The price of paradise
WHAT makes a Bel-Air estate worthy of a $53-million listing price instead of, say, a mere $38 million?
Beyond considering the basics -- location, size and view -- setting a price for the most expensive homes in the market can be a pretty arbitrary task, say the agents who handle such properties. Entering into the equation are intuition, personalities -- both seller’s and agent’s -- and the basic acceptance that mother was wrong when she told you that money couldn’t buy everything.
So how do agents come up with these stratospheric prices?
“An imprecise science” is how Cecelia Waeschle of Sotheby’s International Realty Malibu gently describes the process.
“Like throwing a dart at a board,” offers Kurt Rappaport of Westside Estate Agency, Beverly Hills.
Last year, there were 43 properties in Los Angeles County that sold for more than $10 million, by Waeschle’s count. The agents who work this highest-end market -- themselves an elite few -- admit that the sellers weigh in heavily when it comes to setting a listing price.
“I let clients tell me what they think,” says Jade Mills, with Coldwell Banker Previews International in Beverly Hills.
In this price stratum, if a homeowner believes the property is worth an inflated amount, agents may be hard-pressed to dissuade them. In part, it’s because no agent wants to lose a prospective listing with a six-figure commission. And nobody is actually sure how much one of these dandy places will fetch.
Most ultra-high-end homes are sufficiently unique that their prices can’t be based on what else sold in the vicinity. It isn’t even always possible to compare a property against others because some deals are brokered privately.
Appraisals rarely come into play. Although lenders generally require them before making a loan, the bulk of these sales are cash deals, agents say. What? Your mattress isn’t stuffed that full?
But comparable sales and appraised values matter little, says Westside Estate agent Stephen Shapiro, because at this level of wealth, potential buyers can afford to renovate, remodel and even tear down and rebuild. In other words, if they like it, they’ll pay.
All of which leads back to the No. 1 real estate adage: location, location, location. Shapiro has an 11-acre parcel for sale in Bel-Air listed at $75 million. The buyers will have to build their own house. How’d he arrive at that price? The lot is near the Bel-Air Hotel.
Where are the premium locales? It depends on whom you ask. The “platinum triangle,” answers Rappaport. That’s the area including Beverly Hills, Bel-Air and Holmby Hills.
Malibu beachfront prices are more volatile, Rappaport says. “One house on Carbon Beach will be in the prime section and fetch $15 million. Twenty houses to the south -- same beach frontage, same size house -- and it’s a $7-million property.”
Coldwell Banker’s Chris Cortazzo, who has the 800-pound gorilla of Malibu listings, disagrees about the community’s volatility.
“Malibu is hot,” he says flat-out.
He, with Jan Horn, has co-listed a $65-million beachfront property on 7 acres in Paradise Cove Bluffs -- the single highest-priced residential listing currently in the public eye.
The gated compound includes a 12,000-square-foot main house. There are a total of 11 bedrooms and seven bathrooms and a private road leading to the beach. There are two barn/stables, a large riding ring, three guesthouses, a gym, tennis court and pool.
Cortazzo says he used the recent $30-million sale of a 9,000-square-foot home on 3 acres but without any guesthouses to arrive at his listing figure.
For agent Rappaport, setting a price is “75% data and 25% gut instinct.” He has an understanding of how a property will “translate” to a wealthy buyer and says he is very good at convincing headstrong sellers to see things his way.
How does Barbara Duskin handle a client’s exaggerated view of a property’s worth? The Beverly Hills Coldwell Banker realty diva -- who has the distinction of having sold the most expensive residential property brokered by an agent in the Los Angeles area last year -- says she offers her informed opinion.
“I tell them the market realities,” she says. “I don’t want my clients to waste time, and I do what I can to educate them.”
If a client’s estimate of what a property is worth is way over the top, Coldwell Banker’s Mills does her best to get them to list “more realistically.”
“But the truth is, in these price ranges, you can be wrong,” she says. “Dollars don’t matter if someone really wants the property.”
And when they don’t, the high-end listers do what everyone else does: drop the price and hope it generates more interest.
The asking price of one of Mills’ listings in Bel-Air was recently lowered from $53 million to $43 million. The property includes a 34,000-square-foot house with a movie theater, a two-lane bowling alley and two swimming pools -- one indoors and one outdoors.
Tania Ferris’ Bel-Air listing at a mere $30 million seems like a relative bargain. It’s an Italian palazzo with 20,000 square feet of living space and 5,000 to 6,000 square feet in garages and storage. The house has a movie theater, indoor spa and gym and a wine-tasting room. But perhaps its biggest selling point is that it sits next to the Bel-Air Country Club and has rolling fairway vistas. It was originally developed a few years ago for a relative of the sultan of Brunei and was redesigned and completed by the current owners.
Ferris, of Coldwell Banker Previews International Beverly Hills South office, says she considered comps, the trophy location, construction costs and the value of land when she came up with the $30-million price.
Angelenos can hold their tiaras high when it comes to competing with the rest of the nation for the most expensive homes.
Three Los Angeles-area properties made Ultimate Homes magazine’s 2005 top 10 list of the most expensive properties for sale in the country.
Ranking No. 5 was Duskin’s listing of a 25,000-square-foot Georgian manor home on 11 acres in Beverly Hills. Once owned by singer Kenny Rogers, it was listed at $59.5 million; Duskin’s confidentiality agreement prohibits her from saying what it sold for.
The main house was designed by Roland Coate; the library has fluted Corinthian columns and 22-karat gold accents. An entertainment complex includes not just the standard media room, gym, Roman spa, wine vault and indoor swimming pool, but also a gift-wrapping room. Well, why not?
Mills’ listing of the Bel-Air house that has since been reduced by $10 million ranked No. 7 in the Ultimate Homes list at $53 million.
The No. 8-ranked 122-acre equestrian Robert Taylor ranch in Brentwood was co-listed at $50 million by Coldwell Banker’s Joyce Rey and two colleagues.
When pricing properties in the stratosphere, such intangibles as a property’s ambience or a celebrity association -- Elvis slept here -- sometimes can factor in.
For agent Shapiro, a house has to have “presence” to cross the $20-million mark. “I don’t know, call it ambience, a mood, a statement,” he says. “I know it when I see it.”
Homes built by big-name architects for individual clients are the hardest to price and to sell, he says, because they were built for a specific client and reflect that person’s individuality.
“Give me a well-built traditional or a great Spanish house to sell any day,” Shapiro says.
The celebrity factor doesn’t really play in this crowd of sophisticated buyers, says Duskin, who has represented Sidney Poitier several times in sales.
“If the home is in the location that the buyer wants, they might just ask to see it because he owns it,” Duskin says. “But there is absolutely no impact on the sale price.”
Cortazzo begs to differ. “I think a celebrity connection adds cachet to a property,” he says.
So how are sales in the stratosphere going?
“It’s a great market,” Shapiro says, “but right now, we have nothing listed in the $15-million range and buyers looking.”
Everyone should have such problems.
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(BEGIN TEXT OF INFOBOX)
A pop quiz
Which of these properties is listed at: $65 million? $53 million? $43 million? $30 million? For the answers, see Page 4.
NO. 1: This Bel-Air property includes a 34,000-square-foot house with a movie theater, a two-lane bowling alley and two pools -- one inside and one outside.
NO. 2: A 12,000-square-foot home and three guesthouses are perched on this 7-acre lot in Malibu’s Paradise Cove Bluffs. A private road leads to the beach.
NO. 3: There are 36 bedrooms and 34 bathrooms spread throughout this Bel-Air complex, with its five guesthouses and 18,000-square-foot main house.
NO. 4: This Italian palazzo next to Bel-Air Country Club has an indoor spa, a theater, a wine-tasting room and more than 20,000 square feet of living space.
Pop quiz answers
See how you fared matching the house with the listing price:
No. 1. $43 million
No. 2. $65 million
No. 3. $53 million
No. 4. $30 million
