The holdouts: Wealthy sellers who refuse to lower asking prices
So what if the price tag is nine digits? Some of the nation's wealthiest sellers say their properties are worth every penny — and they're not budging for any market.
Candy Spelling, widow of television producer Aaron Spelling, has kept the price of this home at $150 million since March 2009. It has yet to sell. © Mark J. Terrill/AP
More than four years after the housing market peaked, many of the nation's wealthiest homeowners are slashing prices in earnest. The asking price on the late Brooke Astor's duplex on New York's Park Avenue has plummeted to $24.9 million from $46 million (Bing: Check out photos of the property). In late September, Peter Sperling, son of the University of Phoenix founder John Sperling, dropped the price on his San Francisco limestone mansion to $47 million; he had been asking $65 million since 2006.
Then there are the ultimate holdouts, a rarefied slice of extremely wealthy sellers who are holding the line on today's deal-making, price-slashing mentality. Even as their properties have lingered on the market, these sellers haven't budged on initial asking prices, some of which were set in the waning days of the housing bubble.
Suzanne Saperstein, ex-wife of Metro Networks founder David Saperstein, is still asking $125 million for Fleur de Lys, a 41,000-square-foot, French chateau-inspired mansion near Beverly Hills, Calif., with gold-embossed leather wall coverings and a ballroom. The listing has been on the market since at least April 2007, a month when the Dow Jones industrial average passed 13,000. David Saperstein has an equestrian estate that has been listed for $75 million since at least August 2007.
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With housing prices off about 28% from their peak in 2006, according to the Standard & Poor's Case-Shiller indexes, some real-estate agents say waiting is a risky strategy.
"Everyone, from bottom to top, got hurt in the financial panic, and it's reflected in the high end of the housing market being frozen," says Mark Zandi, chief economist of Moody's Analytics.
He adds that price declines, originally confined to the bottom of the market, have migrated up.
"We've never been in a more price-sensitive market," says Janet Owen of Sudler Sotheby's International Realty, who recently got the listing for the Chicago mansion of JPMorgan Chase CEO Jamie Dimon. Originally listed for $13.5 million in 2007, the home as of August was listed at $6.95 million. It sold in late September.
"The smart sellers respond to the market," Owen says.
Some holdouts and their brokers defend their prices and argue that their estates would be difficult, if not impossible, to replicate today.
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"I feel the property is worth every penny — and probably then some," says Tommy Hilfiger co-founder Joel Horowitz, who has been asking $100 million for his 210-acre estate in Zephyr Cove, Nev., since July 2006, when former National Association of Realtors chief economist David Lereah said that housing appeared to be headed for a soft landing in most markets.
Horowitz says that he and his wife, Ann, spent a year designing the home and spent three years building it. They bought items for the home on their travels before it was even built — including lighting fixtures, fireplace mantels and 400-year-old flooring from French châteaux.
Others point to recent megadeals, saying it's simply a matter of finding the right buyer. London developers Nick and Christian Candy in September reportedly sold their Monaco penthouse for about $314.3 million, believed to be one of the most expensive residential real-estate deals in the world.
Because buyers often come in with lowball offers, cutting the asking price would be akin to negotiating with yourself, says former New York Giants running back Tucker Frederickson, who, with a partner, has asked for $50 million for a 5,000-acre ranch in Florida since 2008.
With unemployment staying above 9%, some consider these lavish, over-the top houses out of sync with the national mood.
"Do you really want to be rubbing it in people's faces when they've been searching for work for 18 months?" says Robert H. Frank, Cornell University economics professor.
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While many sellers can be slow to adjust to the market, the ultrawealthy can be the slowest of all.
The market does affect them, "but they operate by their own set of dynamics," says Sam Khater, senior economist at real-estate research firm CoreLogic.
Still, it's a rule of thumb that the longer a listing lingers, the less desirable it often seems to buyers. For some of these holdouts, brokers have masked the length of time "on market" by avoiding officially listing these properties or by adding and removing them from multiple-listing services. Instead, properties are marketed on brokers' own websites, by word of mouth or through targeted mailings. Candy Spelling's estate in Los Angeles, called The Manor, officially hit the market in March 2009, for example, but was shown in 2008.
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Drew Mandile of Sotheby's International Realty, who represents David Saperstein's equestrian estate, says he and his colleague "go dumb" when a prospective buyer asks how long the property has been for sale. A response could invite fruitless inquires about how low a buyer could bid.
"Do you think a seller has ever told a broker how much he would ever take?" Mandile says.