PHOTOS COURTESY OF KAHALA ASSOCIATES
An interior view and an exterior view of the La'i Road home being auctioned tomorrow. The trend of offering real estate auctions on the Internet may catch on in the physical realm as one more ways for sellers to market their property in Hawaii.
Auctions of homes gain popularity
as a way to sell property quickly
Anyone who's sold property in Hawaii knows the drill: List the property, host a few open houses and wait for the offers to come pouring in. It's been happening so long that it's hard to imagine doing things any other way.
In New Zealand and Australia, auctions are the normal way to sell property. In the United States, real estate auctions are most closely associated with government and bank foreclosure sales. But the same auction fever that has spread from eBay tchotchkes to cars, fine jewelry and art may be catching up with the real estate market.
Once viewed as a quick way to get rid of a property due to unfortunate circumstances such as bankruptcy and divorce, home auctions have become a regular attraction on eBay. At any given time, you can find about 7,000 property listings online, ranging from foreclosures to land and commercial listings, timeshares and residential homes. Current listings range from a $4,500 home in a mobile park in Tampa, Fla., to a Sonoma County Wine Country Estate for $5,400,000, with vineyards planted in Zinfandel and Cabernet grapes.
There are also three Hawaii listings for two waterfront Hawaii Kai townhouses, listed by their owners at $415,000 and $515,000, and a Big Island estate and coffee farm offered at $2.9 million.
PHOTOS COURTESY OF KAHALA ASSOCIATES
The above is a building site that comes with the 1.1 acre property that features a view to Waikiki.
For the first time tomorrow, a high-profile real estate company, Kahala Associates, in partnership with Real Estate Auctions Hawaii, is entering the auction realm. Up for bid is a house at 2547-A La-I Road in Palolo that normally would have been sold the traditional way.
The auctioneer is Joe Teipel, who's well known on the local charity and auto auction circuit, and is branching into real estate auctions through REAH. He is the local consultant to J.P. King Auction Co., an Alabama-based marketer of trophy since 1915, and which branched out to Internet auctions a few years ago.
Whereas Teipel deems a foreclosure auction a reactive approach to selling a property, he calls his approach proactive.
"Some properties can linger for months, but we can put something on the market for 30 days and it's done," Teipel said.
The seller may get a higher price due to "the emotional, or 'blue sky,' values that come into play," at auction.
The buyer, of course, wants to pay the least for a property and may pay more due to the live competitive nature of an auction, but Teipel said at the worst, a buyer will pay the home's market value.
"For the most part, every buyer has done his homework, and they're not going to want to pay more than the home is worth. If I have the winning bid at $800,000 and the back bid is $799,000, then I'm going to feel pretty good because the market has told me exactly what the place is worth. It's not like it'll make a big leap from $750,000 to $800,000."
He said auctions may also be used by developers to finish sales of last units in a condo project or to kick off a project. Mentioning quick sales of recent condo projects, Teipel said, "That tells me they were probably underpriced, and the developers might have gotten more for the units at auction, which would set the tempo -- what would the marketplace bear."
KAHALA ASSOCIATES President Victor Brandt said starting from scratch in marketing the auction has been more difficult than following established practice. "It's easier to stick a sign in front, post to the MLS (multiple listing service) and throw an open house."
KAHALA ASSOCIATES
A statue graces the tropical landscape at the 2547-A La'i Road home that is being auctioned by Kahala Associates and Real Estate Auctions Hawaii.
Preparing for auction has meant launching a full-fledged marketing campaign involving sending out postcards, e-mail and fax broadcasts, and advertising in newspapers nationwide, from the Los Angeles Times to the Wall Street Journal. As a result, Brandt is expecting a handful of buyers to fly in from the mainland for the event.
"We've been receiving 10 to 20 calls a day from the mainland, and all seem very excited about the property," he said.
The sellers made the decision to sell their home at auction, Brandt said, because "they thought there was not enough attention, that people weren't coming to Palolo to see the property.
"The auction process creates an urgency because there is a final date in which everything comes down to the bang of a gavel."
The property up for bid, to be sold "as is" with no contingencies, is situated on 1.1 acres (47,932 square feet) planted with fruit trees and exotic plants in a parklike setting. The main home has three bedrooms and two baths, plus two studios, and a building site for a second home overlooking Waikiki.
Just as with a regular sale potential buyers who require financing must provide a pre-qualification letter at registration.
Those who will be bidding must also bring a cashier's check for $10,000, in their own name, that will be endorsed to open escrow upon acceptance.
Auction sign-in will begin at 11 a.m. before the noon bidding starts. Park on 10th Avenue and walk 100 yards or catch the shuttle bus that will run bidders from their cars to the property.
To assuage Realtors' fear of change, Teipel assures: "Auctioneers are not competitors. We partner with brokerages."
The seller commission structure for brokers and Realtors remains intact. Whereas buyers do not currently pay a commission, with an auction they will pay a premium to compensate the auction company. In the case of the house at La-I Road, it is 5 percent of the property's sales price.
For more information, visit www.KahalaAssociates.com/Auction or call 735-7500. The Web site jpking.com contains tips on how to buy and sell at real estate auctions.
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