Selling houses with history

In the declining real estate market, local brokers are finding even the most lavish and beautiful homes difficult to sell. But some properties present much greater challenges than others, particularly those with a less than happy history.

When federal officials gave word this summer that convicted swindler Bernard Madoff’s oceanfront home in Montauk would be liquidated to pay back his victims, East End brokers immediately began jockeying for the $7 million listing.

Even though Mr. Madoff reportedly fleeced $65 billion from thousands of investors—destroying lives and crippling families in the process—many brokers believed his five-bedroom house would be an easy sale. Since oftentimes infamy brings notoriety and interest, the prime beachfront listing seemed to be a no-brainer for hungry agents waiting to feast on the public’s insatiable curiosity.

A handful of potential buyers may be uncomfortable living in the notorious criminal’s former abode, but not most, according to Richard B. Maltz, a partner and broker

for David R. Maltz & Co. Inc., a company that auctions $100 million worth of foreclosed, bankrupted and seized properties across the country each year.

“People just love the ability to get a deal,” he said, noting that property value can fall due to a less than savory previous owner, but “it really depends on who the person is.”

Mr. Maltz is not selling the Madoff house, but he recently sold a property that the Justice Department seized from a different crook in Montauk and it fetched above market value at $2.5 million.

“This was a bad guy,” he said of the owner. “But nobody was turned off by the fact that he owned it.”

On the other hand, Mr. Maltz said it’s much harder to sell homes of convicted murderers. He said that values will typically decrease in that situation.

Mr. Maltz noted that his company uses the auction method of marketing, which creates a sense of urgency, which ultimately leads to a sale at fair market value. “People get caught up in the excitement of an auction,” he said.

In some cases, the provenance of a house—who owned it and what happened there—can hurt its marketability. Then again, it can also be the very thing that clinches a deal, explained Judi Desiderio, a broker with 27 years of local experience and the owner of Town & Country Real Estate.

Ms. Desiderio signed a nondisclosure agreement that precluded her from specifically discussing the Madoff parcel, but she noted that her firm has encountered houses with both positive and negative history.

“There’s good houses and bad houses,” Ms. Desiderio said, adding that a home’s connection to a high profile criminal can be intriguing to some buyers, while others won’t set foot inside. Town & Country has marketed properties based on their attractive provenance, but the firm has also faced the obstacles of selling or renting those with a more grisly past, she said.

In October 2001, successful financier and investment banker Ted Ammon was found naked and bludgeoned to death in his Middle Lane mansion in East Hampton. After his widow, Generosa Rand Ammon-Pelosi, died of breast cancer in 2003, Ms. Desiderio landed the exclusive listing.

Ms. Ammon-Pelosi was a suspect in the murder case and her lover (whom she later married), electrician Danny Pelosi, was convicted of the brutal murder. The sensational case was eaten up by the mainstream media and was eventually featured on several television shows and adapted into a made-for-television-movie, “Murder in the Hamptons,” in 2005.

“Ammon has been my exclusive since the beginning,” Ms. Desiderio said, noting that she’s rented it every year without fail. But that’s not to say it was always easy to market the property.

Because of the intense interest in the case, clients had to be qualified before touring the house, she said, noting that gawkers and members of the media attempted to get an intimate look at the six-bedroom manor. “We did turn people away,” Ms. Desiderio said, adding, “It made it challenging, but it wasn’t an insurmountable challenge.”

Due to the case’s high profile, there was never any question of whether or not tenants would know or should be informed about what occurred in the Ammon house. But the history of most properties with less than stellar pasts are oftentimes much less public.

Southold broker and real estate professor at New York University and Long Island University John Viteritti said that New York State’s real property law specifies that any property that is or is suspected to have been the site of a “homicide, suicide or other death by accidental or natural causes, or any crime punishable as a felony” is “stigmatized.” In spite of the ugly term, brokers are required to disclose the information only if they know about it and a buyer inquires, according to the law.

Mr. Viteritti suggested that a buyer can do his or her own independent research before bidding on a house, but he said the broker and homeowner have no obligation to further discovery. He noted that if asked, seller’s agents are required to research whether or not pedophiles live nearby, and material problems, such as mold or structural weakness must be disclosed.

“To me, that’s a moral issue,” Mr. Viteritti said, explaining that a murder or suicide is a “marketing issue.” The professor said it’s always better to volunteer all pertinent information because an “atmosphere of deception” can quickly sour a deal.

A forthright broker may lose a few sales, but Mr. Viteritti said honesty is always the best policy. After all, the relationship between a home and its owner is almost always an intimate one.

Agents on the East End may very well share the unpleasant history of a stigmatized home with serious buyers, but the fear of losing a big commission, especially in this suffering market, keep most from publicly discussing the gory details. Even Ms. Desiderio was reticent when asked to comment on her strategies for marketing the Ammon house. She noted that murders are few and far between in the Hamptons, so the issue rarely comes up, but they do happen from time to time.

In 2007 and 2008, two East Hampton murder-suicide cases shocked local residents and the two homes were put on the market in the aftermath. Both homes dropped below asking price, but it’s hard to know if the horrific incidents or the sagging market affected value.

In November 2007, at 85 Cooper Lane in East Hampton Village, Charles Smith, 84, shot and killed his wife Beatrice, 84, and then turned the gun on himself. That house sold for $930,000 in December 2008 though the asking price was $1.1 million.

In August 2008, Lester Stockel, a 64-year-old Cedar Woods resident shot and killed his wife Georgiana, also 64, and then shot himself at their 28 Cedar Trail home. The three-bedroom house is currently listed on the Corcoran web site at a “significantly reduced” price of $1.35 million, down nearly $650,000 from the original asking price of $1.995 million.

Corcoran broker Sarah Minardi refused to be quoted about her listing in Cedar Woods and she did not explain the reduction or the challenges the murder-suicide presents to a sale. The firm’s publicist, Karli Kittine, noted that brokers wouldn’t benefit from calling attention to a property’s gruesome past. “I can’t imagine why one of our brokers would want to talk about that,” she said.

Some properties may be hurt by their connection to previous owners, but homes with notable rather than notorious former residents can be more appealing to buyers. Local author Steven Gaines said a famous owner adds value and cachet to a house. “I think more of it comes down to bragging rights,” he said.

An interesting case in point could be the house once inhabited by Edith Ewing Bouvier Beale and her daughter, Edith. The ramshackle house known as “Grey Gardens” was purchased as a dilapidated mess in 1979 by Sally Quinn and Ben Bradlee, three years after a documentary was made of the once glorious but severely deteriorated mansion. Ms. Quinn and Mr. Bradlee restored the squalid structure to something even greater than its former glory and continue to call the beautiful East Hampton estate home.

Internationally known abstract painter Richmond Burton is the third famous artist to live and work in his home near Sammy’s Beach in East Hampton’s Northwest Woods. He said that legacy made the property especially attractive to him, not for bragging rights, but because of a personal interest in those who came before him.

Mr. Burton bought the house and large studio from world famous sculptor John Chamberlain in March 1998. Mr. Chamberlain had bought the home from Elaine de Kooning, the wife of abstract expressionist master Willem de Kooning and an extremely successful painter in her own right.

“The succession of artists who have been here is hugely valuable,” Mr. Burton said. “I’ve been so productive here.”

The painter described the spacious house as an excellent place to work with no shortage of good vibes, adding, “You can’t put a dollar value on that.”

Mr. Burton has had the house on the market for two years, but it has yet to sell. “That surprised me,” he said, noting that the history doesn’t seem to add value, even though “it’s the opposite of a stigmatized property.”

An additional perk of Mr. Burton’s home is that it came with a number of Ms. de Kooning and Mr. Chamberlain’s former possessions. He pointed out a collection of Ms. de Kooning’s books, which he recently donated to a local library.

For some, even the most mundane object can be valuable if a celebrity owned it. Mr. Gaines recalled a moment when he visited Truman Capote’s former home in Sagaponack and walked away with a can opener. He said he so venerates the legendary local author that the kitchen tool is still on display in his home.

Though they share the information with potential buyers, it is extremely uncommon for brokers to market a house’s celebrity connection in listings and advertising. But bucking the rule, Town & Country broker Theresa Eurell recently sent out a press release highlighting the famous owner of one of her Montauk properties.

The release reads “World-renowned actress Tuesday Weld, early 1960s Teen Queen of Hollywood, has put her house on the market.” Ms. Eurell said she and Ms. Weld made a joint decision to sell the five-bedroom oceanfront house this way because the actress “feels people are star-struck out here.”

Ms. Weld’s desire to advertise herself as the owner is unusual, but the house is on the market for the second time and they’ll try anything to generate interest, Ms. Eurell said. “I think it will definitely add to the interest, not the price,” she said of the strategy.

Ms. Eurell said older clients have been the most excited to see Ms. Weld’s home, but the broker fears that it’s the only reason some people make appointments.

She said the Madoff property would be “the next big drama” in East End real estate, but the criminal’s name could never be used in the marketing plan.

“The minute he turned himself in, I think every agent out here was called,” Ms. Eurell said. “People think it’s going to be this great deal.”

Ms. Eurell predicted that the Madoff house will have a lot of action initially, but pointed out that since it’s government property, those sales can be slow to materialize. She also noted that the government would do whatever it can to get the most money for the victims, so the price isn’t going to be that low.

When all is said and done, the Madoff property will sell eventually and it will go to the highest bidder. A miniscule fraction of his victims will be reimbursed.

Perhaps for most, the history of the Madoff house, and those other homes with a history, will slowly cede from public interest, maybe becoming a vague memory or a piece of trivia. But those who purchase the homes of the famous and infamous will surely continue to tell the stories, whether they are made from happy memories or from tragedy.