As buyers balk at inflated prices for luxury homes and businesses, high-net-worth individuals are turning to auction houses to sell their expensive properties.
A case in point is the planned Dec. 2 auction of Overbrook Farm, a storied 235-acre thoroughbred horse farm in Monmouth County, New Jersey, with an opening suggested bid of $2 million for a property that includes two main houses, several labor houses, and an equestrian training operation with barns, paddocks and a half-mile racetrack.
The sellers are the Bailey family, which has owned the property for 55 years. Among the plaudits that have come the farm’s way was the showing by Irish War Cry, who won the 2017 Wood Memorial Stakes at Aqueduct Racetrack, and finished second in the Belmont Stakes.
Located in Colts Neck, N.J., about 50 miles from New York, Overbrook Farm is adjacent to Naval Weapons Station Earle. The horse farm’s use is restricted as farmland, but its sale could open the door to uses other than breeding and training horses, including agriculture production and events, according to the Asbury Park Press.
The Bailey family is like other HNW clients who are increasingly turning to auction houses in hopes of a quicker sale, rather than let an expensive property languish on the conventional market.
One couple learned that lesson the hard way: After their 3,300-feet Tribeca triplex went unsold for more than a year, New Yorkers Randy and Robin Landsman sold the property last summer through an auction house for $5 million, less than half of the original asking price of $12.2 million, and a little more than what they paid for the home 20 years ago, said the Wall Street Journal.
In fact, auction houses are reporting that high-net-worth sellers have sought their services particularly since 2020, the first year of the COVID-19 pandemic. Online auctions can reach a widespread variety of HNW buyers and sell expensive properties within a precise time frame, but they carry the risk of not reaping the desired selling price.
Examples Include La Dune, an oceanfront Hamptons estate listed for $150 million in 2022, selling at auction for $89 million this year; The One, a Bel-Air mansion listed for $500 million, selling for $126 million at auction in 2022, and Villa Firenze, a Los Angeles estate selling for $51 million at auction in 2021, having been initially listed for $165 million, WSJ reports.
More Ultra Luxury Sales
During the first half of 2024, sales of ultra luxury properties (those going for over $10 million) increased 3.9% to 838 transactions totaling $14.6 billion, compared with the same period in 2023.
“The ultra-luxury market managed to stay above the fray of a difficult year for residential real estate,’’ says the real estate website, TheRealDeal.com.
Online auctions are growing in popularity, according to the Myers Jackson auction house based in Grapevine, Texas, in the Dallas-Fort Worth area. Jackson starred in the Discovery Channel’s “Texas Flip and Move’’ series, and has auctioneer licenses in 13 states.
“One of the number one delivery channels includes video content, providing extensive inspection and assurance packages to buyers,’’ Myers Jackson says.
Overall Market Slows
But according to the National Association of Realtors, overall existing-home sales slowed in 2023 and that pattern has continued, although the median price has continued rising and hit a record in June 2024.
“Even as the median home price reached a new record high, further large accelerations are unlikely,” said NAR Chief Economist Lawrence Yun in a statement. “Supply and demand dynamics are nearing a balanced market condition. The months supply of inventory reached its highest level in more than four years.”
Where the Action Is
The hottest area for luxury auction sales has been Greater Los Angeles, with 135 sales totaling $2.7 billion in 2023. Second is Manhattan, with 121 total sales for $2.3 billion in 2023; both, however saw drops in these sales for the first half of 2024.
Wealthy baby boomers fleeing the high taxes and cold of the north have taken their portfolios to tax havens Miami and West Palm Beach, which saw the millionaire population grow by 75 percent and 90 percent, respectively, from 2012 to 2022, according to a 2023 wealth report.
