Last week the most expensive foreclosure occurred in London. It had a price tag of approximately $20 million dollars or £11 million pounds. The mansion was purchased by a Dotcom millionaire Robert Bonnier. The mansion was purchased last year, just as the market peaked. (The UK is experiencing the same issues as the US.)
It seems the common denominator is that people get in over their heads, regardless if it is a $100 k home or in Mr. Bonnier case almost $20 million dollars. Again it is the same story as we have witnessed in venture capital stories. One company looks to buy another company at top price and sell it to the next one at even a higher price all the time borrowing money from the banks.
In Mr. Bonnier’s situation he did just this. He took out several loans on the property in order to make home improvements. He had hoped to install extra features including a swimming pool and a home cinema, and to put the property back on the market at £15 million.
However, the price of housing slumped and he was not able to make the payments to the bank. Again…nothing ever changes.. The banks possibly have not realized the value of this house has fallen and they refuse to write down the loan. The bank put the mansion on the market for an asking price of £10 million (basically a small discount). There is still insurance to pay and property taxes which will make the banks loss potentially more.
Really nothing ever changes… Private people…companies… banks have all played in this Cheap Money Party!
The fact is though…This is the most expensive property to be repossessed by creditors in British history and one can only ask – will there be more?
I would bet yes!