East MB Home Goes to Auction

By Dave Fratello | October 20th, 2022

Auctions can mean a lot of things.

The finest art in the world is sold at auction. Any one piece is so different from any other, it's almost impossible to set a price without simply putting it out for all qualified bidders.

Cattle are sold at auction. Prices may vary week to week, and animal by animal. The auction provides real-time pricing.

When real estate is sold at auction, it is often (but not always!) a sign of distress.

Foreclosed properties are famously auctioned off on the courthouse steps on behalf of the banks that own them. Here in Manhattan Beach, we've seen some instances over the years where homes in some kind of disrepair or distress were put out for auction. (See links at the end of this post.)

Still, there is a whole business model out there for selling regular, or even elite-level, real estate using auction techniques. This includes some household names, some international companies trying to gain a foothold in the U.S., some online startups and more.

1400 19th St Manhattan Beach CARight now, a large East Manhattan Beach home is up for auction. It's 1400 19th (5br/5ba, 4301 sqft.). (Listed by Edward Kaminsky, eXp Realty of California, Inc.)

The auction starts today, Thursday, Oct. 20, and continues through Oct. 25, online.

(Sadly, that means we don't get either a fast-talking guy in a cowboy hat or a man in a tux with a refined British accent calling out bidders by paddle number.)

For weeks, if you looked at the property online, you would actually see a price of $4,000,000 in the MLS. As the auction began, this price was adjusted to $2,600,000.

In reality, there is no minimum bid for the auction. (The property was offered at $4.500M in March by another agent, gradually cutting to $4.000M before quitting on Sept. 1.)

Not only is there no minimum bid, there's no reserve. So the home will sell. There is, however, a $100,000 deposit required for registered bidders.

Someone is going to get 1400 19th for some kind of fair-market value, with uncommon transparency into how others value the property.

Bidders do need to take note: They'll be paying a 12% winner's fee on top of the final bid. That's traditional in auctions, but not in real estate purchases. This needs to factor into any valuation.

If you review the auction site (link below), you'll also see some info about a fee reduction offered to early bidders. That window's closed now. It was a means of attracting early bids, but once the auction launched, every new bidder is paying the full 12%.

The auction is online now at this link (via "Concierge Auctions," a division of noted auction house Sotheby's, but not related to the local Sotheby's real estate brokerage.)

The site features a lot of the typical kinds of property details (a description, photos & 3D tour) plus somewhat more info that you don't usually get, including seller disclosures, a property inspection report, title report, and more info about the auction process. (Most of that interesting info is paywalled, meaning you have to register to view it. But you don't have to put down $100K.)

So, why is this specific East Manhattan Beach home on the auction block?

It's different. So different that it's really hard to value properly or to market traditionally.

Outside, it looks like one big corner-lot home. Inside, it's kind of like 3 homes.

1400 19th St Manhattan Beach CAThere are three kitchens.

One upstairs, one downstairs, and one in the bonus unit built into the garage. If everything were fully permitted (and we don't know one way or the other), you could almost call this home a triplex.

1400 19th St Manhattan Beach CAThis means the home isn't much like all the others around it.

The buyer pool may disproportionately feature investors. But you may find multi-generational families who see the appeal. Lastly, there may still be buyers who would reduce the number of kitchens in favor of converting the home back to a more traditional space.

Also, the property already had some traditional market exposure, and that didn't work.

For this second try, the sellers hired a local agent who's more than capable of presenting a traditional home and getting it sold. But this novel approach seemed to have more appeal, and more potential, given the uncertainty over pricing and the buyer pool.

We'll track this auction as the bids pile up, and try to wrap up what it all seems to mean when we get to the other side of the process.

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Past Manhattan Beach Auctions

In the short 15 years that MB Confidential has been online, we've seen only a very few real estate auctions locally. The record so far: mixed.

November 2012: 1761 Voorhees.

This home was in a state of disrepair and the market wasn't being kind at the time to fixers. They literally had an auctioneer out front and sold the home in a few minutes. (See our wrapup post with on-the-spot videos here.)

November 2008: 5 new construction homes.

Five speckies that had failed to sell before the real estate market crashed were put up for auction in a much-hyped event. (3 from MB, 2 from Hermosa.) Only one of the houses (in Hermosa) drew a bid, and none sold due to their minimum/reserve prices. Soon, they were all back on the market, then at least one foreclosed and came back again. It just wasn't the time for that auction.

December 2009: 1801 Elm, probate auction.

A wrecked, small original house under probate was auctioned one afternoon for $805K. A Tree Section house for $800K! What were you doing not buying that?!? Update: They remodeled the house; it wasn't a lot sale.

April 2015: 2701 Oak.

Another probate auction. The corner-lot original home sold for $1.340M. Update: They pretty much kept the house, just refreshed it.

October 2016: 710 MB Blvd.

Someone tried a "luxury auction" route but used too high of a start price. By the time auction day came, they had postponed the auction and cut the price $100K. The eventual "auction" sale price of $1.450M was $25K under the original "start price." That's not an auction, that's a regular home sale.

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