Ogilvy Does It Again!

 

25 Lower Cross Road, Greenwich: mansion, outbuildings, 80 acres; the “jewel” of Conyers Farm.
Last Ask: $29M
Sold: $21M
List: David Ogilvy
Sell: David Ogilvy

Broker David Ogilvy has sold his own listing for $21,000,000. The historians among you will quickly recall he did the same thing with this property in 2004! Back then, in a better market for Greenwich’s “Conyers Farm”, 25 Lower Cross fetched $45,000,000. 13 years later and a loss of a paltry $24M, the deal has been done again.

One of the un-heralded skills of brokering is the ability to get your seller to throw in the towel and just let the property sell. In this case, the seller waited two years, which, in the current market, is the mere blink of an eye. There are presently a dozen or two high-end properties (almost all w-a-a-y back country) passing their 10th year on the market, so I’m impressed with what happened here.

But what else happened here? Why is this spectacular place, which the current owner made even more spectacular during his time of ownership, selling for such an enormous loss? It’s not as though market punishment is being spread evenly. No, Conyers Farm for some reason bears the brunt. Other parts of town, particularly waterfront, but even mid-country, have owners showing handsome profits after 10+ years of ownership. For the nonce, Conyers takes the hit, but I truly believe it will rise again.

2017: What A Year!

Here’s a review of this year’s super high-end sales, so far:

  • 9 Sabine Farm: $25M
  • 460 North Street: $22M
  • 25 Lower Cross Rd: $21M
  • 116 Oneida Drive: $20.377M
  • 60 Oneida Drive: $19.250M
  • 7 Cobb Island Drive: $15.250M
  • 200 Guards Road: $13.5M
  • 6 Meadowcroft Lane: $13.065M

Absolutely amazing.

 

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Your Real Estate Has Two Prices

A recent sale of Riverside waterfront property saw $3M+ left on the table.

There is the price you can get in the first few weeks of  your listing, and there’s the price you get after sitting on the market for months and years.

A Greenwich seller has left $3,100,000 “on the table”. He was offered $9,600,000 two years ago, turned it down, and ended up accepting approximately $6,500,000 last week. It’s a classic case, not at all unusual in our market. In fact, the next example is likely right around the corner!

Here’s how it works (every single time):

  • Seller over-prices property.
  • Seller turns down early offers.
  • Seller waits months, possibly years, hoping to hear those offers again.

It’s such a common scenario that one can only conclude that this behavior pattern is built into our DNA.

Will you fall into this trap when it’s time to sell? Yes, you will. What about brokers? Surely they are experienced enough to avoid such foolish behavior when they list their own property, no? No. Brokers are even worse!

At any given time, the Greenwich market contains a dozen or so broker-owned properties that are for sale and they are almost always over-priced. And they sit, and they sit, and then? They sit some more. Experienced brokers commit the same error that they (presumably) have warned their clients of.

Remember that book  Freakonomics? It is full of interesting, useful, surprising facts about human behavior, but I had to laugh at the section devoted to real estate. According to the authors, real estate agents deliberately price your property low so it will sell quickly (oh no!), whereas, when they go to sell their own properties, they price them higher (gasp!). This hideous crime was apparently revealed by the authors’ study of real estate sales statistics in the Chicago area.

Maybe there’s a different type of human in Illinois, but here in CT, while it’s certainly true that brokers price their homes higher, it is also true that the market punishes them just as severely.

The corrosive effect of sitting on the market for months and years is so obvious, so proven, it is a wonder to me that professional appraisers still  don’t acknowledge it in their reports.

So here’s my ground-breaking proposal: Every real estate appraisal should come with two prices, the “early” price and the “late” price.

A sample concluding sentence of an appraiser’s report  might look like this:

Based upon recent and similar market transactions in the area, the market value of the subject is estimated to be in the $5,000,000 to $5,300,000 value range. In the event that the subject remains on the market for 6 or more months, the stated value range should be reduced by approximately 20%.*  

This would at least put banks, lawyers, and estates on notice. Heck, it might even end up influencing the behavior of sellers and brokers!

 

* That 20% drop is only the beginning, of course. After a year or two, your value can easily drop a total of 40-50%!

 

 

$2,000,000 Over The Asking Price

460 North Street, just closed at $22M. Five owners over twenty years, none did better than this one! List: Helene Barre. Sell: Fran Ehrlich.

As I mentioned earlier, way back in June, 1997, I sold this place for the pocket-change amount of $4,700,000. Besides the 2.5% sell-side commission, listing broker Ogilvy had arranged for a selling bonus of $40,000, so I celebrate that June 16th closing date each year with a fine cigar.

Twenty years, and five owners later, 460 North Street has closed again, this time for the somewhat more impressive price of $22,000,000. The ask was $20M, so was there a bidding war? My guess is no. I think that extra $2M was for furnishings, possibly even a few pieces of art (see photos)?

Each of the previous owners of 460 North Street put their “stamp” on it, lavishing millions in renovations, decorations, and expansions. Some made money, some did not. This most recent owner paid $7,987,250 in 2012, so I suspect money was made this time.

The Back Country Continues Its Comeback

74 Upper Cross Road, $9,750,000, now has deal. List: Lyn Stevens Sell: TBD

 

French Road (off lower Round Hill), $9,395,000, now has deal. List: Joann Mancuso Sell: Robin Kencel (and boy, can she!)

19 Doverton Drive, $8,498,000, now has deal. List: Julie Church Sell: Susan Isaak

In addition to the above three that just happened, there are four more $7M+ deals about to get reported, including a $9,000,000-ish Lake Avenue mansion. The big stuff is selling again!

It’s been a long, hard slog since March 2009, but slowly, ever so slowly, property values in Greenwich’s so-called “back country” (loosely defined as beginning at about 2+ miles from downtown) are steadily regaining their losses.

Riverside and Old Greenwich recovered long ago, but other parts of town weren’t so lucky. For a while, there was even talk of new paradigms: “no one wants back country anymore, and certainly not 10,000 square feet” became a commonly held view.

But the market had other opinions. True, no one wanted your 10,000 square foot back country mansion at the price you paid for it, but when the priced dropped sufficiently low, suddenly someone stepped up to buy. I always felt that things couldn’t be that bad if you could still get, say, $5 1/2 million for the place you paid $8 million for.

Anyway, here we are in the middle of the summer for gosh sakes, and we have very big deals being made. The three above are officially reported on the MLS, but four more big deals are due out shortly, stand by…

 

What’s Selling Well In Greenwich Right Now

75 Rock Maple, Greenwich (off Stanwich Road), $5,695,000. Came on May 24th, already has a deal! This was a very smart asking price. We’ll have to wait for the closing, but I won’t be surprised if it had a little bidding war.
List: Helene Barre
Sell: Max Wiesen

You want the truth? You can handle the truth, so here it is: houses priced $5,000,000-6,000,000 are trading quite nicely, thank you. How many? So far this year, we’re up to 11 closings, with 6 more pending. For all of 2016, we had a total of 12, so there, my friends, is another clear indicator of that “zippy” market I talked about..

There is a theory among brokers that these $5M-6M buyers are “yesterday’s $10M buyers” who are now spending less not because they don’t have the dough, but more out of a sense of caution. This could be true, I’m not sure, but as I wrote yesterday, I’m certain some percentage of $10M buyers just aren’t here anymore. They’ve stayed in Manhattan or they’ve gone to places like Florida.

Now consider this: If all the Greenwich property owners with houses on the market for $10M+ (there are 41 of them) suddenly decided they needed to sell RIGHT NOW, they would need to slash their asking prices by millions. That would quickly drive down the price of all these houses presently selling in the 5’s and 6’s.

But guess what? High-end Greenwich property owners almost never really “need” to sell. That’s why we have so many on the market celebrating their 5th anniversary, 6th, 7th, all the way up to a few that have been on for FOURTEEN YEARS. So all you sellers in the $5M+’s? Relax, your market value is safe.

 

 

 

 

Will The High-End Drag Down Everyone Else?

If no one buys this Bugatti Chiron for $2,998,000, will that hurt the sales of $90,000 Mercedes Benzes? Gideon says no.

I was belly-aching about the lack of high-end ($7M+) sales the other day to my friend* Chuck Royce, who certainly knows things, and he said “We lost 300,000 financial jobs and those buyers just aren’t there anymore”.

I won’t argue with the Voice of Royce, certainly the government-caused melt down of the housing industry, followed by the near collapse of the financial sector, took a terrible toll on jobs in the investment business.  But I still think there’s more to this. After all, there are now PLENTY of young couples out there getting into bidding wars over $2M tear-downs, particularly in Riverside and Old Greenwich. It’s one of our busiest segments, and consider the money being spent: they’ll pay anywhere from $2M to $4M+, just for the land, then spend $2M-3M to build the dream house.

Take the folks who just paid $4,325,000 for the right to tear down 206 Shore Road, Old Greenwich: they will be all-in for around $7M when they’re done building. Does that sound like a weak market?

No, what’s going on here besides Royce’s observation of 300,000 eliminated jobs is that young buyers, more than ever, want brand new. That means if you dumped millions into a property 15 years ago, you may not get that money back. Maybe your $12,000,000 house is now only worth $7,000,000, but the buyers are there. Their tastes have changed, but they do exist!

We notice this loss of value most in our extreme high-end properties, but will that erosion inevitably drag all the other prices down? I say no. It’s like the Bugatti example above. Prices in the rarefied categories, whether it be art, property, or automobiles, don’t really have much influence on the rest of us.

 

*You qualify as my “friend” if you can reliably pick me out of a police line-up.

How Real Estate Gets Sold

17 Hemlock Drive, central ("in-town") Greenwich, last ask $6.995M, now has deal.

17 Hemlock Drive, central (“in-town”) Greenwich, last ask $6.995M, now has deal. List: Marjorie Pastel   Sell: Julie Chen

At first blush, this might look like a disappointing result. It started at $11,000,000 a little over a year ago, had three price reductions, down to $6,995,000, and finally, finally gets a deal.

So, did the broker over-price it or was it the owners? I don’t even care, because either way, that one-year process is completely normal, particularly in this price range. Even if the broker had recommended an initial ask of $6.995M (which might have triggered a bidding-war), there is no way on earth the sellers would have agreed to it and, in fact, they probably would have given the listing to a different broker!

As a broker, you get absolutely nowhere in this town by suggesting a sensible asking price. There are exceptions, of course, like the case last month where a broker recommended an asking price of $4,200,000 to a waterfront seller. The seller thought that was “too high”, and told the broker to list it for $3,700,000, and guess what?  A bidding war erupted, and it’s selling for…$4,200,000!

But that sort of seller is as rare as can be. Greenwich sellers, you’ll recall have three favorite sayings:

We don’t need to sell!

We’re in no hurry!

All it takes is one!

That’s simply a fact of life around here, and brokers have had to adapt to it. You price where the sellers tell you to, and you “try” that price for as many months as they can stand. Eventually they get sick of the process and, if you’re a good broker, who’s been communicating market data to the client the entire time, you are still there when they’re ready to cut the price!

All indications suggest listing broker Marjorie Pastel did everything right.