The Bel Air mansion flopped at auction after it was sold for $87.8 million.

An incredibly modern mansion in Bel Air was put up for auction this week for $87.8 million. But the highest bid was just under $45.8 million, according to the home’s seller, dermatologist-turned-developer Alex Hadavy.

“Terrible, terrible, terrible!” this is how Hadavi summed up the results of the auction for CNBC. He filed for Chapter 11 bankruptcy protection two weeks after putting his house up for sale last year.

Despite luxury amenities such as a hidden DJ booth that hydraulically rises from the floor of the living room, a black-marble car gallery, and a glass-and-marble bridge suspended over the foyer, a real estate auction in Los Angeles’ luxury neighborhood failed. to cover the $50 million reserve, the lowest amount Hadavi could have received.

“No one told me that this thing would go below, below this level,” he said.

Hadawi, who owes tens of millions of dollars to several creditors according to court documents, hoped the auction would expedite the sale at a price sufficient to cover his debt. But the doctor told CNBC he was unhappy that the auction, which ended Monday night, coincided with a big drop in both stocks and cryptocurrencies.

Hadawi also said he believes his deal with auctioneer Concierge Auctions prevented the company from bidding at the reserve price. So when the five-day auction began, he was shocked to see the auction house start offering $10 million below the lowest price he had agreed to consider. The seller believes that the lower-than-expected starting point set the stage for what happened next.

Bids were slow to come in, and on the last day of the auction, the highest bid was accepted, falling short of the reserve by about $4.2 million. The last offer of $46.8 million before the auction closed was not reached.

Screenshot of auction results from Hadavi’s mobile phone.

Alex Hadavi

Concierge Auctions did not comment on Hadavy’s confusion over why bids started below his reserve. The auctioneer does not disclose how many bidders actually bid in the auction. But company president Chad Roffers made this statement via email:

“After a vigorous auction, bidding is closed and the highest bid is in the hands of a trustee. With over 80 qualified impressions in the last 60 days, we are confident that market value has been achieved.”

A bridge of glass and marble leads to the living room and leads to the master’s wing.

Mark and Tiffany Angeles / Aaron Kirman Group

Generally, the seller is not required to accept an offer below the starting price, but the auction of Hadavi’s property, located at 777 Sarbonne Road, is a little trickier as it is part of the bankruptcy process. Hadawi told CNBC that in early June, the court will review the most expensive house offer in existence, and if approved, the sale will go ahead whether he likes it or not.

Hadavi is now in a race to find a bid that exceeds the maximum bid filed at the auction, and he said he is considering legal action against the auctioneer for what he called an “imperfect” auction.

“Honestly, I’m not happy,” said listing agent Aaron Kirman of Compass. “We wanted more.”

But Kirman said he didn’t think the auction was illegal. “In the end, the highest bidder is the highest bidder,” said an agent who has participated in several luxury real estate auctions.

Price drops of almost 50% are not unusual for luxury properties that are on the market for an extended period of time before finally being put up for auction. Based on CNBC’s review of recent ultra-luxury auctions, the original asking price of the four best mansions ever sold at auction has been reduced by 68% or more.

The Bel Air deal will include a court-approved 5% auction fee to be paid by the buyer, according to the auctioneer’s website. This brings the current property offer to just over $48 million. If the sale is approved by the court, the mansion will become the fourth most expensive home ever sold at auction.

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