is helping the Virginia Association of Realtors (VAR) explore the possibility of creating a specialty group for auctioneers.

"When we say 'sold,' it's pretty much a done deal," Mr. Chenery says. "You put $2,000 down on a $200,000 house, and you might walk. You put $20,000 down, and it's unlikely."

Still, there are risks to consider. A successful auction demands great marketing to attract the right bidders.

"You have to absolutely understand marketing and advertising on a national scale," Mr. Bone says. Even when an auction brings in less than expected, Mr. Bone says, most owners of million-dollar homes are pragmatic.

"There is an element of risk there," he says. "For most people we work with, though, one property doesn't represent a huge part of their net worth. It's not the end of the world."

Mr. Bone started the National Auction Group in Gadsden, Ala., in 1992 after hearing that a million-dollar home usually spends a year or two languishing on the market before sale. That year or two can be expensive because of the upkeep and taxes involved for a high-end home. As Mr. Zaffere puts it, "Why get bogged down on something that is stagnant?"

Mr. Chenery uses the example of his own home, which sat on the market for four years at a $240,000 listing price and finally sold for $150,000. He says he "would have made more at auction and could have saved $20,000 in taxes and mortgage payments."

Most auctions are absolute, meaning that the highest bid no matter how low takes the house. Other options include a reserve auction, which reserves for the seller the right to reject a bid, and a minimum-bid auction, which opens at or above a pre-published price.

Absolute auctions draw the biggest crowds, says Mrs. Gardner, who has sold 3,000 homes at auction since 1994.

A seller might feel safer starting with a minimum bid, but Mrs. Gardner says it is better to trust market forces to put the right price tag on a house.

"It's going to bear what the market demands," she says. A study by the Gwent Group, a firm that conducts research into auctions, estimates that by 2007, one in three properties will be sold at auction.

The tactic has made inroads in the Washington-Baltimore real estate market, but it hasn't reached the level of acceptance it enjoys in Australia, where more than 90 percent of home sales are completed on the auction block.

For now, the majority of local buyers are sticking with the multiple listing, which allows them to flush toilets, peek inside closets and negotiate closing costs before signing on the dotted line.

"I don't think buyers are attracted to it yet," says Alana Lasover, president of the Greater Capital Area Association of Realtors. "They're working with Realtors and checking the multilist. When people are desperate, they look at everything even auction. It may take off, but not right now."

More info:

Online

• (www.auctionmarketing.org). This site can help you find a licensed auctioneer in your area.

• (www.national-auction.com). Check out the list of celebrity homes and the prices they garnered on the auction block.

Book

• "Sold! The Professional's Guide to Real Estate Auctions," by Stephen J. Martin, Dearborn Trade publishing, 1991.

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