How not to sell a house: The story of 3 Magnolia Drive

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An update tonight on 3 Magnolia Drive, a foreclosed house owned by a bankrupt lender that was put up for auction on March 15 ... and still hasn’t sold.

It’s a nice enough house: 4 bedrooms, 3 baths, 3,238 square feet, in the Ladera Ranch section of Orange County. Built in 2003, it sold for $1.2 million in 2005, and went into foreclosure last year.

I reported last week that, at the auction at the Fairplex in Pomona, George and Kim Sarantos were the high bidders for the house at $705,000. Trouble is, the company servicing the loan on the house -- American Home Mortgage -- didn’t accept their bid, and countered with a higher price, asking $40,000 more, according to Kim Sarantos. After some haggling, and some frustration, she and her husband walked away.

‘We just said, ‘forget it,’ ‘ Sarantos said tonight. ‘It’s not worth it to us.’

American Home Mortgage -- which is in bankruptcy -- has the house listed on its website for $885,000. Because auction buyers agree to pay a 5% premium to the auctioneer, the true cost of the Sarantoses’ bid was about $740,000. Because they felt they would have to put up even more money for some repairs and maintenance, they didn’t want to pay much more than that.

‘The house needs work, and by the time we pay all the closing costs, it’s over $800,000, and it’s just not worth it,’ Sarantos said. ‘This isn’t going to be the last house out there for us. We didn’t lose any sleep over it.’

Thoughts? Insights? E-mail story tips to peter.viles@latimes.com.