|This article was published on: 01/01/2007|
Let’s make a deal
How I Sold It: Start the Bidding!
A Maine practitioner coaches his buyer through an auction to nab a $6.2 million property that includes 2,900 feet of oceanfront land.
BY JEFF ORDONEZ
Editor's Note: In this REALTORŪ Magazine Online exclusive series, Colorado broker Jeff Ordonez talks with practitioners who sold the highest-priced property in their MLS in a given month. This month, Bruce Davis, broker-owner of Homes & Harbor Real Estate in Harpswell, Maine, explains how he found a buyer who bid $6.2 million to win a vast oceanfront property at auction.
You sold a $6.2 million listing — nearly double the second largest listing in your MLS. How did you get the listing?
I actually didn’t get the listing. The home went to auction after the owner passed away. When I found out the property was going on the market, I began to notify prospective buyers [in the hopes of getting the listing]. I found a buyer, but it was too late. The [deceased] owner’s daughter told me that she made up her mind to go with an auction company. So I was left to negotiate with the auction company.
Can you tell me about the property?
It’s four separate lots on 88 acres, with one main house. It’s really magnificent land — the location, its spectacular views, and its 2,900 feet of oceanfront.
How did you find the buyer?
I met the buyer through networking and getting involved in the Board of Land Trust. His business is built around the same principles as mine, which is to conserve as much wild area as possible.
Was it difficult to go through an auction since you already had a potential buyer lined up?
It left me in a position of having to work under auction rules, which I didn’t like too much but was tolerable because the buyer is a contractor and has little fear when it comes to restorations. The property needed some restoration, but since the buyer is very competent with construction, that wasn’t a major concern.
What other obstacles did you face?
The buyer only had about two weeks of due diligence to identify any concerns with the property. That just wasn’t enough time for a formal inspection or appraisal.
How did he overcome that?
Because he’s so competent with construction, he inspected the lots and the home himself. I spoke to several appraisers who I knew and got a wide variety of approximate values, from $2.5 million to $10 million.
That is a big range. What was the assessed value?
I think it was at about $3 million.
Can you explain what happened at the auction?
Because there are four lots, it brought some competition. Before the auction, I managed to convince the auctioneer to sell the property as one lot. The auction house agreed under the condition that it would auction the separate parcels right after the first auction and award the property to the highest overall bid or conglomerate of bids. Our bid of $6.2 million was greater than the individual lot bids. We only had one other person bidding against us. Luckily, I was able to call a time-out to regroup with my buyer.
I didn’t know time-outs were allowed at auctions.
The seller and I rehearsed a lot before the auction. We realized that a lot of things could go wrong at the auction, so I asked the auctioneer if I was allowed to hold periodic meetings with the buyer. I was allowed several time-outs as long they didn’t delay the auction too much. Naturally, I took the longest recess I could.
Did it help?
Yes. I was able to inform the seller and move forward with the bidding.
Do you sell a lot of oceanfront property?
Yes, I’d say about 90 percent of my company’s sales are oceanfront properties. We own about 35 percent to 40 percent of the market right now. For our total sales volume last year, we closed $25 million. This year we’re on track to close $30 million to $35 million.
How did your company manage to gain such a large market share?
It specializes in a niche, mainly oceanfront properties, and we know this market better than anyone else. Add to that our conservation philosophy and our reputation began to spread. Plus, I brought in some of the best real estate talent out there.
What are your company’s plans for the future?
We’ve been growing steadily for years now so I’m going to expand our niche markets. One niche I see that can be better served is vacation rentals. I also have plans to add more office locations along the coastline.
Do you have any words of advice for other practitioners?
You have to love what you do. If you don’t, it’ll be hard to find enthusiasm to sell. Find a niche and specialize in it. Learn everything you can about it. And treat others with respect and warmth, like you would a family member. In fact, the first page of my policy manual states, “The most important thing to me is the most important thing to you.”
Learn How to Get Involved in Real Estate Auctions at REALTOR.org.
About the author: Jeff Ordonez is CEO and broker-owner of TheLuxuryBrokers.com, where he helps match licensed real estate professionals with millionaire prospects. You can reach him at 719/661-2685 or JOrdonez@theluxurybrokers.com
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