A mansion in Los Angeles’ Bel-Air neighborhood was put up for auction, but it ended up going for much less than was initially expected.
“Nobody told me this thing’s going to go below, below this level,” the seller, Dr. Alex Khadavi, a dermatologist from Tehran who became a developer, said, per CNBC.
Last year, he filed for Chapter 11 level bankruptcy protection two weeks after listing the home, per the outlet. Khadavi said he would only go for as low as $50 million, but the house was auctioned off for much less than that — at a bid of less than $45.8 million. It was put up for auction this week at $87.8 million.
“Horrible, Horrible, Horrible!” Khadavi told CNBC about the situation.
The house has seven bedrooms and eleven bathrooms, with two garages and an individual guest house with two bedrooms.
In an interview with the outlet last summer, Khadavi said, “Seven is a number and theme that has affected me in every important aspect of my life,” adding, “from the age I came to America, to the floor level of my condominium.”
Khadavi bought the property for $16 million and decided against selling it to a developer for $24 million, opting to renovate it himself. Not only did he almost entirely get rid of the former mansion — with only one wall still up from the previous house — he also constructed a way for a part of the floor to ascend from below the living room and become a DJ booth and dance floor.
The outlet also noted that Khadavi appears to be in debt to multiple creditors, per court filings, which state that he owes them tens of millions of dollars.
He had several reasons for the underwhelming performance of the sale. He said he was unhappy that the bidding happened at the same time that equities and crypto went down. He also said he thinks the agreement with Concierge Auctions didn’t allow the auctioneer to begin the bidding below the reserve cost. The auction lasted five days, and he said he was stunned to observe the company begin the bidding $10 million under the lowest price he’d been willing to think about, saying he believes that led to the lackluster bidding that came to follow.
Concierge Auctions’s president, Chad Roffers, sent a statement to CNBC saying, “After a spirited auction, the bidding is closed and the high bid is in the hands of the Trustee. With over 80 qualified showings in the last 60 days, we are confident market value was delivered.”
Ordinarily, sellers don’t have to accept a bid if it’s below their reserve cost, but since the residence is part of bankruptcy dealings, the situation is more complex. The doctor told the outlet that the court would look at the highest offer on the home, and the sale would continue if the court accepted it.
Khadavi said he’s thinking about pursuing legal avenues against the company because of what he says was a “flawed” auction.
Co-listing agent Aaron Kirman of Compass said he wasn’t happy, either, and “[w]e wanted more.” However, he said he didn’t think it was a faulty auction. “At the end of the day, the highest bidder is the highest bidder,” he said.
It’s not uncommon for residences like the Bel-Air mansion to experience a massive price decrease if they are on the market for a long time before auction. CNBC noted that “the top four mansions to ever sell at auction saw their original asking prices chopped by 68% or more.”
The Bel-Air agreement will have a fee of 5% approved by the court, which the buyer has to pay, per the auctioneer’s website. That would mean the offer would be a little more than $48 million. If the court approves the transaction, the property will become the fourth priciest residence ever to be sold at an auction.