COURTESY ELITE PACIFIC PROPERTIES
The above North Shore estate is one of about 20 homes that Elite Pacific Properties will be offering in July as part of a multi-property auction, a new way to sell real estate in Hawaii. The minimum bid for the 37,587-square-foot property is $5.5 million.
Isle firm to sell property via auctions
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While real estate auctions are a relatively common way to sell property on the mainland they are still a rather rare practice in Hawaii.
A Honolulu-based real estate company founded in 2005, Elite Pacific Properties, hopes to change that.
After researching home auctions on the mainland, it has decided to stake its own bid on a segment of the market that is still new to the islands -- multi-property home auctions.
On July 14, the company will host its first multi-property auction, featuring more than 20 properties representing a combined sales volume of $25 million.
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Elite Pacific Properties, a rapidly growing real estate company on Oahu, will become the first Hawaii real estate company to bet a portion of its future on the trendy real estate auction market.
The company, founded by Paul Mayer and Stephen Cipres in 2005, got its start in Hawaii's high-end real estate market by offering flexible sales commission structures, some as low as 1 percent. As the company expanded, it began offering more traditional real estate and property management services to its upscale client pool.
Now, Elite is once again on the cutting edge of Hawaii real estate. The company, which closed $39 million in transactions during its second year of business and has grown its office from two to 21 agents since its inception, will begin specializing in multi-property real estate auctions.
While auctions are a relatively common way to sell property on the mainland, especially in high-end markets, they are still a relatively rare way to sell real estate in Hawaii. However, there have always been a small percentage of island properties that changed hands at auction.
Elite researched auctions in depth and noticed a trend outside of Hawaii for multi-property auctions, Mayer said. When other Oahu brokerage firms expressed interest in working with Elite to auction their listed properties, the principals knew that they were on to something, he said.
After successfully hosting several individual "sealed bid" property auctions earlier in the year, Elite has organized what it has termed Hawaii's largest ever multi-property auction, to be held at the Hawaii Convention Center on July 14 from 10 a.m. to 3 p.m.
The company, which has closed $48 million in transactions and has $17 million in escrow year to date, has another $25 million in real estate listed for sale at this auction.
More than 20 owners have agreed to auction their properties at Elite's first multi-unit venture. Minimum bids range from $200,000 for a condominium in Mililani to $5.5 million for a North shore mansion. Just over half of the properties being auctioned are co-listed with other real estate brokerage firms, Mayer said.
"There is something for every buyer at the auction, including vacant land, income properties, condos, and houses, Cipres said. "Naturally, our sellers are expecting to get bids above the minimum, while buyers turn out hoping for a good deal."
Elite expects about 300 registered bidders for the auction, with about two thirds coming from the local community and the rest from out of state. Bidders will need to bring a $10,000 cashier's check and be prepared to make a 10 percent down payment within two days, and close by Aug. 15.
Spectators will be allowed at the auction, but will have to pay a $50 entry fee to cover the cost of the lavish catered lunch.
Demand for the auction has been so strong that Elite has already scheduled another multi-property auction for Oct. 27, Mayer said.
"By 2008, we expect to host one of these a month," he said.
Patricia Buckman, principal owner and founder of Island Properties, has listed her client's four-bedroom, four-and-a-half bath Kahala home in Elite's July auction. The 4,436-square-foot property, which has been on the market since June 1, was originally listed at $3.5 million; however it goes to auction with a minimum bid of $2.1 million.
"Since there is a reserve price, the owner basically felt like he had nothing to lose by placing it in the auction," said Buckman, who said that she hopes that the auction will bring the property exposure in a marketplace that has nine months' worth of luxury inventory listed.
While Buckman has participated in Hawaii real estate auctions before, she said to her knowledge no other Hawaii companies have ventured into that market as deeply as Elite.
"It's not been done before," she said.
Harvey Shapiro, research economist for the Honolulu Board of Realtors, said it will be interesting to watch Elite's auction venture play out in Hawaii.
"It will be interesting to see how they fare. I don't know whether Hawaii is a good market for this or not -- the concept has never really been tested," Shapiro said.