April 13 (Bloomberg) -- A bankrupt real estate agent’s hilltop mansion, conceived during Southern California’s property boom and once given an estimated value of $87 million, is going up for auction after failing to sell for two years.
The unfinished Italianate villa on 12.5 acres (5.1 hectares) in Newport Beach comes with a man-made lake, horse stables, vineyard, tennis court, 17-car garage and views of the Pacific Ocean and Santa Ana Mountains, Auction.com said today in a statement. The property is being marketed by the Irvine, California-based company at the request of debtors after an unsuccessful listing at $37 million.
“At the time when money was in abundance, I can see the grand focus,” Tom Iovenitti, executive vice president of the closely held real estate auction firm, said in a telephone interview. “Unfortunately, this particular property was under construction when nobody could forecast the impact of the real estate downturn and what that would mean to building something of this magnitude.”
The Newport Beach estate is the priciest single-family home ever offered by Auction.com, which has sold “several” properties with prices as high as $10 million, Iovenitti said. Other sellers of mansions at auction have been less successful. A Mercer Island, Washington, estate with a list price of $28.8 million failed to find a buyer in an August auction.
A March 25 open house at the Newport Beach estate attracted 600 people including at least 20 “serious” shoppers from as far away as Seattle, Miami and Israel, Iovenitti said. Another showing is scheduled for four days before the April 26 auction.
‘Very Specific Buyer’
Several qualified bidders already have registered for the auction, said Rob Giem, an agent with Sotheby’s International Realty who was awarded the listing for the estate in bankruptcy court.
“While we all know this will take a very specific buyer, and one who is willing to see the project through to completion, the interested buyers thus far are all aware there is a unique opportunity in front of them,” Giem said today in an e-mail.
Originally named Villa del Lago, the estate was conceived by John McMonigle, the No. 1 U.S. sales agent for Coldwell Banker in 2004 and 2005, at a time Orange County’s real estate market was fueled by wealth from locally based -- and now defunct -- subprime lenders, including Ameriquest Mortgage Co. and New Century Financial Corp.
McMonigle attracted luxury buyers to his open houses by cross-marketing the properties with vendors for Rolls-Royce, NetJets Inc. and jeweler David Yurman. He filed for Chapter 7 bankruptcy protection last year, listing assets of $1 million to $10 million, and liabilities of $10 million to $50 million.
McMonigle, who left Coldwell Banker at the beginning of last year, declined to comment on the planned auction.
Home prices in the Los Angeles area, including Newport Beach, have fallen 41 percent from their September 2006 peak after soaring 150 percent in the previous six years, according to an S&P/Case-Shiller index.
The estate’s buyer will need to spend at least $5 million to finish construction of the 17,700-square-foot (1,644-square-meter) main house, said Bill Cote, a broker with First Team Real Estate in Newport Beach, who specializes in luxury properties.
“If it sells for $15 million, I’d be surprised,” Cote, who’s sold homes in the area for 30 years, said in a telephone interview. “You might have the biggest lot in Newport Beach, but so what?”
Asking Price Drops
McMonigle paid $3.2 million for the land in 2003. Six years later, the property had an expected value of $87 million, according to the Orange County Register, a local newspaper. The estate was first placed on the Multiple Listing Service in May 2010 for $57 million. The asking price dropped to $37 million in January 2011, after OneWest Bank FSB cut off construction funding and as McMonigle tried to avoid bankruptcy.
McMonigle lost the estate, now renamed One Pelican Hill Road North, to a group of investors who put $10 million into the project. The property also has a $20 million construction loan held by OneWest, which acquired the debt after the original lender, La Jolla Bank, failed in 2010, according to bankruptcy court documents.
The minimum sale price at auction must exceed OneWest’s secured claim, property taxes, closing costs, a 5 percent auction fee and other administrative costs, according to a bankruptcy court filing. No dollar figure was given for the total, and the minimum bid wasn’t made public.
The bankruptcy case is In re One Pelican Hill Road North LP, 08:11-bk-17998, U.S. Bankruptcy Court, Central District of California (Santa Ana).
To contact the reporter on this story: John Gittelsohn in Los Angeles at email@example.com
To contact the editor responsible for this story: Daniel Taub at firstname.lastname@example.org