“Billionaire” mansion sale is the latest fail in “ego pricing:” brokers
“It is not based on reality or facts and figures but numbers that look good in a press release.”
Josh Flagg warned him.
When Bruce Makowsky listed his Bel Air spec mansion for $250 million in 2017, Flagg, a broker at Rodeo Realty not involved in the listing, said that the property would sell for less than $100 million.
“Bruce Makowsky, he then yelled at me,” Flagg said. “He invited me to the house several times, and he swore that I would change my mind after seeing it.”
While they were lounging in the property’s 40-seat movie theater, Makowsky, a handbag entrepreneur, asked Flagg again to value the property, the broker recalled.
Flagg gave Makowsky the same answer – between $80 million and $100 million.
“And I said exactly what it sold for!” Flagg said.
Makowsky sold his 38,000-square-foot mansion at 924 Bel Air for $94 million, or $2,473 per square foot. The Wall Street Journal first reported the sale.
Besides the aforementioned theater, the mansion that Makowsky dubbed “Billionaire” features a helipad, bowling alley, massage studio, 130 works of art, two wine cellars, an 85-foot swimming pool, and $30 million worth of exotic cars.
The particulars of the sale itself remain unknown. The buyer is not identified, and agents on both sides of the deal were mostly mum.
Listing agents Branden Williams and Rayni Williams of Hilton & Hyland said that they could not discuss the particulars of the deal. Ben Bacal, of his newly formed company Revel Real Estate, was listed in the contract as the buyer-side broker.
Shawn Elliott of Nest Seekers International, who was also a listing agent on the property, claimed that he also represented the buyer. Bacal and Branden Williams disputed that Elliott represented the buyer. All three brokers declined to identify the buyer, citing a confidentiality agreement.
The pricing puzzle
The mansion’s sale price illustrates a hard-won lesson, according to some agents: attention-grabbing listing prices are a futile exercise.
“Buyers are quiet now,” said Fran Flanagan, an agent at Compass. “They are sitting on the sidelines, waiting for the next thing to happen.”
The next thing that keeps happening, Flanagan said, is a price chop.
Makowsky first listed his abode at $250 million, garnering attention as the most expensive residential listing in the U.S. at the time. But the fashion entrepreneur cut the price to $188 million. And then he cut the price again to $140 million.
The Spelling Manor in Beverly Hills met a similar fate. Seller Petra Ecclestone listed it for $200 million, only to sell for $120 million in July. However, it was still set a record for the priciest mansion sale in L.A. County history.
And a similar situation is playing out with late media executive Jerrold Perenchio’s Chartwell Estate in Bel Air, listed at $350 million in 2018. By June, after two price chops, the ask dropped to $195 million.
And there are yet more examples, with prices slashed on the Owlwood Estate in Holmby Hills, Paul Allen’s estate in the same neighborhood and Steven Udvar-Hazy’s mansion in Beverly Hills.
All the above properties were listed at over $100 million. None – except the Spelling Manor – actually sold for over $100 million.
“We are going through a period of ego pricing,” said Jonathan London, an agent at Compass. “It is not based on reality or facts and figures but numbers that look good in a press release.”
There is precision to a listing price, even for the ultra-luxury market, London said. It involves measuring sticks like square feet, location, and buyer pool.
“How many people are out there who have $100 million for a house, who A.) want to buy a house B.) want a helipad on their roof and C.) want their artwork picked out for them?” London said.
Some brokers praised Makowsky. Aram Afshar of Coldwell Banker noted it was a “real accomplishment” by the entrepreneur and his agents to sell a spec mansion for $94 million after buying the land for $11 million.
But Afshar agreed with other agents that the ultra-luxury market has cooled to the point that when a property is listed at north of $100 million, buyers will likely just wait for the inevitable price drop.
“I think our job as agents now, is, let these sellers know what we really think – and what the market price really is,” Afshar said.
Updated at 1:55 p.m. on Wednesday, Oct. 30 to include additional information about the brokers on the deal.