“Awful, awful, awful!” It was how Khadavi distinguished the auction results for CNBC. He filed for Chapter 11 bankruptcy protection two weeks after the home was put on the market last year.
Despite glamorous amenities like a hidden DJ booth raised from the living room floor by hydraulics, a black-marble auto gallery and a glass-and-marble bridge hanging over the foyer, the auction of the property in the posh Los Angeles neighborhood failed to meet the $50 million reserve, the lowest amount Khodawi could accept it.
“No one told me this thing was going to go below that level,” he said.
Dr. Khodaoui sat on top of the DJ booth rising from the ground in his Bel Air specialty house.
Gaddafi – who owes tens of millions of dollars to several creditors, according to court files – had hoped to expedite the auction with a selling price large enough to cover his debts. But the doctor told CNBC that he was unhappy that the auction, which concluded on Monday evening, coincided with significant declines in both stocks and cryptocurrencies.
Gaddafi also said he believed his deal with the auctioneer, the concierge auctioneer, prevented the company from bidding at the reserve price. So when the five-day auction opened, he was shocked to see the auction house begin offering $10 million less than the lowest price he had agreed to consider. The seller believes that it was the lower-than-expected starting point that set the stage for what happened next.
Bidding came in slow and on the last day of the auction the highest bid was accepted, $4.2 million below reserve. The last bid of $46.8 million did not materialize before the auction closed.
Screenshot of the auction shown from Gaddafi’s mobile phone.
No comment on the auction concierge service commented on Gaddafi’s confusion as to why bids had started at less than his reserve. The auctioneer did not disclose the number of actual bidders in the auction. But the company’s president, Chad Rovers, provided this statement via email:
“After a lively auction, bids are closed and the high bid is in the hands of the curator. With over 80 eligible bids in the last 60 days, we are confident of delivering the market value.”
A glass and marble bridge overlooks the living room and leads to the owner’s suite.
The Mark and Tiffany Angelis Collection / Aaron Kerman
Normally, the seller is not required to accept a bid below the reserve price, but the Khadavi property auction, located at 777 Sarbonne Road, is a bit more complicated as it is part of the bankruptcy procedure. Khadawi told CNBC that in early June, the court would consider the highest bid on the house, and if approved, the sale would go ahead whether he liked it or not.
Khaddawi is now in a race to find a bid that exceeds the highest bid offered at the auction and said he is considering legal action against the seller over what he described as the “flawed” auction.
“Honestly, I’m not happy,” said Compass listing agent Aaron Kerman. “We wanted more.”
But Kerman said he did not believe the auction was flawed. “At the end of the day, the highest bidder is the highest bidder,” said the agent, who has participated in several luxury property auctions.
A 50% price cut is not unusual for high-end properties that have been on the market for an extended period of time before finally being auctioned off. Based on CNBC’s review of recent luxury auctions, the top four mansions for auction have seen their original asking prices fall 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. This will bring the property’s current supply to just over $48 million. If the sale is approved by the court, the mansion will be the fourth most expensive home ever sold at auction.