Great Oak Manor
One of Kent County’s most majestic homes, with land dating back to Lord Baltimore, goes on the auction block next Saturday. The Great Oak Manor, a luxury waterfront bed and breakfast near Chestertown, has over 18,000 square feet, fourteen bedrooms, and guest books noting visits of Robert Mitchum and John Kennedy. The Manor sits proudly on the Chesapeake Bay, but for several years has failed in seeking a new owner using traditional real estate strategies, much to the disappointment of the Chesapeake Bank and Trust, the current owner. That’s why Chesapeake Bank agreed to a private auction working with Easton-based DeCaro Auctions and local agent, Hugh Smith of Coldwell Banker.
While auctions have come to be associated with distressed homes over the years, they are now being used to successfully market and sell high value estates like Great Oak. In Talbot County, for example, recent auctions have shown remarkable success in taking properties that struggled to sell in the traditional way. The well-known Timberland estate on the Wye River, for example, went on the block in November 2008 (shortly after Lehman Brothers failed), and yet sold for $4.6 million.
“People who are visionary are going to adopt this strategy. It gets them out of the market quicker. This is going to grow,” says Smith. “There is a perception that by going to auction, you are getting a discount, and at an auction process, the buyer feels they are getting closer to the real market value of the property.”
In Australia and New Zealand, where this tool has become very popular, studies show that auctions can yield 3% to 8% higher in total purchase prices than traditional sales.
One of the risks owners take is the high cost of marketing the auction with significant upfront costs. In a typical high end sale, costs from $50,000 to $100,000 are put up to purchase advertisements in The Wall Street Journal, specialty magazines, and newspapers, bringing entirely new buyers into the process. On the other hand, If the property does not sell, the buyer forfeits those large expenses.
But apparently very few properties fail to sell. In fact, sellers, according to Smith, are able to achieve plus or minus 10 percent of current market value, and usually within a 30 day period. That fact turns out to be very attractive for sellers who have had their homes on the market for a long time. Sellers can also protect themselves by requiring a “reserve” or minimum bid, although most agree to an “absolute” auction, where the highest bidder wins.
The Great Oak Manor auction will be held on Saturday, September 24 beginning at 11 am on site. For more information, click here.
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