These mega-mansions started out with enormous price-tags, but when they didn't sell, they got massive price cuts. Each estate eventually sold at a discount of more than 60% from the initial asking price. Here are three of the largest price drops in residential real estate in America over the last 12 months.
This oceanfront mansion in Hillsboro Beach, Florida (about an hour north of Miami), was on the market for $159 million in 2015. At the time, it made headlines as the most expensive listing in America.
But for three years the 60,000-square-foot compound had no takers. The owner eventually decided to put the estate on the auction block, and in November of 2018, it sold for a fraction of the original asking price at $42.5 million. That's a $116.5 million or 73% price cut.
What went wrong? South Florida based luxury real estate broker Senada Adzem — who was not involved in the transaction — believes that "when it hit the market, the price was mandated by the sellers based on what they had invested in the property, not based on the current market value."
Adzem adds, "The money spent on custom homes is not in direct proportion with the final sales price. There is a point of no return and diminishing returns in super luxury real estate."
When fashion mogul Tommy Hilfiger listed his Manhattan penthouse at The Plaza hotel in 2013, he was asking $80 million for it. The 6,000-square-foot duplex sat on the market for six years. And over that time, it was incrementally reduced. In 2017, the asking price was lowered to $50 million.
The duplex finally sold in September for $31.25 million. That's a reduction of about 61% and a total price drop of more than $48 million from the original asking price.
Hilfiger had such a hard time selling the penthouse for three reasons, according to NYC-based luxury real estate broker Noble Black, who was not involved in the sale: "pricing, layout, and competition."
"Although it was a penthouse at The Plaza, the layout and views ... were not what most buyers [at that level] would want or expect," says the Douglas Elliman broker.
This Los Angeles mansion originally hit the market for $250 million. Back in 2017, that nosebleed asking price made it the most expensive listing in America. But the 38,000-square-foot home sat on the market for over two years.
The price was eventually chopped to $188 million, and soon after it dropped again to $150 million.
Finally, it sold in October for $94 million. While that's an extraordinary amount of money and one of the largest residential real estate transactions in the country, it was also a 62% reduction from the original list price. The $156 million price drop isn't just the largest dollar amount reduction this year, it's also one of the biggest price cuts in residential real estate history.
"Here's the reality: A $94 million house just sold and it's a big number," says Los Angeles based luxury real estate broker Aaron Kirman, who was not involved in the transaction. "The [original asking] price was wrong and the strategy was wrong. Had they had a realistic price two years ago, it might have gone for more money," Kirman tells CNBC.
Ray Parisi is senior executive producer and Christopher DiLella is a producer for CNBC's special projects unit.
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