Hot Words in Finance: 'For Sale'

By CHRISTINA S.N. LEWIS

Two years ago, Louis Gonda was a billionaire. Then in September, American International Group Inc., the company from which Mr. Gonda derived the bulk of his wealth, collapsed, its shares falling from nearly $60 a share in January 2008 to less than $2.

Worth an estimated $1.4 billion according to the March 2008 issue of Forbes magazine, Mr. Gonda is selling assets. About a month ago, he put his Beverly Hills, Calif., mansion, an eight-bedroom brick Georgian he's owned for more than 20 years, on the market for $42 million. The price met resistance, and within a few days Mr. Gonda lowered the price to $35 million.

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In an email, Mr. Gonda says that with his five children grown, he and his wife plan to travel more and no longer need the home. Situated on 1½ acres and a block from the iconic Beverly Hills Hotel, the house has a rectangular pool, a tennis court and a five-car garage, says Mr. Gonda's real-estate agent, Zach Goldsmith, of Hilton & Hyland, an affiliate of Christie's Great Estates.

In July, Mr. Gonda sold a rare beachfront parcel in Playa del Rey, a Los Angeles beachfront community, for $2.4 million, says listing agent Dan Christian, of Shorewood Realtors. Mr. Christian says Mr. Gonda had bought the plot a year before and razed the existing house to make way for an up-to-date structure.

Mr. Gonda notes that his family has other homes that it is not selling. "The AIG collapse has hurt hundreds of thousands of shareholders and employees. I am not an exception and prudent management dictates that nonessential, non-income-producing assets be sold first," he says in an email. He adds that six years ago his family began diversifying away from AIG and the stock market, a move that "has served us well."

The carnage in the upper echelons of finance is hitting the high-end real-estate market, particularly in traditional finance centers. In Manhattan, the fourth quarter showed a sharp increase in the inventory of homes costing $3 million and up, according to several brokerage reports. Many of the listings were purchased just a few years earlier and have been recently renovated.

"Some Bear Stearns stuff hit the market" in the fall, says Meredyth Hull Smith, of Sotheby's, referring to the collapsed investment bank. London brokers say they're also beginning to see financiers selling in the desirable Chelsea and Kensington areas.

It's a stark reversal of fortune, particularly for financiers whose appetite for amenities like 24-hour concierge service and gated estates drove prices to dizzying heights. Now, many find themselves needing to downsize in an increasingly glutted high-end market, which is falling so rapidly brokers say it's difficult to discern how listings should be priced.

Of course, not every finance chief is selling a home because of the crisis. But all sellers are pitching their homes in a changed world. "It's a terrible time to list right now," says Wilbur Gonzalez, of Brown Harris Stevens.

In early November, Scott Freidheim, an adviser of former Lehman Brothers chief Richard Fuld Jr., put his just-purchased Greenwich, Conn., mansion up for sale for $13.75 million, according to Greenwich listing records. He and his wife bought it a year earlier for $12.4 million. The sale is tied to Mr. Freidheim's relocation to Chicago, says his real-estate agent, Joe Barbieri, of Sotheby's International Realty. Mr. Freidheim didn't return a call seeking comment.

Others selling include Anthony Piszel, the former chief financial officer of Freddie Mac, who put his Maryland Eastern Shore house up for sale in September for $5 million, less than two years after he bought it. He declined to comment via his listing agent, Charles Mangold Sr., of Benson & Mangold. In Nantucket, Mass., Goldman Sachs Group Inc. Co-President Jon Winkelried put his summer home up for sale last fall for $55 million, but has since cut the price, according to his listing agent, Linda Bellevue, of Congdon & Coleman Real Estate, who declined to comment further citing a confidentiality agreement. He didn't return a call to his office seeking comment.

Joe Gregory, former president of Lehman, is selling a home in Bridgehampton, N.Y., for $32.5 million. Mr. Gregory purchased the home for $19 million in January 2007. Reached on his cellphone, he declined to comment.

In Palm Beach, Fla., where a local country club was ground zero for Bernard Madoff, perpetrator of an alleged Ponzi scheme, two of his investors have already sold multimillion-dollar condos at The Breakers for $8.5 million and $7 million, respectively, according to Nadine House, an agent who specializes in the oceanfront development. One alleged victim is also selling at the Sun & Surf development, according to agent Dorothy "Rusty" Engels-Gulden.

Write to Christina S.N. Lewis at christina.lewis@wsj.com