How To Sell A $16.25M House

7 Cobb Island Drive, originally $18.750M, fired first broker, new price $16.5M, bingo, it has a deal. Listing broker Chris Finlay was the 'second broker", nice job!

7 Cobb Island Drive, originally $18.750M, fired first broker, new price $16.5M, bingo, it has a deal. Listing broker Chris Finlay, in the right position as the “second broker”, gets the payday! (As does selling broker Marjorie Marianacci) UPDATE: Closed 12/07/2016 for $15,250,000.

107 Indian Head Road (actually, it's the end of Meadow Road). Officially started at $28M, sells for $16.250M, listing broker Tamar Lurie hung in there for the whole process, nice going Tamar!

107 Indian Head Road (actually, it’s the end of Meadow Road). Officially started at $28M, sells for $16.250M, listing broker Tamar Lurie hung in there for the whole process, nice going Tamar!

What I mean to say is, how to list a $16.25M property, and it’s tricky. First of all, to get paid, you’ll almost certainly need to be the second listing broker (or maybe the fifth?) because these big properties come with “baggage”, the worst of which is that they attract big price estimates from brokers and the end result is, they sit for a long, l-o-o-o-n-g time.

It’s different with normal properties. Let’s say you have an ordinary, garden-variety $3,000,000 Greenwich starter-home you’d like to sell. You call in a few different brokers and you get a fairly uniform response, with selling-price estimates no more than $100,000 apart. Mr. & Mrs. Homeowner are free to reject the advice and price it stupidly high, but the broker’s likely to argue with them about it.

With the big stuff, all that changes. Brokers compete fiercely for high-profile properties because they look great in advertisements, they possibly bring you other big customers, and, of course, the commission ain’t bad (unless you foolishly allow your share to get bargained down to nothing!). The owner often “suggests” the asking price, based on…nothing, and the brokers say, “Oh yes, let’s give it a try!”

The owners of the big ones fit two categories:  they are  hugely successful in some particular field, but let you know immediately that they are also experts in real estate. Or they are heirs who usually live out of town but also, amazingly know much more about real estate than you do!

All of the above can cause a $16,000,000 property to be priced at, oh, $32,000,000, let’s say. This sort of pricing never, ever works, so the property sits un-sold for the first year. Wonderful (expensive) advertising is created for the property, broker open houses are held, every once in a while a showing occurs, but, alas, no offers.

At the end of the year, the owners shake their heads sadly and give their broker the bad news: “We’re giving the listing to someone else”.

Now the price of the (still $16M!) house gets slashed to $28M, and, sadly, another year goes by, maybe another broker goes “bye”, too! Eventually, the price comes down, ever so slowly, inch by painful inch, and one day, it starts to look like a gosh-darned bargain and it sells! If you’re the lucky broker still hanging on to this little merry-go-round, you get the payday, hurrah! The other brokers who fell or got pushed off? No payday. It’s a tough business, friends!

 

If At First You Cannot Sell, Rent Rent Again

15 Terrace Avenue did NOT sell for $3.795M, but it rented for $14,000/mo., how'zat?

15 Terrace Avenue did NOT sell for $3.795M, but it rented for $14,000/mo., how’zat? Note: Link is for all three properties mentioned here.

Not everyone has this option, of course. If, for instance, you need the proceeds from the sale of one home to finance your next, you cannot go the rental route. On the other hand, builders have used the rental “escape-hatch” for years and years, typically when they’ve over-priced their new mansion and can’t face that reality (or can’t convince their investors to face it).

Even during the extreme slow-down/crash of 2009-2011, Greenwich rental rates hung in there, saving many a builder butt. You say no one wants your $7,000,000 spec house (which is actually worth $5.3M)? No problem, someone will gladly pay you $30,000 per month to rent it! $360,000 per year kinda takes the sting out of holding it, don’t it, Bunky?

Here are two more examples of recent (Riverside) rentals of brand new houses. These rental amounts are amazing…

14 Palmer Terrace rents for $14,750/mo (was offered for sale).

14 Palmer Terrace rents for $14,750/mo (was never offered for sale).

42 Hendrie Avenue, directly across from Eastern Middle School, di NOT sell for $2.595M BUT did rent for the princely sum of $11,375/mo.

42 Hendrie Avenue, directly across from Eastern Middle School, did NOT sell for $2.595M BUT did rent for the princely sum of $11,375/mo. Suh-WEET!