Chad Roffers Dishes On A Sotheby’s Concierge Auctions Record

Key Takeaways:

– Inman is hosting upcoming real estate events such as Connect Miami, Luxury Connect, and Inman Connect Las Vegas.
– The oceanfront Hamptons compound, La Dune, was sold at a record-breaking price of $88.5 million at a live Sotheby’s Concierge Auction.
– The seller, Louise Blouin, had originally purchased the estate for $13.5 million and had previously listed it for $150 million.
– Auctioning a luxury property can be an attractive option for agents and clients who want to avoid a price cut on a unique property that has been on the market for a while.
– Sotheby’s Concierge Auctions founder and CEO, Chad Roffers, discusses the considerations involved in auctioning properties in response to bankruptcy.
– The auction of La Dune included a brief intermission in bidding to determine the highest price for the individual homes and the package deal.
– The sale is expected to be approved by the bankruptcy court judge on Feb. 13, with the closing scheduled for Feb. 28.
– Sotheby’s Concierge Auctions has a large database of subscribers, providing access to a wide audience of potential buyers.
– Agents should consider the auction process for properties with a thin pool of buyers that have been on the market for a long time.
– Half of the demand for properties in auctions often comes from outside the market, while the other half comes from the region.
– Sotheby’s Concierge Auctions experienced a 25% increase in business last year.

inman:

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Oceanfront Hamptons compound La Dune sold at an auction in January for a total of $88.5 million, setting a new record for the priciest property ever sold at a live Sotheby’s Concierge Auction, The Wall Street Journal first reported.

The seller, art magazine publisher Louise Blouin, first purchased the two-home, four-acre estate for $13.5 million in the ’90s. Blouin had put the property up on the market on and off for years, and recently put it into Chapter 11 bankruptcy in order to keep control of the estate. She had at one point asked $150 million for the property.

Ultimately, Blouin and her agents decided to put La Dune up for auction while simultaneously keeping it up on the open market.

An unknown buyer’s bid for $79 million for the entire two-home estate came out as the winner — although it still fell somewhere between $7 million to $15 million short of the debt Blouin owed on the property.

Inman recently sat down with Sotheby’s Concierge Auctions founder and CEO Chad Roffers to learn more about the details of the deal and why auctioning a luxury property can be an attractive option for agents and their clients, especially if they’d prefer to avoid a price cut on a unique property that’s sat on the market for a while.

What follows is a version of Inman’s conversation, edited for brevity and clarity.

Inman: What kinds of considerations are involved when an owner puts a property up for auction in response to bankruptcy?

Chad Roffers | Sotheby’s Concierge Auctions

Chad Roffers: A very small percentage of the properties we take on fall under this situation, in terms of whatever is going on with the sellers financially. Most of our clientele today, whether it’s Michael Jordan or CEOs of public companies, they’re coming to us with a unique, expensive property that as amazing as they are, can be challenging [to sell].

So, I think the same thing with La Dune, which is an iconic property — we got an outstanding price for it. And what the common trade with all of these properties is, in my experience, they’re going to sell very quickly for a high percentage of their asking price because the right buyer is there and the listing agent gets in front of the right people, and there’s urgency to transact. Or, they just fall into, for lack of a better term, “a black hole” trying to find a buyer without any urgency.

I saw it reported that the property sold for $79 million, but I think you suggest it was actually more than that?

It’s $88.5 million; that’s the total price the buyer is paying, including all agent fees.

And this was a new record for Sotheby’s Concierge Auctions?

It was a record for us in a live auction. We’ve also had other sales more than this amount, including a little over a year ago, The One in Los Angeles, which sold for $141 million. That was a 100 percent digital sale. The sale of La Dune was open digitally for a little under two weeks, and then concluded with a live auction at Sotheby’s, alongside other things that week and that day that we were selling — art, fine antiquities and whatnot — so that was a first from that standpoint.

How unique is it to have a luxury property incorporated into an auction with different luxury goods, like fine art?

For me, it’s a first-ever, so I’d say it’s unique. But it’s certainly part of an ongoing offering that we’ll make available for sellers with the appropriate types of properties, both in terms of price point and aesthetic.

It was reported that what was supposed to be a brief intermission in bidding ended up lasting for over three hours. Could you explain what happened during that intermission?

Of course. Ultimately, every auction we do has an end to it by definition: the gavel drops and we declare high-bidder. With that said, our No. 1 responsibility is always to make sure that we get the highest and best possible price.

This property was unique in not only the significant price point but also that it was available in parts. So we offered it in two discrete parts: the individual homes and also the package. So what took time was, as we went through the process, we got high bids for the parts and then we took a break to determine, Do we have anybody interested in bidding for the package?

Ultimately, that’s how it sold. But we had to arrive at the highest price for the parts first before we could get to the package. So that’s the main driver for why it took longer than normal.

Good to know. When might the sale be approved by the bankruptcy court judge?

Around Feb. 13. The closing is scheduled for Feb. 28.

La Dune | Sotheby’s Concierge Auctions / Gavin Zeigler

What else should we know about the auction process?

The main points I would emphasize are [that] our forte at Concierge is our database, which has been built over the last 17 years. The reason buyers and top brokers around the world call us is that we have access to almost 1 million people today that are subscribers to our database. So when we put a property on that platform, the audience is engaged from minute one and even if you had $20, $30 million to try to build a database like that, which is what we spend, the money is the easy part. The hard part was the fact that we’ve done it one property at a time over the last 17 years. So I think that would be one important point.

The second one is that very few of our clients are people who are selling because there’s financial pressure. It’s really about our reach and the certainty that we provide, especially in today’s world that’s so uncertain at times. Also, today’s affluent seller and their expectations about how quickly they should be able to get the result they want really plays to our strength.

What are some of the most important things agents should tell their clients to prep for when they do a home auction?

We have had the opportunity to work with some of the very best agents — we operate in over 40 states and 33 countries. So we’re active around the world at all of the obvious places in terms of high-end properties. What I would say to agents is, when you have a property like this, price isn’t the problem, typically. The problem is the pool of buyers is thin. And once you’ve been on the market for an increasing duration, you really need to consider the auction process.

Historically, agents are trained to think and act on the price of a property if it’s not selling. And that might work for an average house, but it has a negative impact on ultra-luxury properties.

Interesting. 

Everyone wants to know where buyers have come from, and it’s been well-reported, but it’s fairly typical for us that half of the demand for a property comes from outside the market, primarily via our database. And the other half comes from what I would characterize as the region.

For example, we just closed last week a property at 120 North Glenroy in Bel Air in conjunction with Rayni and Branden Williams of the Williams and Williams Estates Group [Aaron Kirman and Estel Hilton were also listing agents], and the buyer who bought that had been looking in Orange County. But our process caught their attention — a quality property, selling by a certain date — so they said, let’s go take a look, and ultimately bought it. So it’s also important to point out that it’s a collaborative effort between us and the local broker.

Anything else we should know?

Our business was up 25 percent last year over the prior year. In a world where many people had a down year, we were up, and we’ll probably be up during this first quarter of 2024 by 35 percent over last year, so our business is growing. And with what I would characterize as the “chaos” surrounding the MLS and buyer brokers and all of that, we are a rock of certainty in an uncertain environment.

As a policy, we also make sure that the buyer brokers always have the opportunity to earn a commission. It’s kind of embedded in our process, so whereas that may be less certain for many people or for many transactions, that’s a cornerstone of what we do.

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Property Chomp's Take:

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In other real estate news, the Wall Street Journal recently reported that the oceanfront Hamptons compound La Dune was sold at an auction for a staggering $88.5 million, setting a new record for the priciest property ever sold at a live Sotheby's Concierge Auction. The two-home, four-acre estate was originally purchased by art magazine publisher Louise Blouin for $13.5 million in the '90s. After years of being on and off the market, Blouin put the property into Chapter 11 bankruptcy to retain control.

Despite initially asking $150 million for the property, Blouin and her agents decided to put La Dune up for auction while still keeping it on the open market. The winning bid came in at $79 million, falling short of the debt Blouin owed on the property. However, it still set a new record for Sotheby's Concierge Auctions.

To learn more about the details of this record-breaking sale and the advantages of auctioning luxury properties, Inman sat down with Chad Roffers, the founder and CEO of Sotheby's Concierge Auctions. Roffers explained that while auctioning properties in response to bankruptcy is rare, it can be an effective strategy for selling unique and challenging properties. He emphasized the importance of reaching the right buyers and creating urgency to transact, which can often be achieved through an auction.

The La Dune auction was unique not only because of the significant price point but also because it was part of a larger auction featuring other luxury goods like fine art. Roffers stated that while this was a first-ever occurrence, it will likely be an ongoing offering for properties that meet the criteria in terms of price point and aesthetic.

During the auction, there was a brief intermission that lasted over three hours. Roffers explained that this was due to the property being offered in two parts: the individual homes and the package as a whole. They needed to determine if there were any interested bidders for the package before finalizing the sale.

The sale is expected to be approved by the bankruptcy court judge around February 13, with the closing scheduled for February 28.

Roffers also highlighted the importance of Sotheby's Concierge Auctions' extensive database, which has been built over the last 17 years and provides access to nearly 1 million subscribers. This database ensures that properties receive immediate engagement from a wide audience, resulting in quick sales at high percentages of their asking prices.

For agents considering the auction process for their clients, Roffers advised that when dealing with unique and challenging properties, price isn't typically the issue. The problem lies in finding buyers. After a property has been on the market for a while, agents should consider the auction process, which can attract buyers both locally and from outside the market.

Overall, the auction process offers a collaborative effort between Sotheby's Concierge Auctions and local brokers, resulting in successful sales and satisfied clients. Despite the uncertainties of the real estate market, Sotheby's Concierge Auctions had a successful year in 2023, with a 25% increase in business compared to the previous year.

So, if you're in the market for a luxury property or looking to stay informed about the latest trends and developments in the real estate industry, keep an eye on Inman's upcoming events and stay tuned for more exciting news and opportunities.

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