Woman Makes Bid in Auction Business : Susan Stevens opened her own company, which operates public sales of new homes, about a year ago.

Fifteen years ago, Susan Stevens was a college student working as a waitress at Gulliver’s in Irvine when real estate investor Bill Lange remarked on how persuasively she sold him a bottle of wine and dessert. He suggested Stevens go into sales; she suggested he give her a job. He did.

Stevens worked for four years for Lange--first selling signs and graphics to developers for a company Lange owned, then brokering land for developers. She worked for Lange twice again--and then began her own company, Irvine-based Auction Marketing Services, in direct competition with him.

Lange, president of Lange Financial Corp. in Newport Beach, and Stevens operate two Southern California companies that sell new homes at auction.

With sales of $55 million last year, Stevens’ company is dwarfed by Lange’s business. The latter, along with Santa Ana-based Real Estate Disposition Corp. and Kennedy-Wilson Inc. in Santa Monica. did about 90% of the auction marketing business in Southern California last year, according to Jim Lewis, senior vice president of the Real Estate Disposition Corp.

Stevens’ “operation is boutique-ish now, but it’s a young firm,” Lewis said. “I would be pleased to see them grow; they do a good auction.”

Auctions traditionally were used out of desperation, used to sell properties that were not selling conventionally. During the 1981-82 recession, new home builders began to use them to market subdivisions and the method was resurrected last summer.

But Stevens and others argue that auction sales are here to stay, even in good times. While residential properties are generally priced for auction at bargain-basement prices, they rarely sell that low. Buyers get excited by the auction process and bid up prices. The final price is not everything a developer might ask for, but the quick sale saves enough in carrying costs on the property to make it profitable.

However, most developers still have reservations about marketing via auction, Stevens admits.

“For one, you’re talking about spending all of (the developer’s) media money in one fell swoop” to promote the auction, she said. The cost can range from $120,000 to $250,000.

Secondly, there is always the risk that the properties will sell for the rock-bottom advertised price. “I had one developer who wanted to stop the auction in the middle,” Stevens said. He got nervous after his condo project in Incline Village, Nev., received only four bids--each very low.

In the end, he broke even, was able to pay off his construction loan and went on to build the next phase of the project. Before the auction, Stevens said, the lender had been threatening to foreclose on the project.

Just over a year ago, Stevens left her position as vice president of auction operations at Lange Financial to start her own company with partners Michael Curtis and Randall Lush.

She and Lange disagree about how long she actually worked there--an indication of their estrangement today.

“It was hard in the respect that nobody you worked for wants you to start a competing company,” Stevens said. “But we had different business philosophies about how to treat developers and customers.

“At Lange, we were always putting customers off. It was very autocratic. Here, we ask, ‘What would make you comfortable?’ ”

Lange himself declined comment. Sheila Starnes, a company spokeswoman, said developers may be as involved as they like with auctions. “They certainly have that choice,” she said.

Stevens’ Auction Marketing Services also decided to cut costs by opening three companies under one roof, so they could provide escrow and mortgage brokerage services in-house.

The company’s first project was one of the largest residential auction ever held, Stevens said, as measured by a total pre-auction asking price of $38.5 million. In April, her company sold 52 single-family luxury homes in Torrance for Val-Co Construction Co. for $31.87 million, or 87% of the amount sought.

Its next auction, on March 1 at the Palm Springs Convention Center, is a pool of 68 desert-area residential properties in one of the larger group efforts of its kind. If target prices are met, the sale could reach $16 million.