The Irony Of It: Big Home In Foreclosure Didn’t Attract Bidders

Posted on March 4th, 2009 by saman

Of all the industries in the United States, it is probably the real estate and the financial industries that has been heavily affected by the financial crisis that started in 2009. There has been massive layoffs that makes the people unable to pay their debts. In the real estate industry, there was a profiferation of homes in foreclosure because the owners were not able to pay for the mortgage of the house anymore. On the other hand, the buyers were hesitant to buy properties given the uncertainty of the situation and the inability to really point out the real value of the property. People would like to keep their money just in case times get harder.

And so when it happened that the new home with an estimated value of more than US $10 million received no bids during the February 13 auction of Chevy Bank, the natural would be: Is this brought about by the credit crunch or does the bank has something to do with it?

The House

The house is situated in the Vivienda Estate specifically on the Fortuna Ranch Road, Olivenhain. It is basically a new house owned by Suzy Brown because it was just in 2004 to 2006 when she built the house. The huge one block (measures 16,330 square foot) of Encinitas property has 15 bedrooms and 17 bathrooms. The house has the following facilities: pool, library and study room, landscaped lawns and a yoga room.

However, the house carries with itself a stigma because it was once branded as a “monster house”. The house was originally intended by Suzy Brown in coordination with Deepak Chopra and 60 more investors to be a rehabilitation center for drug dependents. It idea was detested by neighbors; hence, the birth of the “monster house”.

This plan didn’t push through so Suzy Brown looked for another purpose of the house. Brown eventually was not able to pay the mortgage starting last year and so the foreclosure.

The Bid

This home is largest home to be put into foreclosure.

From US $10 million, Chevy Bank opened the bid for Suzy Brown’s home at US $2.275 million. Come to think of it, it is a real bargain because buyers may be able to get it about half the price. The irony of it, no one bid. There are three theories beyond this: 1) People do not want the foreclosure for sale because of the old stigma associated with it, 2) People have no money to buy the property because it is too costly and the value may go down even lower during the financial crisis and 3) The bank is purposely delaying the foreclosure.

Theory #1: People have no money to buy the Property

According to Suzy Brown, there were buyers who are interested to get the property because they came to the house and expressed their interest so this theory may not be the real reason.

Theory #2: People have no money to buy

It is possible that people really do not want to buy properties that is worth this much at this time. Since the financial crisis, people would want to save their money and prepare for the worst that may happen. Moreover, since real estates value as very erratic, people might think that this is not the best time to buy because they don’t know the real value of the property.

Theory #3: The bank is purposely delaying the foreclosure

According the Suzy Brown, the buyers who communicated with her also made an offer in the bank but the bank has been slow in acting on the requests for offers. Chevy Bank’s Asset Manager James Dunn expressed that a real estate broker is now now analyzing the property and it will be put in auction again next month.

Suzy Brown thinks that the bank is purposely delaying the auction so they can evict her with the furnishings which can further lower the value of the property.