It's the story of an investor buyer who wanted the 157 acre parcel in Beverly Hills, and to get it he borrowed $45 million from the seller (Mistake No. 1), the Mark Hughes Estate, and bought it in 2004. In time, the debt surged to $200 million with interest and fees added. The investor transferred ownership to an LLC controlled by the investor's partner, which was unsuccessful last month in declaring bankruptcy. The Hughes estate could either buy the property back, but lose the $200 million it was now owed, or let it go to foreclosure auction. But any other buyer purchasing prior to the foreclosure auction would have to pay the $200 million in debt, and there were no takers. So the property went back to the Hughes estate, after 15 years, leaving it to absorb the $200 million debt. However, the LLC, known as Secured Capital, made a last minute offer of $150 million for the property, but the estate ignored the offer, according to the company's attorney (Mistake No. 2). So last week, the property sold for $100,000 at auction.
So 1) don't overprice your property; 2) or do a carryback loan to a buyer who can't perform, 3) and, finally, know when to cut your losses so you don't lose out completely (the estate could have at least recouped $150 million) and then, end up selling at a below market price that you can't even buy a condo for. And last but not least, check your days on market, and keep checking your market value.
Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996
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