It’s all over but the shouting on The One–also known as the all-time priciest residential property to sell at auction in U.S. history at $126 million.
Or was it $141 million?
And which of the brokers involved gets what for commissions?
“When you’re talking about deals of this magnitude, everything is negotiable,” said Ron Wynn, a veteran broker working with Compass. “But it always boils down to what it says in the agreement. Some agreements are very clear. Some are murky and that’s why lawyers fight about things.”
Any murkiness on The One–and a parlor game of sorts for luxury agents and brokers around L.A.–starts with the $126 million hammer price for the Bel-Air megamansion, which went bankrupt under spec developer Nile Niami.
Put Concierge Auctions, which handled the March 4 sale, down for a 12 percent fee on the sale–that comes to $15 million.
The buyer is responsible for the fee to the auction house, so the total price for The One could be viewed as $141 million.
The extra obligation is another item to sort out, said Scott Talkov, president and attorney for Talkov Law, which specializes in real estate and bankruptcy litigation, with an expertise in co-ownership disputes.
“Most real estate transactions are not conducted through an auction where a fee is charged on top of a sales price,” said Talkov, who was not involved in the deal for The One. It makes the math confusing, especially for brokers looking for the largest possible commission.”
However the confusion gets settled will mean a significant difference in dollars for the brokers and agents involved.
That cast includes Branden and Rayni Williams of Williams & Williams, and Stuart Vetterick of Hilton & Hyland, They all represented the buyer, apparel mogul Richard Saghian, chief of the Fashion Nova brand.
The Williamses are reportedly involved as listing agents, too, along with Aaron Kirman of Compass.
The agents representing the buyer–the Williamses and Vetterick–are in line for a 1 percent commission, according to terms spelled out by Concierge Auction before the sale and confirmed by court documents filed with the bankruptcy court.
The court documents also indicate that there is another 1 percent commission due to brokers or agents on the seller’s side–the Williamses and Kirman, in this case.
Industry buzz, meanwhile, suggests Branden Williams has been vocal behind closed doors about the commissions being pegged to the $141 million price tag.
Whatever cut the Williamses might have agreed to with Vetterick and Kirman remains private. Assuming, however, that the Williamses bill jointly and are in for a half-percent on each side of the deal, they would have the most reason to press for counting the auction fee toward the total price subject to commission. That math would add $141,000 to the Williamses commission, taking it from $1.26 million to about $1.4 million.
Kirman and Vetterick would each see an additional $70,000 or so if the auction fee counts towards the price subject to commission. The half percent we’re presuming here from each of them would mean an extra $70,000 for each of them, taking their respective cuts from $630,000 at the $126 million price to $700,000 with the auction fee added to hit the $141 million market.
Whatever discussions might be ongoing could be rendered moot by the bankruptcy court, which must sign off on the deal for it to become final.
The bankruptcy court is expected to soon decide whether to approve the sale. It wouldn’t be surprising if some adjustments to the deal were ordered by the court as a condition for approval, said Marc Smith, a partner in Encino-based Krane & Smith, which specializes in business litigation, real estate law and intellectual property.
Smith said he is familiar with The One’s case but not involved in the deal.
“The One has had extensive and well-documented construction problems, creditors’ claims and has a limited market for potential buyers either for residential or even commercial use,” he said.
“Since the property is in bankruptcy and the bankruptcy estate has creditors’ claims to date in excess of $250 million and counting, the bankruptcy court will determine and approve the actual amount of the brokerage commission,” Smith said. “ Of course, the brokerage commission will only be paid if and when a sale is approved and finalized.”
Talkov said reductions in commissions wouldn’t be a surprise.
“Oftentimes it is difficult to figure to out how professionals will be paid because debts exceed assets,” Talkov said. “This is [often] a series of people taking a haircut to make something work.”
Chad Roffers, president of Concierge Auctions, said his outfit earned its fee by increasing the market for the property. It had helped handle interest in sale since the bankruptcy.
“Since the inception of Concierge Auctions, the highest level of luxury auctions have become our hallmark: The One was no exception,” Roffers said. “In only 55 days, we secured a strong field of global interest from America to Europe, Asia, and The Middle East, doing exactly what we do best, finding the most affluent buyers from every pocket of the world.”
The One’s features include five pools, a nightclub, a salon and spa, a 10,000-square-foot sky deck, a 400-foot private outdoor running track and a Dolby Digital theater which offers seating for more than 40 people, according to Concierge.
The pending new owner, Saghian, is expected to use the property as a residence as well as a stage of sorts for the various social media influencers who endorse his Fashion Nova brand–a lineup that includes singer Cardi B. and Megan Thee Stallion, among others.