The 1% Also Don't Pay Their Bills: 10 Ultra Luxury Properties In Foreclosure

Tyler Durden's picture

As we reported yesterday, something odd is happening in the US, which supposedly is deep in a "housing market and economic recovery" - foreclosures on ultraluxury homes, those worth $5 million and over, have soared by 61% in 2013 (even as overall foreclosures continue to decline due to the well-known and much discussed "foreclosure stuffing" process, which means millions of properties are held in bank shadow inventory just waiting for the moment to be unleashed and end the implicitly home price subsidy abused by banks for the past three years). Granted, the overall sample is relatively small, with fewer than 200 properties in the ultraluxury category compared to 1.2 million for all properties tracked, but as RealtyTrac notes, "each of these high-value properties represents a much bigger potential loss for the foreclosing lender compared to a median priced property."

Additional thoughts from RealtyTrac:

This trend may indicate lenders are now financially stable enough to more comfortably weather the big-ticket losses that these properties potentially represent. In addition, an improving housing market means more prospective buyers, even for these ultra high-end homes. A bigger buyer pool translates into higher sales prices on these properties, allowing lenders to recoup more of their losses on these jumbo loans gone bad.


"A home selling for $5 million or above represents the ultra-luxury end of the market, and so far in 2013 we’ve had 34 properties close over that price with the average sale being $7.7 million,” said Emmett Laffey, CEO of Laffey Fine Home International, covering the five boroughs of New York.  “Any foreclosure properties in this type of ultra-luxury market usually get purchased very quickly since there is one thing all super rich buyers want – an outstanding deal on a real estate transaction, and in most cases foreclosures of this magnitude come with several million more dollars of built-in value.”

Regardless of the arbitrage opportunities available to "all cash" buyers, who would be happy to park some cash in real estate, the fact that ultraluxury foreclosures are soaring also means that even the "1%" is starting to succumb to reality and beginning to feel the pressure of a financial reality in which only the "too biggest" can never fail.

So what are the properties in question? The photo gallery below, courtesy of RealtyTrac, shows just where any given $5 million + property stopped making its mortgage payments.


This home nestled on a bluff overlooking the ocean was listed for sale at $15.9 million but the foreclosure judgment amount at the foreclosure auction scheduled in November was $12.8 million.


This foreclosure auction property is located right on the water on Pacific Coast Highway in Malibu. It features two detached units and was listed for $9.5 million, but the opening bid at the foreclosure auction in November was $8.8 million.


Built in 1990, this 5 bed, 6 bath estate was scheduled for foreclosure auction in November with an opening bid of $4.1 million, although the assessed value of the property is $5.5 million.



This beautifully remodeled 5 bed, 7 bath estate was scheduled for foreclosure auction in October with a foreclosure judgment amount of $7.5 million. The grounds feature panoramic views of the ocean, a putting green, and stunning pool area.



A beach lover's dream! This pre-foreclosed, 5 bed, 5.5 bath single-family residence was custom built in 2001. A Notice of Default was filed in October with a default amount of $200,000, meaning the owner was behind that amount on mortgage payments.



This pre-foreclosed French Country hillside residence features 6 beds, 7 baths and sits on 8 acres.A Notice of Default was filed on this property in June, and at that time the homeowner was an estimated $125,000 behind on mortgage payments.



Listed for sale at $13.5 million, this exquisite single-family residence in Florida is in the first stage of foreclosure. A dramatic and elegant floor plan makes this 6 bed, 9.5 bath home perfect for entertaining. The initial foreclosure notice was filed in July.



Beautiful single-family "sanctuary" in pre-foreclosure. It features 5 beds, 10 baths and has a fantastic pool and patio area with tranquil views. The pre-foreclosure notice was filed in September with an estimated total outstanding loan balance of $8.1 million.



This 5 bed, 4.5 bath fully-furnished home was scheduled for foreclosure auction in November with an estimated total outstanding loan balance of $5.5 million. It features remarkable panoramic views and is located near many of La Jolla's unique shops.



This bank-owned property was repossessed by the bank via foreclosure back in April 2013 for an estimated $6.3 million. It features 8 bedrooms, 13 baths and is situated on over 23,000 sq/ft.

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Headbanger's picture

I'll take the Delray Beach !!

But does it have an indoor gun range??

At least 50 yards, for my revolver practice.

Oops.. Am I bragging a little??

kliguy38's picture

 You might want to quit worrying about long distance revolver shots and work on your 30 round clip ARs......because that house won't be a "chick magnet" but a "chit magnet" when the peeps come calling........keep the revolver can put it to use before they get a hold of you......because they will want to spend some time working on you for what you have hidden.......

Handful of Dust's picture

"But don't for one second think that home ownership is all sunshine, rainbows, and ice cream sandwiches. There are serious trade-offs that you should know, understand, and accept before signing on the dotted line." (Motley Fool)


Moar from MF:


1. Mortgage debt -- a marriage you can't divorce
According to the Census Bureau, the average home price in 2010 was $272,900. A traditional mortgage will finance 80% of that, or just over $218,000. At the same time, the Census Bureau also reported that median household income in the U.S. was just over $51,000.

Are you comfortable owing over four times your total gross income (before taxes, mind you)?


Full article:

NoDebt's picture

Hold on- isn't that one in Boca the place where that kid went high-end squatting a few months back?  That looks AWFULLY familiar for some reason.

Dear Infinity's picture

I think these people realize better to get out now, than deal with a "buyers" market when interest rates rocket...

Currently sitting just under 3% on the ten year, could get ugly real fast.

lasvegaspersona's picture

the 10 year the 10 year the 10 year...all this fuss over the 10 y....OMG holy mfing she ite, the fing 10 year...

last time (way back in September this year) it almost touched 3% the world almost fell apart.


This is going to be the best interlude before the finale of all time...watching Ben deal with the rising rates. I think he thought he was going to get out before it fell apart again, but nope, Ben can't even whisper the word taper and he'll look pretty silly announcing QE...what is it 6 now....but what is a central banker facing reality to do?

Yes, this is the one thing I will watch closely. We already have a few non voting members suggesting that 'sooner or later' taper must happen. Not Ben though. If he says it the rates go over 3% and Morgan Stanley sets off the chain reaction. If he increases QE the whole world knows it is really over for the dollar.

Who knows, maybe an asteroid will impact Earth and folks will have their attention diverted, otherwise...this will be good!

PT's picture

Oh, then I guess you really do need customers if you want a business that makes you rich.

PT's picture

You know "they" don't like you any more when you get the foreclosure notice.  "But I thought I was on the inside."

PT's picture

... and ...
"But why would I worry about a 5% increase in debt when the value of the property goes up by 10%?" 

PT's picture

I'm guessing these were the houses that weren't bought with laundered drug money?

Or maybe, after all costs are taken into account, it turns out you lose less money by keeping it in a, a, b-b-b-bank? 

ToNYC's picture

Too much fun; too many boring friends. Shut it down.

Cognitive Dissonance's picture

Yes. But for the 1% it's just a 'bidness' decision and not a question of morals.

<Laws Morals are for the little people.>

Skateboarder's picture

And we manage to do it with smaller brains. What elegance.

BurningFuld's picture

No room for my fucking horses at any of those places...pass.

DeadFred's picture

Only a couple of them would survive the Great Tsunamis of 2014. If you want beach front try Wichita.

TeamDepends's picture

Exactly what we were thinking.  At least they'll have a nice view of their last few seconds on earth.

Occident Mortal's picture

"my fucking horses"

Isn't that illegal?

TeamDepends's picture

Not in California if the horse claims to be "trans-species".

johnQpublic's picture

if you like fucking horses, you can keep fucking horses.

BurningFuld's picture

That would be "fucking my horses" not "my fucking horses".

SloMoe's picture

"That would be "fucking my horses" not "my fucking horses"."

Tomato tomahto. Gitty-down cowboy...

toady's picture

One of them said 8+ acres. You must have a lot of horses!

Kirk2NCC1701's picture

Yeah, that's how the 0.1% gets fancy property on the cheap:  Drive other sharks onto the blades of cashflow crisis.

How'd you think old man Bush got his Texas ranch all those decades ago?  There is little honor, even among vampires, sharks and snakes.

NeedleDickTheBugFucker's picture

Malibu, too much my man!

Dick Buttkiss's picture

Looks like a fucking double-wide, albeit with the deluxe greatroom package.

I'd sell mine for half that.

azzhatter's picture

My first thought was that one Malibu joint looks like a fucking mobile home with big windows

RafterManFMJ's picture

Crash and burn
the stars explode tonight
How'd you get so desperate?
How'd you stay alive?
Help me, please, burn the sorrow from your eyes
Oh come on be alive again
Don't lay down and die

Hey, hey
You know what to do
Oh baby drive away, to Malibu

Hole, Malibu

And everybody knows that you're in trouble
Everybody knows what you've been through
From the bloody cross on top of calvary
To the beach of malibu
Everybody knows it's coming apart
Take one last look at this sacred heart
Before it blows
And everybody knows...

Everybody Knows, Leonard Cohen

ajax's picture



Looks like the Beverly Hillbillies decided their old shack was home sweet home after all...


wisehiney's picture

Better get em sold before fukushima washes up.

Freddie's picture

I would love to go to Pelosi's vineyards in Nor Cal and piss Fukushima Iodine 131 and Cesium 137 on her vineyards.

Then salt the damn soil so nothing would grow there.

Reptil's picture

mmmmh Pelosi's not going to be around forever. why not piss on her instead? (just a suggestion)

RafterManFMJ's picture

Au @ 55K
Ag @ 1000

I'll be able to buy any property on that list! But I won't 'cause I'm not a narcissistic moron.

Nope, a farm or apartment building or 3, for me.

Cognitive Dissonance's picture

The thing is......if PM's go up to the prices you post then RE will most likely be a lot more expensive as well.

PM's are for wealth preservation, not appreciation.

magnetic_silver_ideas's picture

PM's are for people that want to ensure that their intrinsic value mantra stays alive in their head.

You can only make bowls and spoons with it. You can't even divide it effectively wihtout ruining the value of the bar.

Gold, while it has useful attributes, is not a panacea.

Cognitive Dissonance's picture

"You can only make bowls and spoons with it."

Too funny. My nose ring is made of Gold. So there!  :)

magnetic_silver_ideas's picture

Good for you. What a great example of intrinsic value.

RafterManFMJ's picture

Agree CD; the winners will be those who lose the least.

grid-b-gone's picture

Hold some productive assets, have low debt, and diversify. 

The reset is in slow motion due to monetary policy. 

The expanded social safety net since the 1930's masks the soup lines. People have no visual cue to prepare. As a result, most will be less-prepared than the last time.

Unless Keynesian magic really works, digital printing will continue to the point of currency failure, over-printing being a form of counterfeiting.

We probably will see rates continue to creep up as control is lost. Then more controls or devaluation are attempted as the final stutter-step before the market cleans up the mess itself.

PT's picture

Now, if only I could afford some productive assets.  Maybe I'll borrow some money ...

All Risk No Reward's picture

If you can't afford the productive asset, become the productive asset.

PT's picture

Tried that.  There's no money in it.  Should I work harder, smarter or be more innovative?

All Risk No Reward's picture

The medium term future isn't about money, it is about the essentials of life.  Gardening, that type of thing.  I hear you though.  Individual autonomy threatens the mega corporate Titans and, as such, the individual is the main target of this Art of WAr operation to subjugate humanity.

magnetic_silver_ideas's picture

Hey, everyone check out the new site, where you can watch millions of dollars of gold exchange hands every day in realtime, using the largest decentralized value exchange network known to man.

Fuh Querada's picture

Sheeit, what do the utilities, insurance, property tax, housekeeping, cleaning, gardening and used diaphragm removal from the pool filters cost in these palaces on top of the mortgage payments ?

magnetic_silver_ideas's picture

You have to have a few plantations and extortion rackets to be eligible to bid on these.

Skateboarder's picture

Haha that's for the PA to take care of, silly. The master need not worry about any of that... until he does [and the property is foreclosed].

Freddie's picture

My old house was on a street with some houses a bit smaller than the one in Boca Raton.    These places are expensive to maintain.  These people easily drop $30,000 a year in maint for pool, grass, painting, cleaning and upkeep.  Anything near the ocean will also rust out or oxidize metal fixtures outside like lights, door locks and handles.

Then you have the property taxes.  I would guess everyone of these houses is WAY over $100 K a year.  The electrical bills in Florida in the summer will run $1,000 a month easy.  I am glad I am in Montana with my rocket fire heater.   I can go outside and shoot .308 1,000 yards down the field.

Nice that Tyler's have a banner add for bigger breast cream.  Can go to a C Cup in weeks.  I heard for guys you can just smoke pot if you want Moobs and alsop THC insanity.

Skateboarder's picture

lol these kinds places need at least one full-time caretaker for upkeep - 50 out of the 100K goes right there.

p.s. it's not the pot that gives you moobs - it's the box of cookies ja eat after. ;)