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Aaron Kirman: How to Get the Most Out of a Luxury Home Auction

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When a multi-million dollar mansion comes up for auction, it’s usually not a great sign.

It could mean the house has been on the market for years because of low prices, because it’s an unusually unique property that hasn’t found the right buyer, or because the seller has debt to pay.

Luxury homes going up for auction therefore sometimes seem like the black sheep of listings, and definitely require a nuanced approach.

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But luxury auctions have been rising in popularity, in part because they’re useful to sellers in a tight spot and can help build excitement around a property. In 2019, Concierge Auctions reported to Fortune that the company was experiencing an average annual growth rate of 35 percent each year, with the auction house reporting a record year in 2021 with more than $3 billion in historical sales and $3.4 billion in competitive bids processed .

Agents who want to please customers who come to the auction must consider a number of factors, Aaron Kirman of the Aaron Kirman Group at Compass told Inman.

Luxury real estate agent and CNBC star Impossible Listing has sold a string of ultra-luxury homes at auction recently, from “The One” mega-mansion to a famous botox doctor’s debt-ridden mansion, all of which sold for tens and hundreds of millions, so Kirman knows a thing or two. about unloading challenging properties at auction smoothly.

Here are his top recommendations for other agents considering a luxury sale at auction, from boosting your marketing to choosing the right auction house and more.

Make sure the buyer and the property are a good fit

Aaron Kirman | Compass

“Luxury home auctioning is not for everyone,” Kirman told Inman. “It is a very unique segment. I always tell people that it depends on the situation, the vendors and where they are.”

Kirman explained that luxury auctions tend to be better for sellers who have high expectations about the value of the property, and so far they haven’t received any offers that have met those expectations.

Because it’s not unusual for ultra-luxury properties to take several months to a few years to sell, auctions also make sense for sellers facing time constraints on when they should sell. Often with ultra-luxury properties, this comes about when sellers get a little carried away developing the home and go into debt in the process. Therefore, auctions are useful once they reach the point of facing bankruptcy: they need the money quickly, and an auction offers just that.

Boost your marketing and advertising

Once the agent and seller determine that an auction is the best course of action to sell a property, it’s time to begin the agent’s marketing strategy, Kirman told Inman.

At that point, Kirman will do everything he normally does to market any other property for sale, but his goal is to do twice as much in half the time to attract as many potential buyers to the auction as possible. He likes to keep the classy vibe in his marketing materials about these types of properties, Kirman said, because they’re almost always at the higher end of the market.

“I do everything that we do as agents, but in a very condensed period of time,” he said. “Double marketing, double advertising, double exposure”.

Since agents typically have 45-70 days to prepare for an auction, they need to act quickly and be ready to hit the ground running with their marketing efforts. That means implementing local, national and international marketing in print and television media such as The Wall Street Journal, Bloomberg, robb reportFOX Business and CNBC, in addition to their own online ad campaigns and targeted marketing efforts.

Build a strong international network of luxury clients

Properties of the kind of magnitude that Kirman has recently put up for auction, which have raised between $47 million and $126 million, are prime investment candidates for international buyers looking to put their money into relatively stable investments (such as real estate) outside their own countries. .

This is why it is crucial to build a network of ultra-luxury international clients, which can prove extremely valuable when it comes to auctioning off a multi-million dollar property.

“In the super high end [properties]I tend to fly to Europe and the Middle East to try to find billionaire buyers who are looking to buy,” Kirman said. “I have a massive database of some of the richest people in the world… But we also do tech advertising all over the world to the rich.”

Kirman explained that the team’s Estate Dynamics tech stack uses artificial intelligence based on the team’s data sets to predict which buyers might be attracted to a specific home, allowing it to reach individual international buyers likely to show an interest in the home. at auction.

Instill urgency in potential buyers

One of the cards an agent has in his back pocket when he puts a house up for auction is that he literally orchestrates a bidding war, which can cause sellers to jack up selling prices.

But agents can also instill a sense of urgency in the buyers they hope to attract to the auction by reminding them that it’s a limited-time offer. And once the bidding begins, they’re out of luck, as all bidders must be vetted in advance and have submitted a refundable deposit for escrow.

“I have the ability to say, ‘Look, this house is going to sell with or without you on that day, so if you want to be a part of it, now is the time because you know it’s going to sell,’” Kirman said.

That’s where selling a luxury home through auction can be a great asset for a seller, because buyers face anxiety not normally present on the open market at the ultra-luxury level.

“That’s probably part of the challenge of selling luxury homes,” Kirman said. “In general, there is no sense of urgency for buyers because they feel like they are the only ones.”

For agents representing buyers at auction, it’s also good to remind them of the urgency at hand, Kirman said, while keeping them at their comfort level.

“The scope of what we’re doing is, we’re working with our buyer to encourage them, bring them to their comfort level and not lose. It is a very stressful experience. It takes a lot to make me nervous… but [auctions] always do it, because in 10 minutes, you’re literally looking at the saleability of a multi-million dollar home.”

Prepare the seller mentally

Ultra-luxury sellers, like the average home seller, take pride in their homes, but there is often more ego involved, especially if they have had a hand in designing the property.

Therefore, it is extremely important to prepare sellers for what is coming at auction, which is often a lower price than the seller anticipated or expected.

“You just have to calm them down,” Kirman told Inman. “At the end of the day, it is an educational process. We need to let them know that, at the end of the day, the market talks about the value of any house, [which] is what the highest bidder would be.”

And the cards on the table, sometimes [sellers are] not happy,” he added. “Sometimes they aren’t, and that’s the problem when you don’t have the luxury of time. So I always say to future developers and developers: ‘Be very cautious about what you’re developing, because God forbid the market changes, or God forbid it takes some time. You don’t want to be in a position where you have to sell, because that’s when people get disappointed…’ Once it goes to auction, it’s out of the seller’s control where it’s going to land, and they need to be prepared for that. ”

Choose the auction house wisely

Kirman added that it’s also important for agents to be deliberate about which auction house they choose to transact with, because not all properties are created equal.

“Make your associations, I mean with the auction houses, wisely, because it’s a complicated game and some are better than others,” he told Inman.

Kirman has used Concierge Auctions for his most recent luxury auctions. He likes that they have their own outlets to distribute marketing around the property and that the process is completely transparent, even when offers come in, which can help build excitement among potential buyers.

“[And] We do not want to endanger our [client] relationships in the process,” Kirman cautioned, saying it’s especially important to choose the right auction house to keep things running smoothly.

Email Lillian Dickerson

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