Even the ultra wealthy are having a hard time in today’s housing market. Snapchat’s co-founder and billionaire CEO Evan Spiegel is a great example: He sold his Los Angeles mansion this month, but it took a major price cut for someone to snap up the property.
Spiegel, who is worth an estimated $3.1 billion, and his Australian model wife Miranda Kerr, put the Brentwood property on the market back in March at $19.95 million. Then a few months later in July, the price dropped to $17.75 million, according to listing records. But the 7,000-square-foot home ended up selling at $16.1 million, nearly $4 million less than what the couple had bargained for. The property closed on Sept. 18, according to listing records.
The property was listed by Drew Fenton with luxury real-estate firm Carolwood Estates, who did not respond to Fortune’s request for comment on the transaction. Carolwood Estates has sold many high-profile, multimillion-dollar properties in Southern California, including the Playboy Mansion.
Spiegel’s former residence was arguably just as high profile even before he moved in. The six-bed, eight-bath home was built in 1951 and was previously owned by Indiana Jones actor Harrison Ford from 1983 to 2012 until HBO Max’s former chief content officer Kevin Reilly bought it. Back in the 80s, Ford had paid exactly $1 million for the home, designed by renowned architect Gerard Colcord; Reilly snagged it for $8.2 million three decades later.
Reilly flipped the house and sold it to Spiegel in 2016 at $12 million. Spiegel, 34, and Kerr, 41, lived there for about eight years, but recently moved into their new $120 million “mega-estate” in Holmby Hills, according to the Robb Report. Spiegel did not respond to a request for comment from Fortune about the sale.
Spiegel and Kerr are also trying to offload another Brentwood property after Kerr let go of her $4.5 million home in Malibu. The other Brentwood home is a 1921 renovated three-bedroom home listed at $4.95 million.
Why it’s hard to sell luxury properties
One of the main roadblocks for both realtors and homeowners in Los Angeles has been the introduction of the city mansion tax. Properties over $5 million incur an additional 4% tax, while properties costing more than $10 million have an extra 5.5% tax—and the tax is typically paid by the seller. It’s separate from the home’s sale price and can be a “massive amount of money,” Emma Hernan, a realtor and star on Netflix’s hit TV series Selling Sunset, previously told Fortune.
“If I could describe the mansion tax in one word it would be ‘nightmare,’” Hernan said. “It’s taken a lot of business away from us as agents, but also [from] developers. Developers are less likely to go purchase another home to try and do a flip because the numbers aren’t going to add up when you add in this mansion tax.”
Spiegel isn’t the only billionaire having trouble selling his home. Billionaire media mogul and News Corp owner Rupert Murdoch had to slash the price of his Manhattan penthouse nearly 40% to $38.5 million earlier this year, and rapper Ye, formerly known as Kanye West, cut the price of his Malibu mansion from $53 million to $39 million, a more than 26% decrease.
While luxury homes are more expensive than ever and transaction volumes are generally trending upward, the market is still “imbalanced” due to low inventory levels, Niklas Hackstein, a luxury real-estate agent with Compass, previously told Fortune.
“Buyers in the luxury sector are either in love with what they are seeing and competing with other bidders, or they do not like it at all and won’t take it unless it is at an incredible discount,” Hackstein said. “[It’s] kind of like they’re doing the seller a favor to take the home off their plate.”
