What does luxury home auction without reserve mean?
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Why would any luxury home owner agree to selling their luxury home at Auction without Reserve?
It seems to be a new trend in the luxury Real Estate market that sellers put their house up for Auction without reserve.
What exactly does Auction without Reserve mean?
Well, any buyer who registers for the Auction can bid on the property on Auction day. The highest bidder will get the property for their highest offered amount and the seller WILL HAVE TO sell it for that offer price.
Property SOLD sounds like something to celebrate about, but let's look at the outcome;
As example from some of the latest Auctions in Rancho Santa Fe, California.
18127 Via Roswitha, Rancho Santa Fe, Covenant:
Original first asking price $15,900,000 reduced to $12,900,000 sold at Auction Day for $6,400,000
> 60% less than original asking price!
16603 Avenida Molino Viejo, Rancho Santa Fe, Fairbanks Ranch
Original first asking price $10,500,000 reduced to $8,900,000 sold at Auction Day for $4,400,000
> 58% less than original asking price!
15651 Puerta del Sol, Rancho Santa Fe, Covenant
Original first asking price $36,500,000 reduced to $22,500,000 offered in pre Auction period for $10,000,000 - $36,500,000 sold for $11,200,000
> 70% under original asking price!
5425 Los Mirlitos, Rancho Santa Fe, Covenant
Original first asking price $28,900,000 reduced to $19,995,000 sold at Auction Day for $13,000,000
> 45% under original asking price.
16270 Via de la Valle, Rancho Santa Fe, Covenant
Original first asking price $19,955,000 sold at Auction Day for $10,650,000
> 47% under original asking price
14115 Biscayne Pl, Poway
Original first asking price $5,295,000 sold at Auction Day for $2,525,000
> 52% under original asking price
6605 La Valle Plateada, Rancho Santa Fe
Original first asking price $12,800,000 reduced to $10,800,000, sold at Auction Day for $6,075,000
> 52.6% under original asking price
I do wonder, if those sellers had known before agreeing to an Auction without Reserve, for how much their property will be actually sold, if they would have done that. All we read in the paper is successfully SOLD at Auction, BUT, there is no success right there! Sellers are forced to sell under market value! It's only good for the buyers and the Auction Companies as well as the agent / brokers involved.
My advice for luxury Real Estate sellers, do NOT agree to an Auction without reserve! Price your home when you go to market at market value! Don't just think I'm in no hurry to sell, so let's ask for a value which is not supported by the market. Listings become stale after a couple month especially after years. Do not lose Millions of $! Why would you want to, just price it right from the start.
My advice for Luxury Real Estate buyers, do GO to the Auctions, clearly buyers are getting a steal!! However, do your research first, make sure you know the cost of maintaining the property, make sure you understand the market value and comparable properties.