The effort to sell the waterfront estate of the late billionaire H. Wayne Huizenga in Fort Lauderdale is mirroring a jarring trend found by a national auction firm: high-priced luxury homes, especially in Florida, are lingering on the market for months, while sellers dial back their asking prices.
That’s the conclusion of the third annual U.S. Luxury Homes Index compiled by Concierge Auction of New York and Austin, Texas. Concierge, which is auctioning off the Huizenga property, has extended the bidding to next month after the auction for Tarpon Pointe was scheduled to occur a month ago. In addition, the $27 million list price has been reduced to $19.5 million, the broker confirmed Friday.
In its report, Concierge said high-end luxury homes in Florida saw the highest number of average days on the market at 1,109. Homes sold the fastest in Palo Alto and San Francisco, Calif., according to the survey, which said homes stayed on the market for 86 and 103 days respectively.
”In every market, luxury properties face unique challenges,” Chad Roffers, chairman of Concierge Auctions, said in a statement.
“These properties are highly distinctive and have a relatively small buyer pool,” he said. “Not only does the price have little bearing on demand, but buyers are often spread out over large geographic areas and they don’t typically arrive at once.”
In a telephone interview, Concierge president and founder Laura Brady said there is a bigger demand for luxury properties in Northern California than in Florida. Moreover, the supply of luxury homes in Florida is larger than many other areas across the country.
“There’s a lot of demand in the Palo Alto market for sure,” Brady said. “The majority of sales [after listing] are occurring in six months. The average days on market is 180 days. Properties are still selling for over 90 percent of the listing. The [owner] price expectations are correct from the onset.”
Conversely, the top 10 sales of properties in the Miami area were at prices that averaged slightly more than 70 percent of their listings.
Another Fort Lauderdale estate. Bella Fortuna, which went to auction earlier this month, was acquired at a “buyer’s premium” for $17.5 million, well below the list price of $37 million, according to broker Katrina Campins. The deal, scheduled to close May 13, ended a lengthy effort to sell the property, which took a year and half.
An auction for a Palm Beach mansion once owned by developer Robert Matthews, who pleaded guilty in a federal investment fraud case, fell short of the expectations of Deutsche Bank, which now controls the property. The bidding, which was supervised by a U.S. Bankruptcy Court, drew an offer of $28 million, said Lamar Fisher, owner of Fisher Auction Co. of Pompano Beach. But the bank, which wanted $31 million, said the offer was not enough, according to Fisher.
‘Strong field’ for Huizenga estate
The Huizenga estate, which went on the market last year, “has a strong field of bidders,” said South Florida broker Billy Nash, who holds the listing. In an email Friday, he said the reason for the extended bidding is that “some buyers asked for additional due diligence.”
“It’s interesting about the larger properties lingering on the market,” Nash said when asked about the Concierge survey. “I don’t think it’s a case of lack of demand; it’s seller expectations to sell luxury real estate at unrealistic valuations.”
Fisher said it’s hard for sellers to place a value on their luxury homes in Florida when the buyer pools are small and the inventory isn’t shrinking.
“There is more supply than demand at this point,” he said. “I agree with their analysis. It’s difficult. That’s the quagmire one is in. What should we ask for and what will the market bear?”
“This has been going on for 24 months,” he said. “My philosophy has been if a property does not sell in six months, it’s either overpriced or under exposed. You either are asking too much, or you’re not telling the world it’s available.”
Trayor Lesnock, who heads Platinum Luxury Auctions, a Concierge rival, called the sellers’ efforts to pinpoint the right price a “slow discovery process.”
“If we are trying to sell a house for $150,000, there is a large buyer base,” he said. If for some reason the property doesn’t sell, the market will tell the seller why. But a $40 million home “won’t get that type of interaction” as the pool of would-be buyers is small.
Buyers on the way?
While Concierge sees Florida luxury home sellers taking a long time finding buyers, the Douglas Elliman real estate firm predicts more high-net worth individuals will be migrating to the South Florida area, thereby increasing the prospective buyer pool.
Investments by high income earners are expected to grow by 5 percent as many flee high-tax northern states, according to a recent report the firm co-authored with the Knight Frank firm.
“We’re seeing more demand in your area because of the tax changes in the Northeast,” said Brady. “Northeasterners are feeling the impact of that,” she added, and are seriously contemplating a move south.
Fisher, meanwhile, said he is mystified by Deutsche Bank’s rejection of the bidder’s offer for the former Matthews home in Palm Beach, which was just $3 million short of the asking price.
“It dumbfounds us,” he said. “Deutsche Bank was the main creditor. They’re going to be the physical owner of it.”