Why Some Supermansions Are Priced Not to Sell

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Why Some Supermansions
Are Priced Not to Sell

By Amir Efrati
From The Wall Street Journal Online

It's the ultimate trophy property: A 29,000-square-foot spread on Biscayne Bay with 13 bedrooms, a gun room, fingertip identity-scanners, and, for privacy from gawkers on passing boats, a machine that shrouds the backyard in mist. Yet several years after putting the home on the market, no one has offered owner Thomas Kramer anything close to his current asking price of $50 million.

Still, he isn't entertaining a cut -- because showing it is entertaining enough. Sears Chairman Edward Lampert and singer Enrique Iglesias have visited, according to people who showed the house; director Michael Mann used the home to shoot scenes of the new movie version of "Miami Vice." "I've met unbelievable, interesting characters," says Mr. Kramer, a 48-year-old real-estate developer.

This is the real-estate world's expanding ubermarket, where prices start at $30 million and sellers are sometimes in it just for sport. These aren't mere mansions -- sorry, Cher, your $9.8 million joint wouldn't make the cut -- but modern-day San Simeons, largely insulated from the rest of the market. Currently about 60 of these mini-emirates are for sale in the U.S., according to databases and interviews with brokers. That's compared with a handful of $30-million-plus homes even a few years ago.

So who are these people, why aren't they in a rush to sell -- and what do their mid-eight-figure pads look like? We went on a cross-country tour of homes that have been on the market for close to a year or more and found sellers such as a former radio-station owner, a retired Seattle-area couple and plenty of people who made their money in the real-estate market. Our visits let us into to a private art wing with steel doors that drop from the ceiling, a 70-foot saltwater swimming pool and a sweeping vista over Michael Eisner's Aspen-area house way, waaaaay below.

We also found prices that didn't seem to compute. One home on Mercer Island, Wash., has a $40 million price tag, more than five times the high sales price on the Seattle-area island. A Los Angeles ranch compound, described in a marketing brochure as "gracious" and "breathtaking," had a guest cottage with a sagging roof and a mirrored disco ball in the screening room. And in Marin County, Calif., a historic home that had undergone a $32 million, nine-year renovation had a two-car garage.

More of these hyper-estates have come up for sale in recent years. On the west side of Los Angeles, there are more than a dozen homes on the market in the $30 million-plus range, up from about two in 2001, according to Cecelia Waeschle of Sotheby's International Realty in Malibu. In Manhattan there are around 20, compared with a handful in 2001, says Fox Residential Group. In Florida, two spec homes under construction are expected to come on the market at about $125 million each, while two in the Los Angeles area will have "for sale" signs of about $60 million.

Testing the Market

Some of these prices can be attributed to the past half-decade's real-estate boom; houses that might have been listed for a mere $25 million a few years ago could go for $50 million now, or more depending on the location. But there are other factors at play. Many megamansions are being built without buyers in mind. There's a sense that some homeowners are simply having fun testing the market -- naming their dream price in the hopes that a buyer will wander by and pay it one day, but without being particularly motivated to sell. In many cases, their houses have sat on the market for years, with owners holding prices firm, or even boosting them.

That's in contrast to the broader market, where some sellers in the second half of 2005 started cutting prices. Nationally, the median existing-home sales price increased by about 13% overall in 2005, but flattened during the second half of the year, as inventories rose and the pace of sales slowed, according to the National Association of Realtors.

But at the market's highest, more-rarefied level, brokers and economists say, activity bears little relation to the rest of the market. In part, that's because deals are done in cash, and the ultrarich tend to be buffered from the economy's ups and downs. Moreover, these homes' prices are difficult to track: There are few sales at this level, properties often change hands without being listed, and it's difficult to find similar houses whose prices can be compared.

It wasn't so long ago that it was rare to find a home selling for more than $10 million. In 1988, there were two homes in that range listed in all of Los Angeles, says Mrs. Waeschle of Sotheby's in Malibu; last year, 11 homes traded hands for more than $20 million. In the Hamptons, on New York's Long Island, at least 22 properties sold for $10 million or higher in 2005, compared with nine in 2004, according to Diane Saatchi, a senior vice president at Corcoran Group in East Hampton.

Below, a look at seven of the priciest U.S. homes for sale.

Mercer Island, Wash.

Mercer Island, Wash.

Who: Chuck and Karen Lytle, retirement-community developers
Asking Price: $40 million
Time on Market: 15 months

The Lytles put their home on the market after a Saudi sheik, a friend of their lighting designer, toured the property in 2004 and expressed interest in buying it. He never did, but more than a dozen people have since viewed this five-bedroom, Mediterranean-style home on Lake Washington between Seattle and Bellevue, says listing agent Wendy Lister. So far, the semiretired Lytles haven't had an offer. The asking price could be one stumbling block. At $40 million, the home is on the water, but doesn't have the great views of downtown Seattle that can be seen from homes at higher elevations on the island. Local brokers say $32 million is a fair opening offer.

The Lytles, who say they're selling because they're spending less time in the house every year (it's one of three they own), hope their recent eight-figure investment will pay off eventually. Among the improvements: a 70-foot saltwater indoor pool, ringed by 10 Egyptian-themed columns (hieroglyphics included), a Medusa-like chandelier and an Asian garden courtyard. Other pluses are the 175 feet of lakefront and neighbors including Microsoft co-founder Paul Allen and Seattle Seahawks Head Coach Mike Holmgren.

Wildcat Ridge, Snowmass, Colo.

This modern-style home in Snowmass, Colo., sits high above former Disney chief Michael Eisner's compound. Its price: $35 million.

Who: Leon Hirsch, pioneer in surgical stapling
Asking Price: $35 million
Time on Market: 11 months

Selling this Rocky Mountains home has been "a pain in the neck," says the 78-year-old Mr. Hirsch. "You've got to have the house in certain shape, they don't let you be there during a showing. It's an invasion of privacy," he says.

So far, more than a dozen prospective buyers have toured the property, but none has tendered an offer. The main hesitation, local brokers say, is the distance from downtown Aspen, about a 15-minute drive away. For some people, "Snowmass just doesn't cut it," says broker Susan Hershey.

On a ridge 1,000 feet above Snowmass village, this 11-bedroom, 14,300-square-foot home gets much of its modern feel from the floor-to-ceiling windows (from 13 to 25 feet high), folded plate roof and furniture from designers George Nakashima and Charles and Ray Eames. Its hydraulic garage door comes from an airplane hangar. Outside, as part of the 200-acre spread, there's a path to the ridge's drop-off, where a seating area overlooks former Disney chief Mr. Eisner's valley compound. Another view: Mount Sopris and the Snowmass resort.

Mr. Hirsch, who with his wife, Fanny, also owns homes in Connecticut and Montana, says that the property is fairly priced and that he won't entertain offers of less than $33 million. "If we don't get the right price," he says, "we won't sell."

Penthouse Apartments, Trump World Tower, New York City

Donald Trump is asking $58 million for four penthouse apartments on the top two floors of Trump World Tower in New York City.

Who: Donald Trump
Asking Price: $58 million
Time on Market: 3� years, on and off

Mr. Trump's four apartments on the top of Trump World Tower have gotten a lot of publicity over the past six years, but no new owners. This quartet, measuring 22,000 square feet over two floors, is being marketed as a single unit.

Mr. Trump says he's in no rush to sell, since only three other of the building's 376 units are available for sale. Plus, having the penthouse apartments featured in the media (Esquire, NBC's "Today" show) may be doing more for Mr. Trump's brand than the cash.

Not that he hasn't come close to selling. In 1999, brothers Cem and Hakan Uzan, whose family owns a telecommunications business in Turkey, signed a contract to buy the apartments, then still under construction, for $32 million. But upon completion, shortly after the 9/11 attacks, the Uzans didn't show up to close on the property, citing terrorism fears. They then tried to recover their 25% down payment, but in a court case that ended 2004, Mr. Trump won the right to keep the $8 million.

The apartments in the 72-story tower, kitty-corner to the United Nations, have 17-foot-high windows, 16 bedrooms and 24 bathrooms and neighbors such as New York Yankee shortstop Derek Jeter. (His spokesman declined to comment.) Some of the four-year-old property needs a renovation. The guest bathrooms lack touches common in today's high-end homes, such as mosaic tiles, commercial-grade granite and double sinks. What's more, the building's fees and real-estate taxes total $30,000 a month. Mr. Trump says he is considering listing the property for rent at $200,000 a month, or $50,000 per apartment.

Locksley Hall, Belvedere, Calif.

This Belvedere, Calif., home, currently listed for $65 million, has panoramic views of San Francisco, Alcatraz Island and the Golden Gate Bridge.

Who: Robert Friedland, mining executive
Asking Price: $65 million
Time on Market: One year

Owner Mr. Friedland spent $5.5 million on the 1.2-acre property in 1995, and then nine years and about $32 million renovating the 1895 house. Although there is interest, local brokers say some prospective buyers are too embarrassed to write offers so much lower than the asking price.

The 12,000-square-foot designated historic landmark has an indoor/outdoor sound system and a panic room, and it sits on some of the priciest land in Marin County, more than $10 million an acre, says listing broker Olivia Decker. (Brokers say Belvedere has better weather than its surroundings, and -- go figure -- when we visited the sun was shining here while the rest of the area was foggy.) Other selling points include neighbors like venture capitalist Tom Perkins, panoramic views of the San Francisco Bay and the Golden Gate Bridge and a wraparound veranda with Corinthian columns and teak decking. The home's landmark status also gives it tax benefits, so property taxes are currently $28,000 a year.

Yet Locksley Hall is about a half-hour drive to downtown San Francisco, and its garage can accommodate only two cars. What's more, the record price paid for a home in Belvedere is $13 million in 2005, according to Ms. Decker; the Bay Area record, set in 1999, is a $45 million purchase in nearby Atherton, she says.

To sweeten the deal, Ms. Decker is throwing in a free week's stay at her chateau in France to the buyer (she normally charges $55,000). Last year, Mr. Friedland dropped the price by $3 million, or 4%.

The Ranch, Brentwood, Calif.

Who: Ken Roberts, former radio-station owner
Asking Price: $60 million
Time on Market: Several years, on and off

This home is often referred to as the Robert Taylor Ranch, after the 1930s and '40s actor who once owned the 112-acre property. Sitting in the Santa Monica Mountains, it's one of the largest estates on Los Angeles's west side, says Joyce Rey, who has shown the property. The house is known locally as a site for star-studded fund-raisers. It's located about a mile up the road from California Gov. Arnold Schwarzenegger's home. (The California Highway Patrol, which handles gubernatorial security, declined to comment.)

The ranch compound, originally designed in 1956, has 17 bedrooms and has been marketed on and off for about that many years. It includes a one-story, 11,000-square-foot main residence with a hot tub, small outdoor pool, screening and casino rooms. Current owner Ken Roberts, former owner of Los Angeles radio station KROQ, paid $900,000 for the ranch in 1975 and says that since then, he has spent $20 million on renovations.

Why hasn't the property sold? While the one-story main house is charming, there are nail holes in the doorway from Christmas decorations and peeling paint on the outbuildings. Some local brokers call it a tear-down. ("It's anything but a tear-down, but I don't care if someone does," says Mr. Roberts.)

Instead of dropping the price over time, Mr. Roberts, 64, now an investor in real estate and broadcast television, has raised it to $60 million from $35 million in the past three years, to account for rising land values. He says he has split the property into eight lots, and is willing to sell them off individually; prices will vary depending on lot.

Rio Vista, Alpine, N.J.

A Manhattan businessman has gotten a lot of interest for this 60,000-square-foot mansion in Alpine, N.J., currently on the market for $40 million.

Who: Manhattan business executive
Asking Price: $40 million
Time on Market: Nine months

Of all the homes we toured, the owner of this 60,000-square-foot (no joke) home, a high-profile Manhattan businessman who asked not to be named, is probably the most motivated seller. He has already bought a new residence and gotten a written offer for this one, says listing broker Dennis McCormack.

For an area of New Jersey known for its sprawling mansions, this one dwarfs the rest. The Palm Beach-style main residence runs more than 60 yards from end to end. Inside, there is a two-lane bowling alley, a darkroom, an art gallery with steel security doors, a 2,000-gallon aquarium (tropical fish included), 4,000 square feet of closets and enough garage space for 19 vehicles.

The property's seven acres, three of which are located in the town of Cresskill, are worth about $14 million, local brokers say. The 13-bedroom home, built in the early 1990s and completed in 2000, cost more than $28 million to build, the owner says. (Today, newly constructed homes in Alpine cost an average of $600 per square foot, meaning it could cost about $36 million to build a home this size.)

Five Star Island, Miami Beach

Real-estate developer Thomas Kramer's Star Island home in Miami Beach, Fla., comes with an asking price of $50 million.

Who: Thomas Kramer, real-estate developer
Asking Price: $50 million
Time on Market: Privately shown since 1997

Owner Mr. Kramer has never officially listed this five-building complex with local brokers, but he's allowed a handful to bring clients to bid on it for years. That's mostly for Mr. Kramer's benefit. "You won't believe how many presidents we entertained here," says Mr. Kramer.

Since the main residence was finished, visits by potential buyers have increased, sometimes to two or three a week during the real-estate boom in Miami Beach, according to Mr. Kramer. He's even had a few offers -- none, however, approaching his "dream price." (Broker Jill Hertzberg of Coldwell Banker in Miami Beach puts the fair price at $30 million to $40 million, pointing out an empty two-acre waterfront parcel on the �-mile-long island recently sold for $15 million.)

Totaling 29,000 square feet, the red clay-colored residence has two private boat docks, towering palm trees, views of downtown Miami, 13 bedrooms and a 10,000-bottle wine cellar. Neighbors include NBA star Shaquille O'Neal, singer Gloria Estefan and hip-hop mogul Sean "Diddy" Combs. We saw the home's Italian and Moroccan-style exteriors, but weren't allowed to tour inside.