An over-the-top modern mansion in Bel Air was listed at auction for $ 87.8 million this week. But the highest bid came in at just under $ 45.8 million, according to the house’s seller, dermatologist turned developer Alex Khadavi.
“Horrible, horrible, horrible!” this is how Khadavi characterized the auction results on CNBC. He filed for Chapter 11 bankruptcy protection two weeks after putting the house on the market last year.
Despite flashy amenities like an invisible DJ booth rising from the living room floor thanks to plumbing, a black marble-clad car gallery, and a glass-and-marble bridge suspended above the atrium, the auction for property in the upscale neighborhood Los Angeles bankruptcy to meet the reserve of $ 50 million, the lowest amount Khadavi would have withheld.
“Nobody told me this thing is going to go below, below this level,” he said.
Dr. Khadavi sat on top of the DJ booth rising from under the floor in his spec house in Bel Air.
Khadavi – who according to court documents owes tens of millions of dollars to several creditors – had hoped the auction would accelerate a sale price high enough to cover his debt. But the doctor told CNBC that he was unhappy that the auction, which ended Monday night, coincided with sharp drops in both stocks and cryptocurrencies.
Khadavi also said he believed his deal with the auctioneer, Concierge Auctions, precluded the company from starting the offering below the reserve price. Then, when the five-day auction opened, he was shocked to see the auction house start bidding $ 10 million below the lowest price he’d agreed to consider. The seller believes that a lower than expected starting point set the stage for what happened next.
The bids came slowly and the highest bid was accepted on the last day of the auction, which fell approximately $ 4.2 million below the reserve. The last bid of $ 46.8 million before the auction closed was not reached.
A screenshot of the auction results from Khadavi’s mobile phone.
Concierge Auctions did not comment on Khadavi’s confusion as to why the deals started below his reserve. The auctioneer would not disclose how many bidders actually bid in the auction. But the company’s president, Chad Roffers, offered this statement via email:
“After a lively auction, the bid is closed and the highest bid is in the hands of the trustee. With over 80 qualified screenings over the past 60 days, we are confident that market value has been achieved.”
A glass and marble deck overlooks the living room and leads to the owner’s wing.
Marc & Tiffany Angeles / Aaron Kirman Group
Typically, a seller is not required to accept an offer below the reserve price, but the auction of the Khadavi property, located at 777 Sarbonne Road, is a little more complicated as it is part of a bankruptcy procedure. Khadavi told CNBC that in early June the highest bid on the house will be considered by the court and if the sale is approved he will move forward, whether he likes it or not.
Khadavi is now racing to find a bid that exceeds the best delivered bid and said he is considering legal action against the auctioneer for what he called an “imperfect” auction.
“Honestly, I’m not happy,” said Compass co-listing agent Aaron Kirman. “We wanted more”.
But Kirman said he doesn’t believe the auction was flawed. “At the end of the day, the highest bidder is the highest bidder,” said the agent, who has been involved in several luxury real estate auctions.
A price reduction of nearly 50% is not unusual for high-end properties that stay on the market for an extended period of time before finally going for auction. Based on CNBC’s review of recent ultra-luxury auctions, the first four villas ever sold at auction saw original asking prices reduced by 68% or more.
The deal with Bel Air will include a court-approved 5% auction fee, which will be paid by the buyer, according to the auctioneer’s website. This would bring the property’s current offering to just over $ 48 million. If the sale gets court approval, the mansion would be the fourth most expensive home ever sold at auction.