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.

2712 Highland Owner Prices Aggresively and Gets Buyer

2712 is located close to Victoria Beach and has good views of South Laguna. It's a large family sized home that appears to be very nice and very contemporary. Rather than price this property at the same high prices of other Laguna Beach home sellers, this seller decided to go in with a lower price. This strategy likely avoided months of languishing on the market and the home moved before the current credit crisis and economic downturn. In hindsight, this was a brilliant strategy.

It all worked for the seller. The property quickly sold for $1,875,000 - very close to the asking price. This sale goes a long way to shedding light on Laguna Beach home prices.

Other homes in this area are listed at prices over two million dollars. Yeah....good luck with those......

Close Escrow...and Lose $500,000 (Or more!)

We've written about 2616 Victoria Drive, recently sold for $3,000,000. Now that a neighboring house (2626 Victoria Drive) is being auctioned with a reserve price of less than $2,000,000, it looks like the buyer of 2616 Victoria has lost a least a half a million dollars in value. Not bad.

Buy a house and loose a half a million dollars.

In a month or so.

Bad decisions can be disastrous. In my opinion, buying 2616 Victoria for $3,000,000 was a very very bad decision.

I wonder what the buyer's agent advised the buyer? Does anyone smell malpractice?

Upside Down in Lagunita - A Million Dollar Buyer's Mistake?

Lagunita is a gated community of about 60 homes on the ocean side of Pacific Coast Highway in South Laguna Beach. It is north of the Montage Resort and approximately across PCH from Ruby's Diner. Most of the homes are pretty dated, but some have been rebuilt. Victoria beach is really close.

In 2007, 4 Lagunita was sold for about $4.6 million. At the time, I was amazed anyone would pay this much for a small house that was NOT on the beach. A recent sale of a large modern home at 36 Lagunita for only $4 million could really lead someone to question the present value of the much-smaller and older 4 Lagunita property. We also know that Orange County home prices have cratered this year.

4 Lagunita is a 2 bedroom home with a small pool and a killer view. All that is well and good - but $4.6 million good? I wonder what kind of advice was given by the buyer's agent. How do you think the value has changed in 12 months? Of course, there is no real answer until there is a sale of the property. If you think the true value of this property is now, say, $3 million, then the buyers have lost about $1.6 million in 12 months. This is more than $100,000 per month and more than $3,000 per day!!!!

The home is now listed for rent on the MLS for $28,000 per month - yeah, good luck with that....

Wave of Foreclosures Washes Up in Victoria Beach

The flippers are collapsing near Victoria Beach, along with Laguna Beach home prices. Check out 2626 Victoria Drive, Laguna Beach. I was in this home not long ago, when it was listed at $3.2M. Now it is listed at $2.49M and it is listed on Ziprealty as a foreclosure. In this environment, I will be surprised if it even fetches $2.oM.

A few blocks away is 2938 Rounsevel Terrace, Laguna Beach. This is a new 3 bedroom home now owned by the bank. This is another house that was listed way up in the stratosphere, but now is listed by its bank owner at $2.35M for an "as is" sale. I wonder what the contractor didn't do before he left. Nothing like buying a two million dollar house that "needs work." I expect this one will languish and go for under $2M.

2616 Victoria Drive "Sells" ??

2616 Victoria Drive has been documented on Blue Move for a while now. A really small house with a good view and beach close, this home started out almost a year ago at an astounding listing price of about $4,300,000. After about a year on the market and repeated price reductions, the home shows as "sold" for $3,000,000. This at a time when at least one other redone home on the same street is listed for $500,000 less? Does someone smell something fishy here? This does not fit with the clear trend in Laguna Beach home prices. Hmmmm.

I researched the "buyer" of 2616 Victoria. It is a living trust located in Las Vegas. Let's look at the seller - a living trust located .....where else....but....Las Vegas, Nevada. Was this just a transaction by the seller between two trusts to effectively end up with a refinance? Let's watch this one now and see if it goes repo!!!