David Enstone, of William Raveis Chapman Enstone in Newport, says an auction is another tool in the marketing mix.

The Providence Journal / Frieda Squires

An upcoming auction of 23 properties in Newport County, to be held by Lynchburg, Va.-based Counts Realty & Auction Group, has the real-estate community buzzing: Can this unusual tactic help speed sales in a slow market? Or will it attract only bottom-feeders looking for a steal?

Only two local real-estate agencies have agreed to participate in the auction, but many more brokers and agents will be watching to see how the sale plays out.

The auction, set for 11 a.m. Saturday at the Atlantic Beach Club in Middletown, is not a foreclosure auction or a fire sale of distressed properties. It is not even an absolute auction, in which properties are sold on the spot to the highest bidder.

This will be a reserve auction, in which sellers establish confidential, minimum acceptable prices before bidding begins. If a high bidder meets or exceeds the reserve price, the sale proceeds. If the high bid is below the reserve, the seller will have 48 hours to accept or decline the bid, or to make a counter-offer to the prospective buyer.

“This is the first time there’s been an auction like this in Newport County,” said Cameron J. Wolfe, a business consultant who worked with the Counts Group to organize the auction. “It’s a growing trend in the real-estate industry.”

“There are 1,400 listings in Newport County alone,” he added. “It’s taking 6 to 12 months to sell a house because of the large inventory.” Sellers who decided to participate in this auction are “motivated,” but they are not desperate, he said.

Jody Womsley is one such seller. Her contemporary Colonial house at 72 Harrison Ave., in Newport, just one block from the harbor, went on the market last month since she is planning a move to Hingham, Mass. Womsley was widowed last year and is planning to remarry. Her fiancé works in Boston, she said, and they want a home that is closer to his job. Womsley’s house was listed for sale at $1.25 million.

Eight of the properties to be sold are building lots in the Indian Hill subdivision in Portsmouth, and not every house in the auction is as luxurious as Womsley’s. But another of the Newport properties scheduled for the auction, an historic house at 204 Spring St., was listed at $995,000.

Jennifer O’Hora Lawrence, an agent with Century 21 Access America in Newport, listed Womsley’s house. Lawrence said the auction is just another way to help her client.

“It’s pretty exciting,” Lawrence said. “We’re getting a lot of activity” because of the interest generated by the upcoming auction, she said. “It’s good exposure.”

Womsley said on Tuesday that seven potential buyers were coming to look at the house during the week.

Lawrence said a number of open houses have been held at the properties to give prospective buyers a chance to conduct inspections and appraisals, and another open house will be held the night before the auction.

“You get to go and kick the tires. You get to check it out. This is very much like a normal house-sale process,” said David Enstone, of William Raveis Chapman Enstone, the other Newport agency with properties in the auction. He said his company’s view is that this auction is “another tool in the marketing mix ... [and] a reasonable thing to try.”

Enstone said auctions are not the best bet for everyone. “You have to have a relatively high level of equity in the property to put it to auction,” he said.

“If we have a hurdle,” he added, it is that in New England, especially in the current economic climate, many people think of foreclosures when they think of real-estate auctions.

“I really think there is a misperception out there that an auction equals a foreclosure,” Paul Leys, a broker in the Newport office of Gustave White Sotheby’s International Realty, agreed.

Leys, who is also a licensed auctioneer, said he wasn’t approached personally by Wolfe to participate in the auction, but doubts he would have jumped into the process. He said he will probably attend the auction to see how it goes.

“Obviously, this is experimental,” Enstone said. “In Virginia, it’s a much more common part of the marketing mix. It’s not something that’s typically done in New England.” People in Newport, however, are used to buying art and antiques at auctions, he added.

One real estate agent who declined an offer to participate in the auction said he objected to the sale for ethical reasons.

“C.J. took me to lunch a couple of weeks ago,” Jack McVicker, an agent with Remax of Newport, said about Wolfe. “I told him I would not participate with my clients.”

“Their business model takes the agent out of the loop and exposes buyers and sellers to a pressure situation,” McVicker said.

Buyers especially are at risk because most will not have adequate representation, he said.

“Their business model is to market these properties outside the area,” he said, but added that only local agents are familiar with the local market.

McVicker said it is significant that bidders will be allowed to register “even while the auction is going on,” but agents have to be registered “more than 24 hours in advance.”

“I have an ethical responsibility to a client to represent them,” McVicker said. “I don’t have any problem having another alternative,” he added, but both parties in a sale should “have an advocate.”

Dwight Counts, a general partner with the auction group, said his company is not interested in cutting local real-estate agents out of the equation.

“We like to work as a team with the Realtors,” he said, likening the relationship to “dual representation.”

Counts said his company, which was founded by his uncle in 1968, held about 300 auctions last year, at which $60 million to $70 million worth of real estate was sold.

The Counts Group charges both sellers and buyers a 5-percent transaction fee, and commissions to real-estate agents are paid from those fees, he said. Wolfe said Counts will pay both sellers’ and buyers’ agents, but will also sell to people who are not represented by agents.

“I would not be participating if I wasn’t being compensated,” Lawrence said.

McVicker noted there are other fees charged by Counts Group — sellers were asked to pay an upfront advertising fee of $2,000, although $1,000 was to be rebated if the seller agrees to a sale on auction day. Enstone said there was also a $500 title search fee.

“You pay for the luxury of getting into a high-pressure situation,” McVicker said.

“I have a lot of questions about it,” Leys said, even though he is “a fan of the auction process.”

“I do think there will be a selection of bottom fishers at the sale,” he added. “When the market was thriving, there was no need for an auction.”

“But I certainly will keep an eye on it,” Leys said. “It’s probably one of those high-risk, high-reward type of things.”

The reserve real-estate auction is not completely without precedent in Rhode Island. In December of 2006, owners of waterfront condominiums in Tiverton, The Villages on Mount Hope Bay, a 55-plus development, held a reserve auction to sell 33 of their lower-priced units. (Their high-end units were excluded because they were still selling well). But the sale was halted by the owners after 1 hour — 2 ½ hours early— after the sale of 17 units. Minimum bids had been set from $240,000 to $380,000, a deep discount from their previous asking prices of $450,000 to $690,000. A one-bedroom unit went for $460,000, and a two-bedroom condo was sold for $510,000.

Wolfe said the Counts Group hopes to hold quarterly real-estate auctions in Rhode Island, even if this first one is not a smashing success. “The auction method does work,” he said. “We will do whatever we can to make it work for this area.”

At the very least, Lawrence said, “some sellers might get a reality check.”

For more information on all the properties for sale at the auction, see www.countsauction.com\newport. For more information on 72 Harrison Ave., contact Jennifer O’Hora Lawrence, ohora@aol.com; for information on 204 Spring St., contact listing agent Lisa Downey at downeyl@raveisre.com.

cdunn@projo.com