Only 3 Make It Past Door for House Auction : * Real estate: Some who were turned away grumble that it was all a ploy to lure buyers at the high end of a slow-moving market.
When is an auction not an auction? When no more than three bidders show up with the required $50,000 deposit, dozens of looky-loos are turned away at the door, and only one potential buyer is really interested enough to make an offer.
That’s what happened in Hancock Park Sunday, when a widely advertised auction for a lavish private home that was being offered for a suggested minimum bid of $3.2 million--it was once listed at $4.5 million--quickly became a private bargaining session.
It was so private that a man who declined to identify himself, but drove a pale blue 1990 Cadillac coupe registered to James A. Shuemaker, the owner of the home, quickly ordered a reporter off the premises.
Advertisements in The Times had depicted the event as a public auction, offering guided tours on two previous weekends and also one hour prior to the auction.
But a pistol-packing security guard enforced the ban on entry to all but those who put up a deposit with cash, cashier’s check or money order. And the man in the Cadillac said: “It’s a private auction. We make the rules. If you think it’s anything else, you’re wrong.”
Some auction fans who were kept out grumbled about the proceedings, saying that it was little more than a ploy to lure buyers at the high end of a slow-moving real estate market.
“The rules have changed. It’s not a fair auction,” said one of them, Marc Fried, a obstetrician-gynecologist who dabbles in real estate.
“A lot of people use the word ‘auction’ to lure people thinking it’s a good deal,” said his colleague, Peter Weiss, who was also there. “It’s really a marketing deal to get people in.”
Auctioneer David Sanford of Gamson & Associates acknowledged as much, describing the real estate auction market as a sort of pyramid, with bidders vying for cheaper homes at the bottom and only a few able to brave the high prices at the summit.
If serious bidders are few, it is not uncommon for an auction to revert to a standard real estate transaction, he said.
“It’s a marketing technique,” said Sanford. “When that happens, I just take off my auctioneer’s hat and put on my broker’s hat.”
Later, Sanford said that an offer of more than $2 million was made for the house, which has six bedrooms, six baths, a lap pool, ballet room and a cedar-paneled wine cellar.
“We hope to consummate a deal. It’s very close,” the auctioneer said.
But Shuemaker, when reached by phone on Tuesday, said that there was no sale despite the ad campaign and other publicity efforts.
“The auction did not occur. There were no bids,” said Shuemaker, a real estate developer. He declined further comment beyond saying: “The auction industry is the auction industry.”
He did say that the 8,700-square-foot house, has now been put up for sale through Coldwell Banker’s Hancock Park office, where agent Barbara MacDonald said that the asking price is $3.2 million.
Carl Maggio, manager and vice president of the brokerage, said that the original price of $4.5 million was “very, very high” for the area, one of the city’s oldest wealthy neighborhoods.
After a dead year in the real estate market, six Hancock Park homes have sold for more than $1.5 million in the last six months, he said, and three of those went for more than $3 million.
But as for auctions, the one that never happened Sunday was the first Maggio heard of in his six years in Hancock Park, and he did not like it as a technique.
“If you’re talking about a builder who is trying to sell something like 15 to 18 condos in a group-type sale, that’s one thing, but when you have a single house, it doesn’t pay, because it’s way too costly a procedure,” he said.
Realtor Fred Sands, who once considered adding auctions to his own bag of tricks, agreed, saying that the procedure appears to be chancy at best.
“Our experience has been that it doesn’t work very well for individual homes unless you’re giving it away. And if you’re giving it away, you can do it without an auction,” he said.
