A state-of-the-art Bell Air mansion was auctioned for $ 87.8 million this week. But the highest bid came in just under $ 45.8 million, according to home salesman and dermatologist Alex Khadavi.
“Horrible, horrible, horrible!” was the way Khadavi described the results of the auction on CNBC. He filed for Chapter 11 bankruptcy protection two weeks after the house hit the market last year.
Despite the fancy amenities such as a stealth DJ booth rising from the living room floor with plumbing, a gallery of black marble cars and a glass and marble bridge over the foyer, the property auction in the luxurious Los Anzea neighborhood to cover the $ 50 million reserve, the lower amount will entertain Khadavi.
“No one told me this thing would go down, below that level,” he said.
Dr. Khadavi sits above the DJ booth that rises from under the floor of his Bel Air home.
Khadavi – who owes tens of millions of dollars to many creditors, according to the courts – hoped the auction would hasten a sale price high enough to pay off his debt. But the doctor told CNBC that he was not happy that the auction, which ended on Monday night, coincided with big drops in both shares and encryption.
Khadavi also said he believed his deal with auctioneer Concierge Auctions had prevented the company from starting bidding below the reserve price. So when the five-day auction opened, he was shocked to see the auction house start offering $ 10 million below the lowest price he had agreed to consider. The salesperson believes that the lower-than-expected starting point set the stage for what happened next.
The bids came late and on the last day of the auction the highest bid was accepted and about $ 4.2 million fell from the reserve. The last bid of $ 46.8 million before the closing of the auction was not met.
An auction screen capture comes from Khadavi’s mobile phone.
Concierge Auctions had no comment on Khadavi’s confusion as to why the bids started below his reserve. The person in charge of the auction did not reveal how many bidders actually offered the auction. But the president of the company, Chad Roffers, offered this statement via email:
“After a lively auction, the offer is closed and the high bid is in the hands of the Trustee. With more than 80 recognized appearances in the last 60 days, we are confident that the market value has been delivered.”
A glass and marble bridge overlooks the living room and leads to the owner’s wing.
Marc & Tiffany Angeles / Aaron Kirman Group
Usually, a seller does not have to accept an offer below the reserve price, but the auction of Khadavi property, located at 777 Sarbonne Road, is a bit more complicated because it is part of the bankruptcy process. Khadavi told CNBC that in early June the highest existing bid for the home will be considered by the court and if the sale is approved he will proceed whether he likes it or not.
Khadavi is now in a street race to find a bid that exceeds the top bid submitted at the auction, and said he was considering legal action against the auctioneer for what he called a “defective” auction.
“I’m honestly not happy,” said Compass co-agent Aaron Kirman. “We wanted more.”
But Kirman said he did not think the auction was wrong. “At the end of the day, the bidder is the bidder,” said the agent, who has been involved in several luxury real estate auctions.
A price reduction of almost 50% is not uncommon for high quality properties that are on the market for an extended period of time before they are finally put up for auction. According to a CNBC review of recent luxury auctions, the top four villas ever sold at auction saw their original prices fall by 68% or more.
The Bel Air deal will include a court-approved 5% auction fee, which will be paid by the buyer, according to the auctioneer’s website. That would raise the property’s current bid to just over $ 48 million. If the sale receives court approval, the mansion will be the fourth most expensive home ever sold at auction.