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Putting your home on the auction block

Country music star Barbara Mandrell tried for years to sell Fontanel, her 136-acre Nashville estate that featured an indoor pool, shooting range and helipad. Every time a real estate agent would call, the Mandrell home went into Normandy Invasion mode to tidy the 27,000-square-foot log home for the showing, all to no avail.

Mandrell turned her sad country song into a boot-scootin' boogie by calling J.P. King, a fourth-generation, family-owned property auction company in Gadsden, Ala. Within days, an auction date was set and qualified bidders were invited to inspect the property during a two-week showing period. When the gavel dropped, Fontanel sold for $2.1 million, to the delight of both buyer and seller.

Mandrell's case is not unusual, especially among wealthier homeowners. True, home auctions still more commonly evoke foreclosure images. But owners of $1 million-plus properties are increasingly turning to auction companies as their first choice when selling a home.

The reason: It's fast, it's convenient and it's final. There's no dickering on price, no contingencies, caveats or conditions. High bidder takes all, period.

"What Barbara liked about the auction was the viewing dates were known," says J. Craig King, president of J.P. King. "She got her home ready one time and it was a lot easier on her and her family.

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"Upper-income people have gotten where they are going out and making things happen as opposed to waiting on things to happen," says King. "If they were to list a property in this price range, it could linger on the market for a year or more, and it's hard to create enthusiasm for a shopworn property. More of our sellers are coming to us now as their first alternative."

Auction equals action
Property auctions are on the rise. Reaping the benefits of the growing auction-by-owner segment are the J.P. King company, its Gadsden-based neighbor National Auction Group, Chicago auction house Sheldon Good & Company and other such firms across the country.

According to The Gwent Group, a Bloomington, Ind., firm that tracks the auction market, real property auctions brought in more than $54.5 billion in 2002, a fivefold increase since 1980. While residential auctions only account for about 2 percent of home sales today, the National Association of Realtors estimates that within the next seven years, one in three properties will be sold at auction.

An auction creates an event around a property, effectively lifting it out of the local real estate market where comparable values, financing and negotiating often make home selling a drawn out and frustrating ordeal. For an average 8 percent to 10 percent of the selling price (vs. a 6- to 7-percent real estate commission), an auction company markets the property, primarily and most effectively, through its company database of interested investors.

"At J.P. King, we have a proprietary database of more than 250,000 people who have contacted us on past campaigns with their buying parameters," says King. "Not only do we target our mailings to these people, but we have our staff make a personal call to as many as 500 or 1,000 individuals to let them know we have a property within their criteria.

"A typical campaign will have 50 people who will touch some aspect of that auction process, as opposed to a typical agent who will be driving the sales process on their own."

(continued on next page)
-- Posted: June 2, 2004
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See Also
When an auction is appropriate
20 tricks to selling your home
6 reasons your home isn't selling
Track prime rate/other leading rate indexes
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