When William J. Chadwick, a managing director of Chadwick Saylor & Co., a Malibu, Calif.-based real estate investment banking firm, put his Malibu mansion on the sale block in 2008 it caused quite a stir among real estate enthusiasts. The 10,500-square foot Carbon Beach estate was asking a hefty $65 million — and just as the economy was beginning to collapse.
Three years, three real estate agents (including megabroker Chris Cortazzo of Coldwell Banker Previews International) and several huge price cuts later, the home has failed to find a buyer the traditional way. Now it’s going to auction with the help of Carol Bird, a Malibu real estate agent with Westside Estate Agency, and Premiere Estates Auction Company, a Manhattan Beach, Calif.-based luxury real estate auction firm. It is not a foreclosure auction nor is the property in default. Rather the upcoming auction is the latest example of a growing trend of high-end home sellers choosing to auction their residences off as a way to nearly guarantee a home sale.
“The seller is just motivated to sell because he wants it sold by a certain date and the property has been the market for an extended amount of time,” explains Tony Fitzgerald, a broker with Premiere Estates Auction Company. (Bird adds that the Chadwick family is moving out of state.)
What is the starting bid for the house once asking $65 million? A more modest $22 million. Even so, in auction terms that means a new record: “The $22 million starting bid coupled with the fact that the original listing price was $65 million makes this the highest priced home ever go to auction,” asserts Fitzgerald.
It also means that the winning bidder will walk away with quite the beach home bargain: at a starting bid of $22 million, 21804 Pacific Coast Highway could sell for as much as 66 percent off the original asking price. Not bad for a mansion sharing sand with the rich and famous residents of “Billionaire Beach” in Malibu, Calif. Fellow home owners on “Billionaire Beach,” officially called Carbon Beach, include Microsoft co-founder Paul Allen, Dreamworks Animation chief Jeffrey Katzenberg, Oracle chief Larry Ellison, and entertainment scion David Geffen, to name a few. Famed music producer Lou Adler lives right next door.
“It’s like a castle on the beach,” gushes Carol Bird, who represents the Chadwicks and began arranging the auction less than two weeks ago. The six-bedroom, nine-and-a-half-bathroom “castle” boasts a master suite with dual baths and two dressing rooms, a massive 90-foot great room, an oceanfront gym, and a blue leather chair-studded home theater room that cost $1.5 million to build. There is also a wood-paneled library displaying a huge salt water aquarium and around the corner, a tequila tasting room. The 4,500-square foot oceanfront patio holds an outdoor kitchen and a 75 foot two-lane lap pool — the biggest ever permitted to be built in Malibu. The patio leads down to the sand and water, of which there is 150 feet of frontage. Thanks to a fresh water stream running down Adler’s neighboring property, an additional 40 feet of undeveloped, unobstructed beach means 180-degree ocean views.
The structure itself, built by architect Lester Tobias, was not actually designed as a castle, but its foundation elicits the comparison. “Most people probably wouldn’t be as excited as I am about this, but the house’s foundation goes 47 feet into bedrock and the requirement is usually 10 feet,” explains Bird. She considers the home’s reinforced, earthquake-resistant foundation a major boon for the sand-situated estate. “They built a fort that will be standing forever.”
Bird says the home has already welcomed two high-profile prospective buyers (who will unfortunately remain anonymous) for viewings and she expects more to flock to the opportunity. The auction is slated for September 18, but an interested buyer could purchase the place now.
If that doesn’t happen, Premiere Estates will sell 21804 Pacific Coast Highway in a reserve auction, meaning that a financial minimum must be met to ensure that the Chadwicks’ outstanding debt on the property can be paid back to loan lenders. Aspiring bidders are vetted before the auction date and required to plunk down a $150,000 cashier’s check to receive a bidder’s title. Once the auction ends, the buyer must fork over a 10 percent deposit immediately, arranging to pay the rest within the following 45 days. A closing can take as little as a week.
When asked what the two real estate brokers expect of the auction, neither believes the house will fail to find a new owner, though for how much remains a mystery until the gavel falls. It is very rare for a property to not sell in a non-distressed auction, notes Fitzgerald. We will have to wait and see if Malibu’s “sand castle” finds a billionaire buyer who can further contribute to Carbon Beach’s nickname.
© 2012 Forbes.com