Judge cites ‘squishy market,’ approves sale of 777 Sarbonne at less than auction reserve

Rejects spec developer Khadavi’s last-ditch effort to halt $46M auction deal

A bankruptcy judge denied spec developer and celebrity doctor Alex Khadavi’s bid to stop the sale of his latest megamansion, instead giving approval for a $45.7 million bid for the property at 777 Sarbonne Rd. in Bel-Air.

Khadavi was dressed in scrubs from his Dermatology & Laser Medical Center and represented himself at a zoom hearing in the Los Angeles courtroom of Judge Sheri Bluebond on May 25. Khadavi objected to the sale because the high bid at auction, which ended May 9, did not reach a reserve price of $50 million.

The megamansion’s original asking price was $87 million.

Khadavi also protested the timing of the auction. It took place during the Muslim holiday of Eid, when many potential buyers from the Persian Gulf might have engaged in familial and religious duties. Khadavi also contended that starting the auction with a low bid of $40 million damaged the sale.

“They spooked the market––it was like a knife falling,” he said. “It really messed up the auction.”

Bluebond told Khadavi that it was always the court’s intention to go with the value and the price the market gave to 777 Sarbonne Rd., even if it did not reach the reserve mark set for the auction. The megamansion had been extensively marketed, and there was no reason to give more time for a perfect buyer to offer a perfect price, she said. “Did it produce as much as hoped?” she asked rhetorically at the hearing. “No. But you know what? You’re not alone. Every large property in this vicinity in the last few months hasn’t sold for what we hoped it would sell for. The market is a little squishy at that price point.”

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Eyebrows were raised when one of 777 Sarbonne’s neighbors, The One megamansion, got a relatively paltry $126 million from an auction sale in March. The goal of The One’s auction was to sell for $239 million. A 2019 appraisal pegged the value of The One at $350 million.

A sales motion filed with court last week gave a comp for 777 Sarbonne Rd, citing a 14,756-square-foot mansion at 11490 Orum Rd. in Bel Air that sold for $32.25 million on April 15, according to property listing sites.The property had previously been listed for $56 million.

The buyer for 777 Sarbonne Rd. was identified only as 777 Property Holdings LLC in filings. Eryck R. Escobar, an attorney for the U.S. Trustee Program, requested the buyer be identified so his office could assess whether there are sufficient means available to complete the deal. The lawyer for the Chapter 11 trustee, Keith Patrick Banner of Greenberg Glusker, said that the buyer had wired funds to close the deal, including a five percent buyer’s premium.

The buyer did not want to be identified because he believed Khadavi to be violent. In July 2021, news outlet TMZ reported that Khadavi was booked for making felony criminal threats to his neighbors at his West Hollywood condominium.

The judge accepted the buyer’s reservation, and directed Banner to send the U.S. Trustee a declaration which would spell out the sources of the buyer’s wealth. Banner would not comment further on the declaration.

The listing agents for 777 Sarbonne Rd, a house built on more than one acre of exclusive Bel Air neighborhood, were Aaron Kirman of Aaron Kirman Group at Compass and Mauricio Umansky of The Agency. According to the auctioneer’s website, they were owed a 2 percent co-broke commission to split. Agents representing the buyer were James Harris and David Parnes of The Agency, who also were in line for a 2 percent co-broke commission.

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