Inman Luxury Connect returns live, Oct. 25-26, 2021, at the Aria Hotel and Resort in Las Vegas. In the lead-up to the big event, we’re talking with scheduled speakers and other top luxury agents about a big recent deal. Consider this a taste of the knowledge that will be shared at Luxury Connect. Make plans to join us.
If you thought Los Angeles’ luxury market was cutthroat, get a load of this: a buyer paid over $30 million for a 12,000-square-foot mansion that he planned to tear down because the land value was worth more than the home.
When asked to tell us about a recent big transaction, The Agency broker and “Million Dollar Listing Los Angeles” star David Parnes spotlit this sale precisely because he was able to offer his buyers what they wanted despite being difficult to find: flat land in a dense area that can be used to build something new.
Below, Parnes shares with Inman why such a find is currently in-demand in Los Angeles.
Inman: Tell us about a recent transaction that stands out.
David Parnes: It was an off-market transaction in Holmby Hills and it was a very unique property because, although it had a 12,000-square-foot structure on it, it’s likely going to get torn down — essentially, used for land value. What was so significant about it was that the entire lot is completely flat and it’s almost 2-and-a-half acres. To have that in prime Holmby Hills is a very, very rare situation.
I was proud of the transaction because it sold off-market at a very fair price that worked for both the buyer and the seller. I find the best deals are the ones where everyone wins and, in this instant, the reason everyone won was that the seller got a great price for the land value of a house that they’ve lived in for over a year. They weren’t going to build [something else] so it made very good sense for them to move on at a very good price while the buyer can build their dream home and build value through that.
What they’re going into it for is still going to leave a very big margin, whether they sell it or not. In my opinion, that is a win-win-win.
Is this kind of deal unusual for Holmby Hills, which is an affluent and densely-packed part of Los Angeles’ Westside?
It is. The thing is, it’s not just about the size (two-and-a-half acres) but about the fact that the land is flat. You’re not going to get that in that location. There’s only a handful of properties even in Holmby Hills that have the flat acreage above 2 acres and even if they do, it can be completely out of range [from what buyers are looking for]: five acres or 11 acres. That’s a whole different level of property.
But two-and-a-half-acres is a great size and the optimal size for building because you can construct any house you want there. It’s not an expensive construction because you’re dealing with flat land and I feel that two-and-a-half acres is sufficient for any house that anybody could ever want to build. Anything above that is, I don’t want to say overkill, but is surging on palatial which is not as necessary or required.
Are more buyers expressing interest in building in your market?
There is a shortage of land you can buy right now, particularly flat land that is well located. There’s just not enough product to cater to this specific demand and, as a result, I get calls asking for that profile of property all the time. For this property, the sellers were never going to build a new house themselves and so the sale of the land value has really benefited them. I’ll tell you that it was well over $30 million.
Inman: But below $50 million?
Do you believe that we’re going to see more of these kind of sales in the years to come?
The demand is there but they very seldomly come up because a lot of these lots are already built on. I can’t see a lot of these happening and so, when one does come up, it’s an incredible opportunity.
Like winning the lottery?
Yes but I would say that they’ve already won the lottery if they can afford to buy it.