Stephen Shapiro is the chairman of Westside Estate Agency, a high-end real estate brokerage that caters to clients with high net worth. Shapiro co-founded the firm in 1998 and has since built the company to more than $1 billion. The average sale price in 2008 for a WEA home was $12.1 million.
Q. The commercial real estate market has been hit hard in this economic downturn. How has the sale of high-end homes been affected?
There was a period of time a year ago when everything was in freefall. Everybody was afraid; they didn’t know how low it would go. Then, around March, it stopped sliding as precipitously. People are prepared to pay for a house an amount that is diminished by the amount they lost. If they lost 30 percent of their net worth, then that house has to go down 30 percent, as well.
Q. Does the economy create opportunity for high-end real estate?
There are opportunities where you can determine there is a high-end person who has a financial need to sell, in which case you’re going to take as many shots at you can to get that at the best price. Some houses have more debt against them than their current value. There may not be opportunity until that house is foreclosed. We are seeing some people buy notes from the bank and then file a notice of default. Then, either they get the house or someone goes to the auction and pays the note and any arrearages. They can make quick money that way.
Q. What is your advice to someone looking to buy executive real estate?
Don’t be shy. Take a shot. But don’t buy it because you think you’re getting a great buy and you’ll make money on it in a year. Buy because it’s where you want to live. It’s very hard on the very high end to find houses you love and want to live in. It’s got to be an emotional buy at a fair price.