Not just the realm of fire sales and foreclosures, auctions are a possible key to premier Malibu estates.
By Melonie Magruder / Special to The Malibu Times
Notwithstanding current market “corrections” following the recent real estate credit meltdown, there will always be a buying audience for the tony higher-end properties of Malibu.
“Malibu is one of the most prestigious locations in the whole world,” said Todd Wohl, vice president of the real estate auction house, Premiere Estates Auction Company.
This is why Wohl feels absolutely confident that he will sell an (appraised) $12.9 million, Ocean View Drive Malibu home with sweeping views of the coastline in what some say is an unusual approach to exclusive property sales-a live auction. “We’ll probably sell the house in about five minutes,” Wohl said.
“Auctions?” one might ask. Isn’t that just a fire sale for distressed sellers or property foreclosures?
“Actually, real estate auctions are extremely common,” Wohl said. “Essentially, we take buyers and sellers and create a marketplace with a market value that is immediately evident to buyers.”
Premiere Estates Auction Co. has been around for more than 20 years, auctioning everything from industrial properties to condo units to multimillion-dollar estates throughout the country. Its combined sales in the last year alone have topped $600 million.
A couple of years ago, Premiere Estates was hired by Fox Network and the producers of “American Idol” to auction four oceanfront condos in Malibu in its first nationally televised real estate auction program. The properties sold in less than 30 minutes for more than $4 million.
“There is a growing inventory of available properties from $4 million up in Malibu,” Wohl said. “We’re seeing the same in Huntington Beach and Newport. The psychology of the marketplace might have changed in recent months, but there is still tons of credit available for these kinds of properties, if you can qualify.”
Wohl explained that there is a big difference in auctioning properties like the Ocean View home and something sold on courthouse steps in a foreclosure sale by the banks.
“In foreclosures, you have to pay the full buying price that day,” he said. “After our auctioneer brings the gavel down on a sale, the process is pretty much the same as with traditional real estate purchases. The buyer has 30 days to arrange financing before closing. And most people in a position to bid on a $13 million home have pretty good relationships with their bankers.”
Despite Wohl’s confidence in a sale of the Ocean View home, some local real estate agents have reservations about the efficacy of auctions for both buyers and sellers.
Rick Wallace, a local broker for Coldwell Banker, said he has doubts that auctions are the best way to sell properties.
“This is quite unusual and will probably not become a trend,” he said. “I can think of only a few property auctions that have happened in Malibu.”
Whereas Wallace agrees that sellers can be pretty much assured that their property will ultimately sell at auction, “it might not sell at the best price the market can bear,” he said.
Auctioneers are hoping for that “feeding frenzy” that comes from a live auction to push the price up, which doesn’t always happen, Wallace maintains. “I saw an auction a few months ago for a property valued in the $2 million range,” he said. “But it went for far less.”
Wohl said Premiere Estates’ auctions build a bigger market and, therefore, a bigger demand for its properties, through extensive advertising nationwide and, surprisingly, a symbiotic relationship with traditional real estate brokers.
“We are not in competition with brokers,” Wohl emphasized. “I would say 30 percent to 40 percent of our sales come to us by brokers who bring clients to our auctions. And, of course, they all get the normal two and a half percent commission. Brokers know local markets, so we see them as our partners.”
Wohl said a minimum opening bid of $7.5 million has been suggested for the 19-acre Ocean View estate, which includes a 7,000 square foot Mediterranean villa, an expansive pool, a lighted tennis court, four-car garage, gym, arboretum, guest house, barn and corral for horses leading to trails through Escondido Canyon.
“And we expect to see it go for a lot more,” Wohl added. (Buyers are also responsible for paying an 8 percent “buyer’s premium” for houses sold at auction.)
“Hey, if I could afford it, I would buy this house,” Wohl said. “It’s the Malibu mystique. When you stand by the pool and look out over the view from Catalina to the Santa Barbara Islands, it’s the definition of serenity. It’s pure peace.”
The scheduled auction is to take place Sept. 23, 2 p.m., at the property on Ocean View Drive and is open to anyone who can show up with a cashier’s check made out to the escrow company for $500,000. More information can be obtained by calling 800.290.3290, ext. 2907.