Knock 25 percent off the listing price of a $100 million home, and you’ve just saved a prospective buyer a cool $25 million — a sum that’s bound to pique the interest of even the fabulously rich.
That’s the thinking behind the new asking price for Tranquility, a nine-bedroom, 38,000-square-foot estate that originally went on the market in 2006 for $100 million.
Tommy Hilfiger Corp. co-founder Joel Horowitz and his wife Ann built in the late 1990s, sparing no expense in constructing an eight-building compound that incorporates materials, artifacts, furniture and art gathered from around the world.
The main residence’s great hall features 30-foot-tall windows, and a sky-lit entryway boasts marble floors patterned after those in the New York Public Library. The dining room features 300-year-old French plank flooring, and there’s a cigar lounge modeled after one in New York City’s St. Regis Hotel.
Now the couple are ready to move on, and have repriced the house to sell.
"I think people’s lives are moving much faster now — they are kind of gravitating to where their families are," said Shari Chase, president and CEO of the brokerage representing the Horowitzes, Chase International. "They want to be closer to their kids, and grandkids, and it’s very difficult to have people traveling back and forth."
Instead of dropping the asking price gradually, "We thought we’d make the (new) price compelling right out of the gate," Chase of the decision to slash the asking price by 25 percent.
The property — which sits on the Nevada side of Lake Tahoe and completely encircles a smaller lake — went on the market when the U.S. was on the verge of a housing crash that triggered a global recession.
Tranquility’s boat house sits on a lake encircled by the property.
"We’ve had some great showings," "But our market went into decline — even the billionaires’ confidence was shattered in a way that everyone was pulling back."
Chase said that while there’s been a "real surge" in interest in high-end luxury homes in the last year, it’s taking longer to put transactions together.
"We just had a $9.8 million home go into escrow and is scheduled to close in three weeks," Chase said. "That’s something we haven’t seen in a couple of years."
Chase International’s other high-end listings include a five-bedroom, 12,255-square-foot estate in Tahoe City, Calif., with an asking price of $24.9 million, and a nine-bedroom lakefront mansion in Incline Village, Nev. priced at $34 million.
Around the nation, there are several homes on the market with steeper asking prices than Tranquility, according to LuxuryRealEstate.com. They include a partially completed Windermere, Fla. mansion with an asking price of $100 million (or $75 million "as is"), and "Spelling Manor," a Los Angeles estate with 27 bathrooms put up for sale in 2009 by television producer Aaron Spelling’s widow, Candy, which is priced at $150 million.
The latest numbers from the National Association of Realtors show sales of homes priced at $1 million or above were up 11.1 percent in April compared to a year ago. That compares to a 22.2 percent decline in sales of homes priced at $250,000 to $500,000. Sales of homes priced at $1 million and above were up even more sharply in the Western U.S., rising by 22.7 percent.
Shari Chase, president and CEO of Chase International.
Chase said at the very high end, buyers seem to be much more finicky about what they are looking for in a property, and have plenty of homes to choose from.
In the ultra high-end market, buyers are often looking to pay cash for a third, fourth, or fifth home. Luxury homes are often a discretionary purchase — a "lifestyle enhancement" — rather than a necessity, Chase said.
"Sellers have to be really right on top of the game to get a buyer moving," Chase said.
That means pricing a home right and, when offers start coming in being flexible about terms and what the market will bear, Chase said.
"The key is the value perceived by the buyers," she said.
Determining the value of a one-of-a-kind home like Tranquility can be complex. For one thing, there are no "comps," or comparable properties, in the Lake Tahoe market. Zillow doesn’t offer a "Zestimate" for the property, but notes that the asking price has dropped from $2,631 per-square-foot to $1,973.
Tranquility’s great hall features 30-foot-tall windows.
Chase said two appraisers in the San Francisco Bay Area think Tranquility compares favorably to a 25,500-square-foot limestone mansion in Los Altos Hills, Calif., sold in March for $100 million to Russian venture capitalist Yuri Milner.
The sale price was a new record, besting the $95 million Donald Trump sold his home in Palm Beach, Fla. for 2008 — but the Wall Street Journal reported that half of the price was seller financed.
Chase said Tranquility’s asking price was determined by an appraisal that included an analysis of what the sellers have invested in the property.
As is the case with any home on the market, Tranquility could end up selling for more than its current asking price of $75 million.
Since the 25 percent price reduction was announced on May 27, Chase said there have been "several inquiries that could pop the sale of this property."
Selling points include Nevada’s favorable tax rates and maintenance expenses that aren’t as astronomical as one might expect.
"People think you would need a huge staff, but you don’t," Chase said. "The building is sustainable and the expenses are really in line — much less than people think."
The house is being sold fully furnished, Chase noted — buyers "just need to bring their pajamas and their toothbrush and they’re in."
Tranquility’s sale will not trigger a reassessment because homes in the area are assessed automatically every 5 years, and annual property taxes on the property are currently around $150,000.