Selling castles in the clouds
Authored by: Marco R. della Cava - Published in: USA Today
Created on: 2005-06-25
WOODSIDE, Calif. â€” Things have gotten so nutty in today's hyperventilating real estate market that â€”warning! - stories about $500,000 starter houses may induce uncontrollable yawning.
For that matter, the vaunted "million-dollar home," long the object of our Robin Leach-like leering, is nearly shack-like in pricey pockets of the Northeast, South Florida and house-crazy California.
So where are the truly juicy tales from the files of the Multiple Listing Service? North, in the realm of double-digit millions.
Exhibit A: An ailing grande dame of an estate has just come on the market in this horsy Silicon Valley ZIP code that features a modernist 1940s house (buckling floors, no appliances), pool and tennis court (appear to have last seen action in the Eisenhower era) and 20 brushy hilltop acres (talk about yardwork).
Price for this fixer-upper: $18 million, "and I would count on about $4 million more to really get it into shape," says Mike Cunningham of listing agency Cashin Co.
There's already interest in the place, which is perhaps no different from the rest of today's sizzling market. With the right location and good structural "bones," sellers of even the most decrepit abodes know that a little TLC and time will sooner rather than later yield a tidy profit for the new owner.
But look closer at the Richie Rich housing market and you'll be glad â€” yes, glad â€” not to be playing in this league. Because of a limited pool of buyers whose options for playgrounds range from the CĂ´te d'Azur to Cabo San Lucas, multimillion-dollar retreats have a way of sitting around. As a result, they require marketing back flips by agents that just about earn them those exorbitant commissions.
Since a good cleaning and a Sunday open house aren't likely to impress someone worth hundreds of millions, agents have learned to put on a show: Some stage parties to bring the home to glitzy life; others court the press to generate attention; and a few take more discreet approaches, such as presenting the house via a resort-worthy Web site.
Then there's New York real estate agent Dolly Lenz of Prudential Douglas Elliman, who has been known to approach clients like a mother determined that her kids eat spinach: You need this property, and we're going to sit here until you realize it.
Last year, she identified a potential buyer for a $45 million East Hampton estate called Burnt Point. Lenz had made a slick video of the estate, but the client, pharmaceutical industry billionaire Stewart Rahr, had yet to see it in person.
"So I risked $25,000 and rented a helicopter, picked him up and flew him out there," says Lenz.
The reward for such chutzpah was a $1.6 million commission check. And there are more crumbs where that came from.
Last week, the New York Post reported a $90 million home sale in East Hampton. The transaction is shrouded in rumor; Lenz says she has since spoken with the seller, "who said I could still show the house." But if the house did sell, it's a U.S. record, topping billionaire financier Ron Perelman's $69.9 million purchase of a Palm Beach, Fla., estate last year.
"Real estate is the new pornography," says Steven Gaines, author of The Sky's the Limit, a new book that peeks into the crazy world of Manhattan real estate. "People used to want that white picket fence. Now they want huge representations of their achievement."
No one knows that better than Donald Trump, who has The Apprentice 3 winner Kendra Todd handling the renovation of a Palm Beach mansion that will run a cool $100 million.
All this one-upmanship in the air has, in the past few years, contributed to an almost 50% jump in sales of "true luxury" homes costing $5 million and up, says Rick Goodwin, publisher of high-end-oriented Unique Homes magazine. "There is definitely a feeling that a lot more money is being spent on very expensive homes. A $20 million teardown really isn't unheard of."
The stakes do have a way of constantly being raised. Goodwin's magazine is touting the Japanese-inspired simplicity of Oracle founder Larry Ellison's home in another Silicon Valley kingdom, Atherton. It's on the market for $25 million. Ellison has upgraded to a neighboring custom home whose price is unknown but likely vertiginous.
"When you try and sell any of these homes, your marketing has to be out of the ordinary," says Goodwin. "The cookie-cutter approach of a brochure and tour is just not going to work."
That attitude has proved a boon for Grace Price, who manages the career of her artist husband, Nicholas. The Prices live in Las Vegas, where they are increasingly called upon to turn on-the-block mansions into temporary art galleries.
"We recently took over a $7 million place in Celine Dion's neighborhood and filled it with Nicholas' paintings and sculpture," says Grace Price. "The house got a few offers almost immediately."
But some outside-of-the-box approaches don't work out.
When real estate agent Joan Eleazer of Dallas' Briggs-Freeman nabbed an epic listing in nearby Denton â€” the $45 million, 48,000-square-foot Champ d'Or â€” she decided to enlist the media's help to spread the word about this odd slice of Versailles down the road from a trailer park.
Few resisted. USA TODAY, CBS News and a dozen other outlets recounted the foible of cell phone magnate Alan Goldfield â€”champ d'or in French â€” who, shortly after finishing the project, downscaled to a $2 million home. But while his extravagance made for a good tale, the stories didn't bring in a sale. Two years later, it's still available.
Taking the exact opposite approach is Betty Brachman, a Sotheby's International Realty agent in San Francisco. Her low-key, elegant demeanor impressed Gary Shansby, who wanted only a select clientele to hear about the sale of Villa Shanel, his $35 million, 360-acre Xanadu in Sonoma.
"For starters, I told Betty we're not doing local media. I mean, I know all the guys (here) who could buy this home. So we're looking elsewhere in the U.S., and around the world," says Shansby, whose TSG Consumer Partners has major stakes in a range of consumer products companies. "I also didn't want to show the home, unless the person was very serious."
So Brachman crafted a Web site for Villa Shanel "that's nicer than my own," she jokes. "The air is very thin up there (in this price range). You have to present the properties as fine art. You have to also present them as fine investments."
Brachman also commissioned a glossy coffee-table book, to be given to anyone who makes it to the personal tour stage. And Sotheby's is featuring the property in a poster in the lobby of New York's tony Carlyle Hotel.
Although buyers in this stratosphere likely don't need financial incentives, Shansby is providing one year of free maintenance, an estimated $700,000 value that includes a full-time staff of eight.
Woodside's $18 million "fixer" also has servants' quarters, but now they are just crumbling monuments to the estate's 1940s heyday. The home was the social focal point for oil and shipping tycoon Ralph Davies and his wife, Louise, who would lend her money and name to San Francisco's symphony hall.
Louise Davies lived out her lavish and elegant life on this estate. When she died in 1998, a dot-commer snapped up the property with grand plans to bring it out of its state of disrepair. But the owner went bankrupt and the estate went on the market.
"It was really a dump," says Cashin broker Cunningham. "We had nine guys here for three weeks hauling out junk. The floors in the house were warped, and the wood paneling was falling off. We had a lot to do."
And they had a plan.
First, Cashin hired Victoria Hunter of Staged for Success, who worked on a shoestring budget of $5,000 to bring the empty box of a house to faux life. She persuaded a local furniture retailer to loan out $200,000 in modernist merchandise, and personally sewed fringe onto remnant carpeting.
Next, the agency decided it "had to create an aura around the place," says Cunningham. So it threw a lavish bash for 250 of the area's top brokers, lining the once weed-choked driveway with gleaming vintage automobiles.
A few days later, a woman showed up at the estate with a digital camera in hand and a slight catch in her throat.
"Wow, I have so many memories of growing up in that house," says Janie Barman, a great-niece of Louise Davies. "Shirley Temple Black lived down the street. She taught me how to swim in the pool. I had my wedding reception in the gardens. And there were parties, parties all the time."
Barman grew up to be ... a real estate agent. Her take on the sale of this mega-bucks piece of her past?
"My great-aunt was Bay Area royalty, really, so I guess someone would have to want to buy a piece of that," she says. "But it sure would take an unusual buyer. You know, it's really not easy to sell these kinds of homes."
Article entered in the Staged Homes System: 2005-07-07