At Premiere, a Malibu home originally listed for $8.4 million in September 2008 and cut to $6.9 million by December 2010, sold for $5.2 million in an auction this April. An estate in Corona del Mar, California, was priced at $19 million in October of last year, reduced to $12.9 million in January and sold for $7.5 million in April. A mansion in La Jolla, California, was listed for $15 million in February 2009, lowered to $12.9 million in September 2010 and auctioned for $8 million in December.

No Overpayments

"Nobody is going to overpay in an auction," said Katie Bentzen, 56, who sold her Malibu home with a view of Zuma Beach in October 2009 for $900,000, a 47 percent discount from the original listing price. "If you really want to move on with your life now, people have to be ready to get real on the price of their home."

For Andrew Osinski, 67, a former managing director of the global asset management division of Lehman Brothers Holdings Inc., it was time to move on after his wife's death eight years ago and his four children left his waterfront home on Long Island Sound in Darien, Connecticut.

"After I listed the house last year, it quickly became stale," Osinski said. "I've been a trader all my life. There's nothing worse than sitting on a stale position. I wanted to try to get out now."

Market Change

He had listed the five-bedroom, seven-bathroom property -- which he bought in 1994 for $1.52 million and subsequently rebuilt -- in May of last year for $12.5 million. This June, after six weeks of promoting the auction and showing the house to potential bidders, it sold through New York-based Concierge Auctions for $8 million, the low end of a range that extended to as much as $10 million the company had suggested. Osinski had a $5 million loan on the property.

"The market has changed," he said. "I asked too much, as we all do. I hung on for a long time. But this is it. It's time to move on."

Osinski, who is retired, is looking to buy a home in Naples, Florida, where he plans to spend most of the year, as well as a second property, a 3,000-square-foot, cottage-style house with a private dock close to Darien.

Sandwith says he expects high bids for his Mercer Island home because "some of the highest recorded sales have been conducted through auction."

He bought the lot, which had an old house on it, for $5.38 million in 2004, according to King County, Washington, public records.

"That's a significant piece of property to commit to," Sandwith said. "I don't want to limit myself."