bubbleinfo.com

You’ve never seen a kitchen photo, have you?  Hat tip to JS for sending this in, from the U-T:

A luxury bankruptcy home in La Jolla once featured in TV commercials has been sold for almost a third of its original asking price of $45 million, based on details from the property’s listing agent on Wednesday.

PHOTOS: http://hurwitzjamesco.com/property.php?lng=en&id=9

Beverly Hills-based Bob Hurwitz said “The Razor” property, considered by designers as an architectural marvel, has closed escrow. The buyer, an East Coaster, paid $14.1 million in cash, added Hurwitz, of the Hurwitz James Company. More details are expected to be released on Thursday.

Public records show about $34 million was spent building the 11,000-square-foot estate, which has never been occupied. Construction began in 2002 and was completed in 2008. The original sale price was set at $45 million but has consistently been slashed according to the market and even more when it became a bankruptcy property.

The Razor house, 9826 La Jolla Farms Road, was originally set to be sold at a Sept. 27 auction, but that was canceled because there were no qualified bidders.

The auction was then rescheduled to Nov. 10, with the starting bid shaved to $13.9 million from the $16 million set in September. The property again could not be sold because none of the bidders came close to what the bank would accept, at least $17 million, according to the listing company.

The oceanfront home is the bankruptcy estate of Jimmy Donald Cooksey Jr., according to public records. It is the work of San Diego-based architectural designer Wallace E. Cunningham, named one of Architectural Digest’s Top 100 Designers.

From the miamiherald.com:

All they have to do is ditch the reserve price, and auctions would work great - have some guts!  Hat tip to AL for sending this along from the wsj.com:

Last Friday, about 60 people gathered at a 10,300-square-foot French Chateau-style home in a gated community of this wealthy suburb of Los Angeles. Nibbling on fruit salad and croissants, the visitors meandered through the home’s large kitchen, checked out the view of the rolling hills or peeked into the movie theater with stadium seating while it played “Pretty in Pink.”

They had all gathered to see this seven-bedroom, seven-bath mansion, which was rented by singer Britney Spears between roughly 2008 and 2010, sell to the highest bidder. The home had previously been on the market for as much as $10.8 million; bidding would start at $4.5 million.

“I’m starting to get butterflies,” confessed Regina Leon, who owns the home with her husband Jose “Pancho” Leon, a builder and founder of a money-order company. After several of her girlfriends mentioned they were coming by, Ms. Leon had decided at the last minute to cancel her hair appointment to stay to watch the action unfold. Mr. Leon said he wasn’t worried, though he admitted he’d gotten only about four hours of sleep the night before.

Once considered a last resort for desperate sellers or for banks unloading foreclosed properties, home auctions are increasingly being used to sell penthouse apartments, waterfront mansions and grand country estates—many of them languishing in an uncertain market after significant price cuts. At Premiere Estates Auction Co., founded 10 years ago, the average price of a home the company auctions is up nearly 40% from a year or so ago, says auctioneer Anthony Fitzgerald. Gadsden, Ala.-based auction company JP King, in business since 1915, has seen inquiries for home auctions above $10 million so far this year double from a couple of years ago, said Craig King, the company’s president. In 2010, the company had 11 inquiries for homes above $10 million; so far this year it’s had 24.

As the housing slump drags on, the carrying costs of waiting out the market have become onerous, even for the wealthiest. A seller who put a home on the market in 2009 hoping that a turnaround was on the horizon may now be realizing that it could take several years or more for the market to rebound. Taxes on a $10 million or $20 million home can run into the hundreds of thousands of dollars a year, in addition to staffing, landscaping and other upkeep. The ultra high-end of the market is particularly vulnerable: As of September, houses priced at $10 million and above declined nearly 9.5% in value from last year, according to Zillow, the online housing tracker, compared to a 4.4% decline overall.

“Eventually, even the people who have unlimited means will throw in the towel at some point,” said George Graham, the CEO of Concierge Auctions.

Some brokers warn that when a well-known mansion or estate fails to sell at auction, it can become tarnished, making it harder to sell in the future. “If you have all that hype and then it doesn’t sell, then you’ve got egg on your face,” said Jeffrey Hyland, president of Beverly Hills-based real-estate firm Hilton & Hyland.

Bob Hurwitz, a longtime Southern California broker who recently tried unsuccessfully to auction off a $45 million sculptural-style home in La Jolla known as “the Razor,” said he’s concluded the process doesn’t benefit sellers, who assume all the risk by paying marketing fees up front. (Fees can range anywhere from a couple thousand dollars to upwards of $150,000 for ultra high-end homes.) He said auctions can also turn off potential buyers who don’t want to pay an additional 8% to 12% in premiums after the sale, which can amount to a million dollars or more for an expensive home. “It just doesn’t make sense,” he said. Laura Brady, of Concierge Auctions, said most buyers are aware that all real-estate transactions involve fees, and the premiums are included in auction-sale prices, “just like real estate agent’s fees” are in a traditional sale.

Mansions and estates are frequently auctioned for much less than their previous price tags, though those price tags may have been set unrealistically high to begin with. While both art-auction houses Christie’s and Sotheby’s are affiliated with real-estate companies, neither conducts real-estate auctions in the U.S. (Both have some affiliate agencies that have auction divisions which partner with companies like Concierge and Premiere Estates.)

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Bob the listing agent and his staff have found us here, so I told him I’d try to help him rustle up a few more bidders for the next auction coming up Thursday.  Tomorrow is the deadline to get in your $500,000 deposit to qualify to bid! From the U-T:

The auction date for “The Razor” house, a bankruptcy estate in La Jolla once featured in TV commercials, has been rescheduled for Nov. 10, according to the listing agent and recent court records.

The starting bid for the 11,000-square-foot home with private access to Black’s Beach also has changed, falling to $13.9 million from the $16 million set in September, documents show.The never-occupied home, at 9826 La Jolla Farms Road, is the bankruptcy estate of Jimmy Donald Cooksey Jr., according to the documents.

The original Sept. 27 auction was not held because “unfortunately, no bidders qualified for the auction,” the attorneys representing trustee Leslie T. Gladstone wrote. Listing agent Bob Hurwitz, who is based in Beverly Hills, said the real estate company came close with an overseas buyer but the funding could not be ironed out in time.

The terms for the newly set auction also have changed. Previous terms required bidders to wire in $500,000 to the trustee one week before the auction date. Now, interested buyers can demonstrate ability to close two days before the auction and bring a cashier’s check to the trustee in the amount of $500,000. The winning bidder would endorse the check over to the trustee.

The Nov. 10 auction will begin at 11 a.m. at 3580 Carmel Mountain Road, Suite 300 — the law offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., which is representing trustee Leslie T. Gladstone.

Court documents say the property, which was never finished by the former owner, will be sold free and clear of liens.

The home is the work of San Diego-based architectural designer Wallace E. Cunningham, named one of Architectural Digest’s Top 100 Designers.

About $34 million was spent building the estate, which was once featured in commercials for Calvin Klein and Visa. The original asking price was $45 million.

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Bob needs to include the girl, or at least have her be the auctioneer!

From Lily at the U-T:

A ban on foreclosure auctions outside the downtown San Diego Superior Court has forced those who conduct them to two other areas that already host such transactions, a spokesman with a trade group that represents trustees said Monday.

The ban, made official in a July 1 court order, takes effect Tuesday.

People who “cry” trustee sales now conduct business at the entrance of the East County Regional Center, 250 E. Main St. in El Cajon, and outside 321 N. Nevada St., the address of Oceanside’s Housing Division offices, said Richard Meyers, executive director of the Irvine-based United Trustees Association.

It’s up to the individual companies that publish and post the sales to decide where to go, Meyers said.

The downtown San Diego venue had been used as an auction site since the 1960s. Over time, court officials said, dozens of investors, their representatives and onlookers routinely crowded around the main entrance of the downtown facility throughout the day, causing safety and security concerns.

A reader noted that yesterday was an active day for trustee sales.  But unlike last month, when I got snookered into thinking something was afoot, I went right to the auction.com website. 

Yep, yesterday they conducted their latest installment of ’trustee sales by ballroom auction’ – link here.

I can relate to what they are going through.  Bank of America and others are dumping some of their worst properties on them – only two of the 117 properties were over $400,000, and the majority were under $200,000.  There was also plenty of postponements.  Of the 117 on the list, only 30 were sold – they postponed 58, and cancelled 29.

If you are looking to pay cash for cheap properties, and don’t mind buying without title insurance and inspections plus evicting the occupants, this might be for you.  At least the parking is easier, and you won’t be tripping over the bums and hobos downtown.

But it is run by the same REDC auction house that has been exposed here previously.

Overall yesterday there were 68 trustee sales conducted throughout the county, with 38 properties being purchased by 3rd parties, and 30 going back-to-bene.  It brings October’s total up to 672 trustee sales, with three days to go.  In September there were 754 successful trustee sales.

A ”reserve price” spoils another auction – from latimes.com:

The auction of a custom-built mansion along Malibu’s “Billionaire’s Beach,” so named for its wealthy homeowners, hit a snag Sunday when it failed to generate an acceptable bid.

Although the bidding started at the minimum $22 million opening price, it stalled there short of the  “reserve price,” the undisclosed value at which the owners are willing to let the property go. The sellers, William and Cheryl Chadwick, rejected the bid.

Now Westside Estate Agency listing agent Carol Bird and Premiere Estates Auction Co. are working on securing written offers from the four bidders and an international buyer who was unable to attend the event and will view the property this week.

The beachfront home was listed at $65 million when it first came on the market in 2008. The 10,500-square-foot house, built in 2005, has 150 feet of beach frontage.

Reader Jay saw that auction.com is now conducting trustee sales, and wanted the scoop.

It’s not surprising that lenders bloated with properties would be attracted to the allure of ballroom auctions.  They seem like a great idea – let’s gather around a bunch of novice buyers in a big room and create a frenzy.

But the format is the same as buying at the court house steps, where you have to pay all-cash only, and no title insurance.  At least at the regular REDC ballroom auctions they let you finance the sale, and close 30 days later with title insurance – which opens the door for the amateurs.

Most of the all-cash repo buyers are pros.  They aren’t going to be persuaded by the usual REDC antics of guys in tuxedos running around like monkeys to distract you from the common thread – that they have shill bidders.  From their FAQs:

Q. What is the difference between a Credit Bid and the Opening Bid?

A. Under the law, the beneficiary under the deed of trust may place a bid or bids (directly or through Auctioneer) during the auction called a “credit bid”. Such credit bids can be made up to the total amount due the beneficiary, including the Trustee’s fees and expenses. The “Opening Bid” is an initial credit bid to be placed at the auction, but does not represent the maximum credit bid that may be placed on behalf of the beneficiary.

While it is legal to do this at the court house steps, lenders typically are too busy/disorganized to attend the bidding, let alone manipulate it.  But shill bidding is standard practice at all REDC auctions, so I would think it’ll be attempted at these auction.com trustee sales too.  But will the pros go for it?

You know my policy – I don’t believe anything I hear, and only half of what I see.  So I checked it out for myself.  At the last REDC auction I attended about two years ago, I stood in the front corner and looked back at the audience – that way I would only hear the auctioneer’s bids, while looking for the actual bidders.  It is a farce – most auction prices were run up without corresponding bidders in the audience making the bids.

But I do give them credit – they tell you that they are doing this in the fine print, if you read and understand it.  But most amateurs are too excited over ”getting a bank deal” to realize what is being done to them.

If you’d like to check it out for yourself, here is the link to the first attempt – the lenders threw them nine garbage properties for starters:

http://www.auction.com/event/Southern-CA.php?auctionID=E-002&chkVenue=2223

P.S.  The auction company REDC purchased the website “auction.com” for $1,000,000 to use as their entry into regular residential sales.  But like with their ballroom auctions, they put the 5% commission on the buyer.  How is it working?  According to the MLS, they have closed one sale this year, a 2br condo in Allied Gardens that they listed for $99,000 – it closed for $64,000.

We thought auction.com might be on to something, after spending $1.7 million just for their name.

They had some flashy advertising, and made it sound like auctioning houses on-line would become the norm.  They are owned by REDC, the hotel-ballroom auction outfit, so who better to blaze the trail? 

Apparently they are off to a slow start.

The last week of January was designated as the big kickoff for their San Diego on-line auctions, once they had completed two weekends of open houses.  But since then, they’ve been peppering the bulk emails, announcing the “second chance”, which must mean the first chance wasn’t quite what they had hoped.

How did it go?

Here are their listing stats for San Diego County since September 1st:

Actives: 10

Pendings: 1

Cancelleds/Expireds: 22

Total: 33

I love the idea of house auctions, and think the on-line format has great potential.  But the listings I saw were over-priced by at least 10%, so it’s no surprise that they didn’t sell any – their one pending is from last year. 

Judging by the number of cancellations and expireds, the customers must not have thought much of the results – but they need to focus on their price as the culprit.

The next auction of properties that have been declared defaulted due to unpaid property taxes is coming up on Friday, March 18th.

Here is the list of properties:

http://sdcounty.ca.gov/ttc/docs/pats7032.pdf

A good source for vacant lots and timeshares – including 27 timeshares at the Carlsbad Inn!