With some million-dollar houses sitting on the market for years, one realtor tries to drum up interest the eBay way
Mike and Ruth Sherman are living every homeowner's nightmare: their house has sat on the market for 21 months, and they're about to cut the price for the second time -- down 25 percent from their original figure.
Don't feel too sorry for the couple. Their 4,770-square-foot Lake Harriet Parkway home could sell for $1.65 million -- or more, if an unconventional auction works out as planned.
On Monday, Oct. 25 around 5 p.m., realtor Bruce Birkeland hopes to open multiple envelopes, each with a qualified bidder's offer. There will be no counter offers -- buyers each submit their one and only figure. The Shermans (who were not available for comment) don't have to accept the highest bid. However, depending on the competition, a qualified bidder could take the house on Lake Harriet's south bluff for the $1.65 million "reserve" price -- below the current $1.995 million asking price, reduced from the original $2.2 million.
Birkeland -- a garrulous former busboy who now drives a Porsche and owns a seven-figure Kenwood abode -- explains that the eBay-esque gamesmanship is a way to whip up interest in 4888 Lake Harriet Parkway and discount the price without committing. Officially, the house is still listed for sale for $1.995 million; if the auction doesn't work, the price can remain that high (if the Shermans are willing to wait) or be reduced by some figure higher than the $1.65 million reserve.
While no one is breaking out the violins for the would-be-sellers of fancy lakefront homes, it is a slow time for some at the high end. Birkland, who sells $50 million worth of homes annually, said that while residences priced $700,000 to $1 million are still selling nicely, some upper-end properties have sat unsold for up to two years. "Since 9/11, the high-value buyer has been on the sideline, just like with the stock market," he said.
Figures from the Twin Cities Multiple Listing Service (MLS) confirm Birkeland's observation. Homes under $350,000 are selling, on average, in three months or less -- still a seller's market, if less intensely so. Homes over $1 million, though, take an average of 15 months to sell.
Said Birkeland, "Home values between $1 million and $2 million got so stretched in the '90s appreciation that people won't go much higher" for prime locations such as Lake Harriet Parkway.
Instead, he said, many high-end buyers save hundreds of thousands of dollars by buying near, not next to, amenities. One top-tier disincentive: the mortgage interest deduction caps out at $1.1 million -- not enough to get on the lake these days.
Fancy and flawed
The Shermans' home, which they purchased in 1992, has the sort of cachet that lures status seekers. Known as the "Al Checchi house" after the major Northwest Airlines stockholder who lived there in the late '80s, the "Landmark Mediterranean villa" is a 1928 classic.
A broad entryway with sweeping staircase and balcony announces that this is a home to entertain in. One can easily imagine guests floating down the staircase into the showplace front room where they can take in a panoramic wintertime view of the lake and downtown's glittering skyscrapers. Afterwards, they might wander into the sunroom to enjoy the indoor fountain.
Day-to-day living is eased by five bathrooms, five baths, a beautiful Italianate garden, basement entertainment center and a radiator-heated two-car garage -- plus a couple dozen pricey bottles that the Shermans left (or perhaps forgot) in the wine cellar.
The new kitchen doesn't hurt, either -- part of $100,000 in renovations Birkeland convinced the Shermans to make after the house originally went unsold. They also lightened up the interior by removing baroque wallpaper and dark drapes and smoothing the topography of thick-plastered "Mediterranean" walls.
Still, the house is relatively dark -- partly because the neighbors to the west are so close (one of Birkeland's touches was to obscure the kitchen windows facing next door) and because the house is split into many rooms that don't share light.
And for its prestigious Lake Harriet address, the house is actually "thin" to the lake -- its long view and front door face the less romantic Penn Avenue South.
It seems obscene to ask, but the current situation begs the question: why hasn't anyone bought 4888 Lake Harriet Parkway to tear it down?
There's too much house and too little lot, explained Birkeland. Teardowns happen when the house price is (relatively) low or there's a lot of land to build a bigger house on. The Shermans' house nearly fills its 70×161-foot lot and, even at $1.65 million, would get a reconstruction off to an expensive start.
"If you had $1.7 million, wouldn't you want this house?" crows Birkeland with a master realtor's brio.
I momentarily entertain the concept of paying $170,000 down for the privilege of an $8,687 monthly mortgage payment plus $2,000 per month in property taxes.
"I'd probably ask you what else I could get," I reply.
"Well, in Minnetonka, you could get 7,500 square feet, an indoor pool, a fireplace in the kitchen, on a half-acre," he replied. "But look -- there are only about 80 homes on Lake Harriet, and 130 on Lake of the Isles. They're not making more of them."