Reality TV Revisited

Posted by Mike Michalski on Sunday, December 23rd, 2018.

You knew it would end like this, right? 

Owner of luxurious oceanfront home in Manhattan Beach at 108 The Strand - 5 bedrooms, 8 baths, 6910 sqft, custom built in 2014 from a Louie Tomaro design - taps his local agent (the one who represented him when he purchased the original home as a teardown back in 2012) to sell the newly-constructed home at a nosebleed price of $20 million (to be precise, $19,985,000) in 2016, only to see the property languish on the market for 6 months.

Meanwhile, the Bravo 'reality' tv show, Million Dollar Listing Los Angeles, becomes a huge cable hit.  The owner of 108 The Strand, obviously a viewer, thought what he needed to move the home was some star power (even if all the agents on that show are westside agents).  So out goes the local agent and traveling down the 405 to Manhattan Beach with film crew in tow to take over the listing is the new reality show agent from Beverly Hills.

Indeed, the home was the subject of a short scene in a 2017 episode where the agent and his broker discussed pricing strategies, eventually settling on a list price of $19,995,000.

And then the home just sat there.  The original $20 million price tag eventually gave way to a number in the $18 millions (in July, 2017), then below $18 million (January, 2018), below $17 million (August, 2018) and eventually below $16 million (September, 2018).  

We discussed this home and several other local reality show listings and sales in our blog post Alright, Mr DeMille, I'm Ready For My Closeup.

Then, suddenly last week, 108 The Strand was gone, sold to an all-cash buyer on December 18, for $15,250,000 or roughly $5 million below the original start price, a cumulative 31% price cut and roughly 27 months since the original list price and starting date back in September, 2016 (and that's not counting the prior 6 months the home was listed with the local agent).

So who made out on this deal?  One would think the seller still did pretty well, given he paid $7,050,000 for the original home in 2012.  No matter how much you attribute to cost of construction, there had to be a realized capital gains profit in the millions.

And the buyer did rather well, purchasing an almost new home at 31% below original list while the smaller (6,123 sqft) next door neighbor - 104 The Strand - recently sold for $18.4 million (for those keeping score at home, that's over $3,000/sqft).

But the big winner?  Well, that would be the listing agent who also brought the buyer to the table and, consequently, stood to pocket the full listing commission of $762,500, assuming the standard 5 percent commission rate that is typically split between the seller's and buyer's agents where the parties are represented by different agents.

Aaah, the perks of being a reality tv star.

This entry was posted under Manhattan Beach, and Realty Bites.