Saturday, November 29, 2008

2626 Victoria Drive Auction Report - Seller Won't Accept Highest Bid

I took some time off today to wander down to the auction being held at 2626 Victoria Drive. I went because I wanted to gauge in real time what is happening with the Laguna Beach real estate market. This home was on the MLS at a reduced asking price of about $2,500,000. After the auction failed (see below), the listing price was cut by $300,000. Call me strange but I got a kick out of the auction.

The auction took place at about 1:20 pm inside the house. About 20 bidders looked on. The seller couldn't have asked for a more perfect day - the strong sun was sparkling off of a wide swath of the Pacific ocean - all viewable from the front deck. It was an uncertain atmosphere, with the bidders eyeballing each other and not quite knowing what to expect.
From the general appearance of the bidders and the cars they drove, I could tell that most bidders were fairly affluent.

The auctioneer first covered the terms of the Auction. The the winning bid had to pay an additional 6% buyer's premium, had to put 10% down by this Monday, and had to close escrow in 30 days. No contingencies were allowed for a winning bidder to obtain financing. The advertised reserve price was $1,900,000. I didn't check the auction disclosure for the square footage of this 3 bedroom house, but I'd guess it was about 1500 square feet. Not big.

The auctioneer tried to make a big deal out of his opinion that people would be getting one heck of a deal. He started bidding at $5,000,000 as somewhat of a joke. Silence.
He went down to $4,000,000. More silence.
He went down to $3,000,000. More silence.
He went down yet again to $2,000,000. More silence!
He went down to $1,500,000 and got a hit. One of the "Internet" bidders seemed to have placed a bid. Was it a real bid? I have no idea.

Having a starting point, the auctioneer went to $1,600,000 and did his auction lingo in that price range for a while. This was met with silence from the crowd. No one bid. The auctioneer then singled out a person in the crowd - "Sir, you are interested in this property, aren't you?"
To which the gentleman replied "Not at this price." Priceless!!!

The auctioneer, having absolutely no success in getting any other bids, announced that the action was over and that there was no winning bid because the reserve price hadn't been reached. All expectations were deflated and the bidders dispersed into the sunny Laguna Beach afternoon.

I'd say the owner of 2626 Victoria Drive can't face the reality that his home is really worth $1,500,000. It probably will be worth less next month! This shows me that Laguna Beach home values are a LOT lower than the asking prices. Only a moron would pay anything close to the asking prices of most of the properties currently listed in the MLS. In some coming posts, I'll detail some actual moronic buying decisions and how these buyers have lost huge amounts of money in very short times. Until then, enjoy the weekend and any open houses you attend.


Anonymous said...

Very interesting reporting. Thanks for that. It's good to know that place got a $1,500,000 bid and that's it. Victoria Beach has been way too pricey for ages.

Anonymous said...

Great Post.... I have been watching the LB Market and you hit the nail right on the head with your assessment on this house!

Anonymous said...

Okay, I have looked at this house and the driveway to the garage is scarcely big enough to drive a Vespa into (maybe an original Mini-Cooper), ergo, the only thing you can do with your car is park in front, however, there really is no street parking without blocking your neighbor's driveway. Forget any kind of even small SUV.
There is exactly one closet in the house and a tiny linen closet, thus, that counts as only one full bedroom. The master bath has one sink that I guess a couple would "take turns" spitting toothpaste into and washing their faces/shaving over.
There is a back "patio" that looks onto a wall of concrete and might make a small dog run. When it rains, the run-off from PCH above will flow onto the upper mini-concrete patio and onto the lower one. The kitchen has a view into, you guessed it, the wall of grey concrete back patio. The sides of the house have no windows as they are as close as a condo to the neighbors.
The view from the front living room shows some blue ocean but mostly unsightly rooftops. The master bedroom and other office have a little better views.
There is also no central heat and air but these funny wall units. When you live by the beach gas forced air helps prevent everything from staying damp and moldy.
I would be very cautious about purchasing this house. Look at what is perched above you out back.