• An over-the-top modern mansion in Bel Air was listed for $87.8 million for an auction. But the highest bid came in just under $45.8 million, according to the seller Alex Khadavi.
• Khadavi — who owes tens of millions of dollars to several creditors, according to court filings — had hoped the auction would precipitate a sale price large enough to cover his debt.
• If the sale gets court approval, the mansion would be the fourth most expensive home to ever sell at auction.

An over-the-top modern mansion in Bel Air was listed for $87.8 million for an auction this week. But the highest bid came in just under $45.8 million, according to the home's seller, dermatologist-turned-developer Alex Khadavi.

"Horrible, Horrible, Horrible!" was how Khadavi characterized the auction results to CNBC. He filed for Chapter 11 bankruptcy protection two weeks after putting the home on the market last year.

Despite flashy amenities such as a stealth DJ booth that rises out of the living room floor by hydraulics, a black marble-clad car gallery and a glass and marble bridge suspended above the foyer, the auction for the property in the luxury Los Angeles neighborhood failed to meet the $50 million reserve, the lowest amount Khadavi would entertain.

"Nobody told me this thing's going to go below, below this level," he said.

Khadavi — who owes tens of millions of dollars to several creditors, according to court filings — had hoped the auction would precipitate a sale price large enough to cover his debt. But the doctor told CNBC he wasn't happy that the auction, which concluded Monday evening, coincided with large drops in both equities and crypto.

Khadavi also said he believed his deal with the auctioneer, Concierge Auctions, precluded the company from starting the bidding under the reserve price. So when the five-day auction opened, he was shocked to see the auction house start bidding $10 million below the lowest price he'd agreed to consider. The seller believes that lower-than-expected starting point set the stage for what happened next.

The bids came in slow and on the last day of the auction the highest bid was accepted, and it fell about $4.2 million short of the reserve. The last offer of $46.8 million before the auction closed wasn't achieved.

Concierge Auctions had no comment on Khadavi's confusion over why bids started below his reserve. The auctioneer would not reveal how many bidders actually bid in the auction. But the company's president, Chad Roffers, offered this statement via email:

"After a spirited auction, the bidding is closed and the high bid is in the hands of the Trustee. With over 80 qualified showings in the last 60 days, we are confident market value was delivered." 

Typically, a seller is not required to accept a bid below the reserve price, but the auction of Khadavi's property, located at 777 Sarbonne Road, is a bit more complicated because it's part of bankruptcy proceedings. Khadavi told CNBC that in early June the highest existing offer on the home will be considered by the court and if it's approved the sale will move forward whether he likes it or not.

Khadavi is now in a race to find an offer that exceeds the top bid delivered in the auction and he said he's considering legal action against the auctioneer for what he called a "flawed" auction.

"Honestly, I'm not happy," co-listing agent Aaron Kirman of Compass said. "We wanted more."

But Kirman said he doesn't believe the auction was flawed. "At the end of the day, the highest bidder is the highest bidder," said the agent, who's been involved with several luxury real estate auctions.

An almost 50% price cut is not unusual for high-end properties that sit on the market for a prolonged period of time before finally going to auction. Based on CNBC's review of recent ultra-luxury auctions, the top four mansions to ever sell at auction saw their original asking prices chopped by 68% or more.  

The Bel Air deal will include a court-approved 5% auction fee, which will be paid by the buyer, according to the auctioneer's website. That would bring the property's current offer to just over $48 million. If the sale gets court approval, the mansion would be the fourth most expensive home to ever sell at auction.