More homes go on the block as market slows

AUCTION HOUSE

The manicured front lawn of the small Arts and Crafts house on Woodland Shores Road was filling up by 11 a.m. one Saturday this month. Most people, dressed casually in sweat shirts and jeans, huddled in small groups talking idly.

Attired in khakis and a blue shirt, Gregg Napier scooted around the front porch wearing a headset. "We'll get started in two to three minutes," he said.

Napier darted in an out of the house a few times, spoke to a cameraman on how to film the event and then caught the crowd's attention. They were there for an auction, and Napier, an agent with Prudential Carolina Real Estate, was the auctioneer. When ready, Napier explained the format of what's known as an absolute auction.

"Let's rock and roll. I'm ready," said participant Karen Keefe.

At 11:07 a.m., Napier launched the sing-song, roll-off-the-tongue bidding call.

"Someone want to pay $300,000? Anybody, 3? $250,000. Come, just $100,000."

With no takers, Napier set an unofficial price floor for the James Island house, originally listed at $295,000.

"I got in for $160,000," Napier said, underscoring he would pay that much even without bids, so no one would walk away with a steal. After that, someone offered a bid of $180,000, and the race was on.

The Nov. 3 contest eventually boiled down to three bidders, then two — Keefe and John Oakley — who upped the ante to $245,000. When Oakley looked like he was wavering, Keefe called out $245,000 and $5. Napier nixed that, so she bumped the price to $247,000. Sold! It was 11:17 a.m.

Though not yet widespread in Charleston, real estate auctions are gaining in popularity nationwide, according to the National Association of Realtors, which started an auction division a dozen years ago.

Residential property auction sales rose 39.2 percent from 2002 to 2005 growing from $10.2 billion to more than $14.2 billion in sales a year. The NAR cited the figures from a special report published by the National Auctioneers Association, adding that auction sales should rise as conventional real estate deals slow.

Foreclosure or distressed property sales on the courthouse steps are routine here and across the country. The Woodland Shores Road sale was unusual for the Charleston area given that the property was attractive and no one owed huge sums of money on the home.

Auctions that take place as an alternative to real estate listings or owner sales are a tiny segment of the local market. Yet they are popular elsewhere, such as Kentucky, where Napier is from and horse auctions are big business.

And they can have advantages over brokered sales. Prices typically mirror the list price: They may be higher and usually aren't much lower. Sales also take place quickly: The James Island house was to close in 30 days.

"I am the principal auctioneer," Napier said. "I'm the guy who usually gets out there and creates the market."

With Napier's program, the seller does not pay a commission. At the same time, "We do not do it for free," he said. There's a buyer's commission that typically is 10 percent of the purchase price.

On the block

While evidence is anecdotal at present, auctions may be catching on in the Charleston area. They are an attractive means to move properties in a sluggish market, as now, since homes usually sell faster than listed houses. According to the latest figures from the Charleston Trident Association of Realtors, about 10,400 homes were on the market at the end of last month, roughly a nine- to 10-month supply.

"There are so many homes on the market," said Sheila Gianatos, broker manager of the James Island office of Prudential on Folly Road, where Napier is based. "People have to move on a timely basis."

Prudential Carolina, the largest real estate company in the area, has held about one auction a month since it started its auction division about a year ago with Napier as its head. A handful of other auction ventures are eyeing residential sales to complement their regular business of auctioning commercial buildings.

"For the Charleston area, it's a relatively new concept," said Napier, who has been in real estate for 30 years, including the past nine locally.

He said auctions aren't just to move properties that have been on the market for a long time; they have a twin incentive: To the seller, there's the chance that the home will be bid up as high or higher than the list price; to the bidder, there's an opportunity to get something at a low price.

Homes with "multiple offers are the ones you really want to auction," Napier said.

Gianatos sees the auction business as a companion to brokered sales, which have slowed in the current housing downturn but by no means dried up. Nearly 11,000 homes changed hands through October, down 21 percent compared with the first 10 months of 2006, according to the local Realtors association.

"The market definitely has changed, but it is a more balanced market. ... It's just a cycle," Gianatos said.

Done deal

Back at the Woodland Shores home, Keefe, the high bidder, sighed with relief after Napier bought the gavel down.

"I'm glad it didn't go any higher," she said, noting that she bought the residence as an investment and eventually plans to rent it out.

Rob Dee, who dropped out when the bids reached about $220,000, said this was his first auction. He said he didn't realize it would move so fast. "I was just looking to get into the real estate business" as a landlord, he said.

Oakley, wearing a red Gap sweat shirt, said Keefe "got me." He had been willing to bid up to $250,000 but backed off when it seemed like she was willing to go higher and after realizing that the costs of clinching the sale would push him over his limit. Still, "I think it went real well," Oakley said.

All in all, most people came away pleased with the auction.

"Greg has made a believer out of me," said Dennis Joye, listing agent on the property for Prudential Carolina. "I think it (the sale price) is still below market value, but it's a very successful price."

Reach Jim Parker at 937-5542 or jparker@postandcourier.com.