Sluggish market forces new strategy


December 13, 1992|By Adriane B. Miller | Adriane B. Miller,Contributing writer

When Dick Kansler's mother died, he wanted nothing more than to settle her estate quickly. But selling her two-bedroom bungalow in Baltimore -- with the market in the pit of a slump -- wasn't easy.

He tried to sell the house himself earlier this year, listing it at $75,000. It sat without drawing a single serious offer for three months. Then he hired an auctioneer.

Anthony Auctioneers of Towson spent about a month advertising and marketing the property, then sold the house at public auction in 20 minutes.

"You get to a point where you just want to get the monkey off your back," Mr. Kansler said. He gladly accepted a final bid of $72,500 for the property, a few thousand dollars shy of his original asking price.

Mr. Kansler isn't the only frustrated house seller who has turned to an auctioneer to get rid of property during the current slow market.

"There's been a tremendous increase for all of us in the auction business," said Lester Dement Jr., president of the Auctioneers Association of Maryland in Frederick. "There are only so many days of the week to sell. Sometimes you have to call up other people you know in the business to help out."

Paul R. Cooper, vice president of Alex Cooper Auctioneers in Towson, has plenty of customers fed up with how long it takes to unload unwanted property by conventional means.

"Many people come to me and say: 'I can't wait any longer. I'm tired of waiting,' " Mr. Cooper said.

He recently auctioned a Baltimore property that for months had stubbornly refused to sell. Potential buyers with cash in hand had shown little interest in the house with a price tag of $1.8 million.

"We actively marketed it for three weeks, targeting certain sections of the newspapers with ads," Mr. Cooper said. "The day of the auction we had six people with deposit checks, and two active bidders up until the very end."

The property sold for almost $1.7 million just 15 minutes after the auction began.

He concedes that success on that scale doesn't happen at every auction. In fact, even after one advertises in the best places and bends the best ears about a property, sometimes nobody wants it, even at a fire-sale price.

A recent auction of a 15-room, 3,500-square-foot house in Fells Point failed to produce a bid higher than $100,000 -- even though the property was in decent shape, historically significant and one block from the water. The owner rejected the $100,000 bid as too low.

The owner sold the property to a buyer who surfaced after the auction. But he received less than $150,000 for his house -- far below his original asking price of $239,000.

Few auctioneers guarantee a sale, especially when sellers reserve the right to reject bids they think are too low. Selling anything now is tough.

"If you went to a Realtor and said, 'I want a cash contract with a bid in three weeks,' they're going to say, 'Are you crazy?' " Mr. Cooper said. "But, in essence, that is what you are saying to an auctioneer."

Auctioneers and Realtors don't always see eye-to-eye on the best way to sell real estate. But they are finding they can both benefit by working together.

Bill Cassidy, a Long & Foster Realtor in Baltimore, said he rarely works with auctioneers. "But in this kind of economy, it's something you should consider," he said.

Richard Opfer of Richard Opfer Auctioneering in Timonium agrees: "In hard times, the more help you have, the better."

Auctioneers sometimes offer real estate brokers a commission on purchases by people they refer. Pat Vitilio, president of Anthony Auctioneers, says his firm pays brokers as much as 3.5 percent of the final sale price of the property if they accompany the buyer to the auction.

Sellers usually pay auctioneers somewhat less than real estate brokers charge. Mr. Vitilio said the norm in the Baltimore area is a 7 percent commission for brokers, paid by the seller. "Auctioneers traditionally charge about 5 to 6 percent," he said, "possibly as low as 3 to 4 percent on extremely valuable properties."

Depending on the auctioneer, the seller or buyer pays the cost of advertising the property before the auction. That's not cheap. Mr. Cooper said his clients typically pay more than $1,000 for

auction ads.

Auctions don't always work to a seller's advantage. But here, auctioneers say, are the best ways for a seller to get top dollar at their real estate sale:

* Be realistic in setting a price. Some auctioneers suggest that sellers be willing to accept a bid 30 percent less than what they think the house is worth.

"The only reason I'll take a property is if the price is very reasonable," Mr. Cooper said. "If I feel somebody has expectations that are too high, I suggest they list with a Realtor."

Naming a floor price or "reserve" is OK, as long as the price isn't too high, said Mr. Vitilio. "The purpose is to sell real estate, not to shop themarket or evaluate what the market is worth."

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