An over-the-top modern mansion in Bel Air sold for $87.8 million this week. But the top bid was just under $45.8 million, according to the home’s seller, dermatologist-turned-developer Alex Khadavi.
“Terrible, terrible, terrible!” this is how Khadavi characterized the auction results to CNBC. He filed for Chapter 11 bankruptcy protection two weeks after putting the home on the market last year.
Despite eye-catching amenities like a stealth DJ booth that hydraulically rises from the living room floor, a black marble-clad car gallery, and a glass-and-marble bridge suspended over the foyer, the auction for the 50-something luxury-district Los Angeles property fell through -covering a million-dollar reserve would be the lowest amount Khadavi would stand by.
“No one told me this thing was going to go below that level,” he said.
dr Khadavi sits atop the DJ booth that juts out of the ground at his home in Bel Air.
Joe Bryant
Khadavi – who owes tens of millions of dollars to several creditors, according to court documents – had hoped the auction would fetch a sale price large enough to cover his debt. But the doctor told CNBC he wasn’t happy that the auction, which ended Monday night, coincided with big falls in stocks and crypto.
Khadavi also said he believes his deal with auctioneer Concierge Auctions is preventing the company from starting bidding below the reserve price. When the five-day auction opened, he was shocked to see the auction house start bidding $10 million below the lowest price he had considered. The seller believes the lower than expected starting point set the stage for what happened next.
Bids came in slowly and on the last day of the auction the highest bid was accepted and it underperformed the reserve by about $4.2 million. The last offer of $46.8 million before the end of the auction was not reached.
A screenshot of the auction results from Khadavi’s phone.
Alex Khadavi
Concierge Auctions did not comment on Khadavi’s confusion as to why bidding started below his reserve. The auctioneer did not want to reveal how many bidders actually bid at the auction. But the company’s president, Chad Roffers, offered this explanation via email:
“After a vigorous auction, the bidding is closed and the winning bid is in the hands of the trustee. With over 80 qualified showings over the past 60 days, we are confident that 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
Normally, a seller is not required to accept a bid below reserve, but the auction of Khadavi’s property at 777 Sarbonne Road is a little more complicated because it is part of bankruptcy proceedings. Khadavi told CNBC that in early June the highest existing offer for the home will be reviewed by the court and if approved, the sale will go ahead whether he likes it or not.
Khadavi is now in a race to find a bid that beats the highest bid placed at the auction, and he said he is considering legal action against the auctioneer over what he calls a “faulty” auction.
“Honestly, I’m not happy,” said co-listing agent Aaron Kirman of Compass. “We wanted more.”
But Kirman said he didn’t think the auction was flawed. “At the end of the day, the highest bidder is the highest bidder,” said the broker, who has been involved in several luxury home auctions.
A nearly 50 percent drop in price is not uncommon for high-quality properties that sit on the market for an extended period of time before finally being auctioned. Based on CNBC’s review of recent ultra-luxury auctions, the top four mansions ever sold at auction saw their original asking prices fall by 68% or more.
The deal with Bel Air includes a court-approved 5% auction fee, which the auctioneer’s website says is to be paid by the buyer. That would bring the property’s current listing to just over $48 million. If the sale is court approved, the mansion would be the fourth most expensive home ever sold at auction.