In the go-go days before 2006, super luxury and unique homes going to auction became the thing to do. Today, most auctions are a gimmick to get a listing, or because the people are just asking way too much money. On rare occasion though, a potential bargain pops up due to some circumstance.
I am talking about the big auction houses online and offline, not the courthouse steps. As the high bidder on several properties with bids under $50,000 last year, the banks wouldn’t let me have them. The banks and investors just decided to stop letting stuff go that cheap about a year ago. It was my first indication that we might be nearing the bottom resistance pricing for the market.
Above $1 Million FHA and conventional loans are not available so pricing is all over the board. It just depends on how much money and patience the sellers have. Estate auctions last about a year if more than one sibling is involved. Even the short sales of homes over $800,000 that were taking over a year to close have finally seen a decrease in the time to close. So what does that have to do with a home in Corona Del Mar today?
A property that has been on the market over six months and was originally listed at $14 Million in Corona Del Mar is currently being auctioned. Over time the asking offer was lowered to $9.9 Million. $9.9 Million was a good starting point from my perspective as an agent, but it had been on the market so long the buyers just weren’t interested.
Recently someone decided to send it to Auction. The home is one of the few original homes sitting on ocean front property left in Southern California. Most have been knocked down or had a major remodel. Walking the property it was easy to see a new Tuscan style home featuring a subterranean garage. There was a well dressed man with his feet up, looking out over the Pacific as we walked the property, his shoes still at the front door.
I started emailing all of my clients who might consider such a project and found no interest at all. One responded “That isn’t where the money is going.” Now I knew this would be interesting.
After about 20 minutes at the property, and after noticing some of the little details I could see my wife connecting with the house. Details like the kitchen with the polished concrete floor still scarred by the tile squares, and the white washed wood vaulted ceiling in the master, and the 1960’s style electrical light dimmers with clear switch plates were just a few of the things I noticed.
Standing in the little galley kitchen with a priceless view of the Pacific, my wife looks at me and says “I could live here just like this.” The opening price of $5.5 Million was clearly out of this weeks budget, so I knew it wasn’t going to happen at this auction. I started tapping away on my iPhone and sent a couple more feelers out to my friends who could write a check like this while I was admiring the view from the back yard.
My wife is always the romantic when it comes to homes and real estate. I am generally more the business and facts type. Standing there looking out over the cliff leading to the Pacific waters, I started to understand my wife’s connection to the house. It was like telling your grandmother it was time to move to the “nicer” retirement home. I started to picture myself writing my next book on the back lawn overlooking the Pacific sitting behind the house much like it is today. I wrote my first book sitting on a balcony of my Texas McMansion overlooking a lagoon pool with a tropical garden as the backdrop. How much cooler would it be to be sitting on a cliff above the Pacific writing that next book that is swirling around my head.
This morning, the property was just approaching $6.0MM on the auction site. As an investor, that is still a bargain with a lot of room to make money. As I write this there are just over 10 hours to go. It will be fun to see if this is like poker and the two real bidders are waiting in the wings to make a snipe attempt at the end or if some lucky person is going to get a once in a lifetime buy on this land.
If I could just get that big advance for the next book or find a .05% interest only 5 year loan that converts to a 25 year at 5%, I would buy it for $6.0MM today and worry about it later, and that just isn’t how I do business, there is something romantic about this property.
If you want to see it or bid on it in the next 10 hours, call me. If you want to make me that loan, call me.