What it takes to sell a luxury home in posh Palm Beach

Tax benefits are leading more out-of-towners to plant a flag on the exclusive island, where brokers are in fierce competition and backstabbing is par for the golf course

Sep.September 20, 2019 10:00 AM

The property known as La Follia at 1295 South Ocean Boulevard closed for a record-breaking $105 million in July.

Driving over the bridge from downtown West Palm Beach to Palm Beach Island takes less than a minute, but once you arrive, it feels like it’s a world away.

Along North and South Ocean Boulevard, service quarters’ entrances are common, as are intricate wrought-iron gates for the property owners and residents, luxury cars tucked away inside. Trash is picked up daily, and lawn trucks are constantly cutting, trimming and picking up landscaping debris. Depending on the day, piles of trimmings will reach six feet tall, one broker said.

As the home to celebrities like Howard Stern, author James Patterson, Tiger Woods and Max Weinberg, longtime drummer for Bruce Springsteen’s E Street Band, the 18-mile-long island is known for its pristine homes, ever-present wealth and exclusivity.

That image is only boosted by one nationally famous private club on the island, President Trump’s Mar-a-Lago, where Palm Beachers can rub elbows with 45 and his family.

And unlike elsewhere in South Florida, the ultra-high-end residential market in Palm Beach boomed over the summer, during what is typically the off-season. Fourteen single-family homes totaling more than $343 million in sales volume closed in July, according to MLS and Palm Beach County data compiled by Premier Estate Properties.

By comparison, in July of last year, 10 properties sold for only $97 million.

The month notched an all-time record for the priciest residential property ever sold in the county, and the deal represented just under a third of the total sales volume in July. Closing for $105 million, the record-breaking property known as La Follia, at 1295 South Ocean Boulevard, is a 2.6-acre estate with 13 bedrooms, a fitness center, a movie theater and gaming area, a five-car garage, 210 feet of direct water frontage and a boat dock. Lawrence Moens of Lawrence A. Moens Associates represented the buyer, while Gary Pohrer, Ashley McIntosh, Lisa Wilkinson, Cara McClure and Adam McPherson of Douglas Elliman were the listing agents.

That record will likely be beaten by the trade of beauty mogul Sydell Miller’s estate at 1415 South Ocean Boulevard. Sources say the property will sell for over $110 million, with some even pegging it at $200 million.

But inventory’s up. As of Sept. 10, there were 33 homes listed for more than $10 million on the local MLS, said agent Jim McCann of Premier Estate Properties. That’s about one-third of the 124 houses on the market in the town of Palm Beach and does not include the shadow inventory.

The amount of high-end inventory is not unusual for this time of year, McCann said.

“The seasonal nature of this market is such that some homeowners will make a determination not to put their homes on the market until in the month of September, when the snowbirds show up,” he added.

Predictably, scouring the island for deals is extremely competitive, and many times the big sales happen behind closed doors, hitting the Multiple Listing Service after the fact so that agents can receive credit.

Determining how big the shadow inventory is can be a challenge, but McCann predicts that another 50 homes will hit the market by January.

In such an exclusive market, the brokers who rule the roost are a select few.

“It’s a different market than any other in South Florida. It’s more akin to the Hamptons. It’s who you know,” said Jennifer Hyland, a top producer at Illustrated Properties and part of the Peters & Hyland team.

Brokers Moens and Christian Angle, among others, are involved in all the top deals. Neither responded to requests for comment. In addition to representing the buyer in the record $105 million sale, Moens has represented Chicago hedge fund manager Kenneth Griffin in the majority of his purchases in the area, which total at least $350 million.

Griffin recently paid $99 million to purchase the former oceanfront estate of ex-L.A. Dodgers owner and billionaire developer Frank McCourt, possibly completing Griffin’s assemblage along South Ocean Boulevard and Blossom Way.

120 Clarendon Avenue is currently listed for $11.65 million.

“A lot of the deals are done that way, behind closed doors,” Hyland said of Griffin’s acquisitions. “It’s nice to be able to say you sold before you hit the market. … It also creates a buzz within the top echelon of the industry.”

Breaking in

Chris Leavitt, an Elliman agent who’s part of the Leavitt McIntosh team, had to earn his way into the Palm Beach market. But when he shows up at the brokerage’s under-construction Palm Beach office in his new Aston Martin DB11 on a Friday afternoon in early August, it’s clear that he’s since been admitted to the club.

Leavitt’s 2014 stint on Bravo’s only season of “Million Dollar Listing Miami” made it harder for him break into the market, he said. “If you’re a loudmouth broker, you’ll lose your clients’ trust very quickly,” he added.

“I toned it down a bit. It’s hard to get accepted. You have to really prove yourself. One big deal is not going to [make] you.” The focus, he said, “should never be on you.”

Driving through the island, Leavitt echoes what other brokers say about closing deals in Palm Beach. He compares working on the island to playing chess. Discretion is key.

And every agent has their schtick, he said. They have to. The Palm Beach Board of Realtors has 560 full members and 91 brokerage firms doing business on the barrier island, though that number includes some surrounding communities.

“It’s probably one of the most competitive markets in the country,” said Pohrer. “There are 700 brokers chasing 200 sales.”

When he moved to Palm Beach, Pohrer said, he was able to get lower-priced listings, but he pushed them off. “I didn’t want to get locked in that price range,” he said. He compared it to working on Wall Street, competing with hundreds of stockbrokers.

We all are competing against each other on a daily basis, yet we all have to be friends. It’s slightly strange, to be honest,” Pohrer said.

Where some agents in Miami, for example, may be more obvious about stabbing their competitors in the back, that’s not the case in Palm Beach, Leavitt said.

“They do it with class. It’s not as obvious as a jab,” he said. “There’s an art to being nasty but elegant.”

McCann, like others, says it helps to be involved in the community, “whether it’s philanthropy or civically.”

Pohrer uses golf to network. The former professional golfer said that otherwise, it’s hard to get the attention of the ultra-wealthy clients he represents.

“Golf is the most important single factor that gave me the ability to communicate with people on a daily basis,” he said. “When you hop in the golf cart, you have this person in your golf cart who sold this company, and all the sudden they’re going to be stuck with you for four to six hours. If they like you, they try to help you out, [and] keep you informed if any of their friends [or] family wants to move down.”

While there are hundreds of agents who try to work on the island, those who live there say it gives them the upper hand.

“You’re living amongst your friends, clients,” said Pohrer, who lives in a home on the northern end of Palm Beach that was previously owned by Weinberg, Springsteen’s drummer, and is about half a mile from his colleague McIntosh. “We love it so much; it helps us sell it.”

McIntosh, whose family ties in Palm Beach date back to the 1800s, has been part of the social scene on the island her entire life. So when she got a divorce in 2006, she had to reinvent herself “to be taken seriously as a businessperson,” which she did by creating a market report that “made sense for the island.” That involved dividing Palm Beach into four submarkets and tracking sales in those areas.

Like most agents, she’s done her fair share of staging houses, of doing showings at sunrise. She even painted a chain-link fence white so that it wouldn’t appear in listing photos.

“I only vacation in places where my phone will work,” McIntosh said.

McIntosh led the Elliman team representing the seller of the $105 million property over the summer. She wouldn’t say whether she took a reduction in commission for that deal, but it’s not unusual for agents to do so at the higher end of the market, especially if an agent has both sides of the deal.

“Sometimes the agents have to bleed a little. Sometimes the seller doesn’t always get what they want. Sometimes the buyer pays a little more than they want,” she said. 

The Trump bump

Brokers and agents on the island say that Trump’s changes to the federal tax law have boosted the luxury residential market on the island and in the region as a whole. The law limits federal deductions for state and local taxes. In Florida, there is no income tax.

“It all boils down to wealth preservation and quality of life,” McIntosh said. “April 15 [tax day] opened the gate to people maybe sitting on the sidelines, concerned about the economy and trade situation.”

Hyland said she’s shown properties to half a dozen buyers from Silicon Valley, San Diego and Los Angeles over the last few months. California is among the highest-taxed states in the U.S.

Others say the tax benefit is just one piece of the puzzle. McCann attributes the bump in sales this summer in part to the fact that the stock market tanked late last year. Then, in January, the government shut down.

“As Wall Street goes, so goes Palm Beach,” he said.

There’s also the question of whether the president’s presence is making an impact. Palm Beach agents aren’t outwardly political, but they acknowledge that he’s put Palm Beach on the map.

Mar-a-Lago

“I don’t think people are moving here because of him, but people are thinking of Palm Beach more because it gets the press. With the amount of exposure, it just becomes a place. If he’s there, it’s got to be pretty darn nice and secure,” Pohrer said.

Land squeeze

Homebuilders in Palm Beach are as busy as the buyers who paid tens of millions of dollars for old homes that they plan to tear down. Developers like Malasky Homes, Mark Timothy (of the Pulte Homes family) and Hedrick Brothers Construction are among them.

“If you’re a new builder and you want to build something on the island, it’s a rude awakening to get things approved and on the ground,” said Jack Buell Jr., the Palm Beach County market president of Centennial Bank.

Buell said contractors are consistently busy in Palm Beach, whether it’s for new construction or renovations.

Still, the island isn’t getting any bigger, which is why a number of downsizing Palm Beachers have opted to purchase units at the Bristol, a luxury condo tower across the bridge in West Palm Beach.

Sydell Miller, who is under contract to sell her sprawling estate on the island, closed on a full-floor penthouse for $42.6 million in March. Real estate developer Stuart Bernstein and his wife, Wilma, who own a condo in Palm Beach, are upgrading to a unit at the Bristol.

Flagler Investors, led by developers Al Adelson and Gene Golub, completed the Bristol, the first new luxury condo project to be built in West Palm Beach in over a decade, this year. More developments are planned nearby, like 25-story, 83-unit La Clara being developed by Toronto-based developer Great Gulf. Jeff Greene is now reversing course and planning condos instead of rental apartments at a mixed-use project in downtown West Palm Beach.

“Palm Beach is still the No. 1 choice,” Hyland said. “It’s great for boating, it’s got the ocean, it’s got restaurants, and a lot of wealth management firms are right on the island.”


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