One of the more popular, enduring real estate myths is the idea that if a wealthy buyer really wants something, it doesn’t matter what the asking price is. This is baloney, of course, and here are two examples to prove the point…
Both of these properties border on, and were bought by, mega-wealthy owners. In the case of 52 Pear Lane, the famously well-heeled Egyptian next-door neighbor had a standing offer on it for $10,000,000. After the death of the elderly owner, the family decided to put the place on the open market instead of accepting the neighbor’s offer. First, it was put up for rent (asked $25K, got 15K), then, a year later, for sale at $16,500,000.
That was an impossible price, so there it sat for another year. Eventually, they sold it for (surprise!) $10,000,000, to… the fellow next door with the standing offer! Note that he waited patiently, and never raised his offer. That’s because $10M was already a “generous” offer. But wait, you say, he’s worth hundreds of millions! Why wouldn’t he just pay up? What’s an extra five or six million to this guy? The answer is, an “extra” five or six million apparently means quite a lot to him.
The second example is 38 Crown Lane, owned by a well-known New York Knickerbockers star, and situated right next door to a well-known hedge fund billionaire. Knicks guy has standing offer of $5,000,000 from hedge fund guy, but Knicks guy can’t resist putting the place on the market for $5,995,000. Four months go by and finally, Knicks guy sells to….are you sitting down?….The hedge fund guy for $5,000,000! But wait, you say, hedge fund chap has billions! What’s an extra $995,000 to him?? He probably threw that much into trick-or-treaters’ U.N.I.C.E.F. boxes! Possibly true, but once again, a rich guy declined to “pay any price” for property he very much wanted to own.
Next in this series: Asking Prices…. y’ever notice how, when someone’s selling, say, a Van Gogh, they don’t start at $200,000,000 and negotiate down; rather, they begin at a number like $10,000,000 and negotiate up. Could there be a lesson here for property sellers?