Home Sellers Take to Auction

No House Is an Island

All the way across the country on the New England resort island of Nantucket, real estate attorney Stephen Meister is moving along a parallel path. He has hired the same auction house, Sheldon Good, to sell off three properties, two of which he developed and a third that his son bought and renovated.

Meister, who owns a residential development company on Nantucket and is a partner in a Manhattan law firm, says he chose to auction because "I want a definite timeline" -- and the flexibility to make his next moves. "I want to purchase other properties there and elsewhere, and I was attracted by that format."

Meister says he has set minimum bids for his properties "at least 15% to 20% below market value," at $7.65 million, $2.55 million and $1.15 million. The two lower-priced properties will be sold at an open-outcry auction, while the third will be handled through sealed bids.

Meister says he believes that "prices are still holding steady" on the island, despite "a slowdown in velocity in August." He cites the strong Dow Jones Industrial Average and the Federal Reserve's recent half-point cut in interest rates as evidence that the economy is on course. "Nantucket is not going out of style," he says.

Ryan Wagner, a vice president at Windwalker, a real estate broker and an executive at Scout Capital, a locally based real estate developer, says that "the market is fine." However, he adds, "I don't think anyone in their right mind would have hoped things would continue" at the pace that pulled the market forward in 2005 and 2006. Still, Nantucket's median home price, which rose 5% last year on sales volume of $920 million, is expected to rise at least that this year; sales through Sept. 30 totaled $620 million and are down about 12% from the same period last year, he says.

Is Meister pursuing the right course? Wagner said he recalled "two other instances where it's been tried, but I don't think in either the reserve price was met." However, he added of the reserves set for Meister's properties, "these seem more reasonable. It's an interesting way to go, and potentially a pretty effective way to move property. A lot of people will be watching with interest."

It's very much worth noting that both sellers say they are moving from positions of relative strength; these are not forced or foreclosure sales, and either seller can choose not to sell if his price isn't met. But both want to move quickly in a market that is doing anything but that. Says Feldstein about what's really underlying his auction decision: "I'm a New Yorker," he declares. From a timing standpoint, "today is okay, but yesterday is always better."