Auction houses move from foreclosures towards pricey mansions

Investment banker's Malibu home heads to auction with largest opening price ever
August 30, 2011 03:33PM

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From left: Chadwick Saylor & Co. Managing Director William Chadwick and his Malibu home at 21804 Pacific Coast Highway

Traditionally reserved for foreclosed properties, home auctions are increasingly becoming a medium for the wealthiest Americans to sell their homes, according to Bloomberg News. Large auction houses have reported an increase in the number of auctions of extremely high-priced mansions, the number of buyers and the number of bidders.

J.P. King Auction Company, an Alabama-based auction house, said the number of mansions it has auctioned worth more than $8 million has doubled this year. Similarly, Charlotte, N.C.-based Grand Estates Auction Company said just 12 percent of its auctions are homes in financial distress and the number of buyers has grown 130 percent.

The number of luxury properties auctioned by California-based Premiere Estates Auction Company also increased 30 percent last year, according to the firm.

In fact, Premiere Estates is preparing for an auction with what’s believed to be the highest opening auction bid ever. Sept. 18 it will accept bids starting at $22 million for a Malibu property owned by William Chadwick, a managing director at investment bank Chadwick Saylor & Co., that was originally listed for $65 million in 2008.

Though many sellers ultimately accept bids at 50 percent discounts of initial asking prices — the winning bids often range closest to the tax value of the property — they resort to the auction because of the quick returns the process offers. Bloomberg News cited as examples a Darien, Conn. property listed for $12.5 million auctioning for $8 million; a La Jolla, Calif. mansion listed for $15 million that auctioned for $8 million; and a $5.5 million Malibu property going for $2.8 million in an auction. [Bloomberg News]