Silicon Valley realtor Ken DeLeon living large in the backyard of one of his properties.
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47 View Street, Los Altos, recently sold by DeLeon Realty. Sale price: $12,750,000
Photo: David Eichler
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171 Tobin Clark Dr., Hillsborough, recently sold by DeLeon Realty. Sale price: $8,788,888
Photo: Ryan Selewicz
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333 Atherton Ave., Atherton, recently sold by DeLeon Realty. Sale price: $13,500,000
Photo: David Eichler
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2275 Amherst Ave., Palo Alto. Sale price: $4,600,000 (This was Ken DeLeon's former home)
Photo: Bernard Andre
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Ken DeLeon, self-proclaimed "most interesting real estate agent"
Photo: Timothy O'Connell
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Ken DeLeon’s gray tweed vest matches the cabinets. That’s planned. So are the Asian noodles in the tiny takeout boxes (for the Chinese house hunters) and the chicken curry on the kitchen counter (for the Indian ones). So is the barista who’s frothing cappuccinos in the backyard—next to a guitarist strumming mellow Jimi Hendrix covers. And so is the 12-page high-gloss booklet that DeLeon Realty produced to promote this newly constructed $3.8 million five-bedroom mini-manse in Los Altos. “Most places just have a printout,” says one house hunter admiringly as she walks through the backyard guesthouse. “These people try to sell you a dream, a lifestyle. They really sell a product.”
This house isn’t tricked out merely as a courtesy to open-house trawlers. The whole scene is an overt exercise in psychological engineering: The kids munch noodles, the adults linger on the patio, the guitarist keeps up the genteel rocking during the open house’s extended hours—it’s a suburban house party! It’s all intended to create the impression that there’s high competition for this place, so you’d better step up fast and bid high. Everything that DeLeon does is calculated to maximize long-term profit, even if that requires spending audaciously in the short term. It’s a realtor’s creed to buy the most expensive car you can afford to impress your clients, but DeLeon takes that ostentatious art to new levels. Parked out in the street is his two-tone Rolls Royce; parked at the Palo Alto airport for aerial tours is his firm’s single-engine Cirrus jet.
At 6 foot 3, nerdishly handsome and perpetually tanned, DeLeon has figured out better than anyone else how to push property in Silicon Valley, one of the most expensive and rapidly appreciating markets in the country. According to the real estate website Zillow, eight of the Valley’s most significant cities—San Jose, Santa Clara, Palo Alto, Sunnyvale, Cupertino, Mountain View, Los Gatos, and Los Altos—have seen their median home sale price soar an average of 71.4 percent in the last five years, from $901,843 to $1,545,706. (By contrast, even skyrocketing San Francisco appreciated only 59 percent during that time.) DeLeon has brokered enough deals in this money-drenched area to become one of the most successful real estate professionals in America. In June, the Wall Street Journal named his 43-person company the country’s top-grossing real estate team. In 2014, it grossed a mindboggling $558 million in Silicon Valley house sales: That’s about the entire city budget of Palo Alto. That’s the quarterly earnings of Delta Airlines. That’s the global gross box office of Fifty Shades of Grey. “There are definitely a lot of people who envy his success,” says Mark Wong of Silicon Valley’s largest independently owned real estate brokerage, Alain Pinel.
DeLeon reached the pinnacle of American real estate by doing to tech argonauts what Levi Strauss did to the original 49ers: mining the miners. Nearly 90 percent of his buyers are Silicon Valley players, often flush with IPO cash. But what really sets DeLeon apart is his mastery of a unique market, the one for which every ambitious Silicon Valley agent is angling: the Chinese. Clients from the Asian superpower made up 32 percent of his brokerage’s buyers and 7 percent of its sellers in 2014 (DeLeon claims that the buyer number goes up to 50 percent if Chinese Americans are included). “That’s the holy grail of real estate,” says Brad Inman, a real estate industry watcher whose Emeryville company, Inman, publishes a widely read news website. “That’s like having stock options in Uber. Someone who’s figured out China has accomplished something very significant, because most people want to do it but can’t.”
This is not just a story about one realtor who tapped into a geyser of foreign money. It’s also about the world’s fastest-growing economy, an unstable one with tight monetary controls whose richest members want to diversify their assets and get their money out of the country. Chinese investment in Bay Area real estate started 25 years ago, when newly wealthy Chinese began to buy solid properties with the aim of installing their kids at Stanford or UC Berkeley. But in recent years, this group of millionaires—one of the fastest growing in the world—has picked up the pace, scouring the globe for high-end real estate, preferably on a nice plot of land (under the Communist government, land in China can be rented but not owned). Chinese buyers have spent more than $600 million on Bay Area real estate in the past two years, according to Real Capital Analytics. Brokers say that foreign buyers are 75 percent of the market here for properties topping $20 million—like the three Atherton mansions that have been swooped up since 2012 by a Chinese real estate magnate who is also developing luxury condo towers in SoMa. DeLeon is certainly not the only agent who has tried to capture these dream buyers. Agents in the Valley are taking night classes in Mandarin and traveling to luxury real estate shows in Hong Kong and on the mainland. Alain Pinel brokerage partnered with a Chinese adjunct to advertise its Bay Area listings on a Chinese-language website. But more than any other outfit, DeLeon and his team have cracked the code, and they’re not exactly discreet about it: At staff meetings, they celebrate each sale to a Chinese client by banging a miniature gong.
On a February Saturday in Cupertino, one of the most insanely appreciating cities in the country (home sale prices are up 81.7 percent since 2010), I join a group of buyers being toured around in DeLeon’s 13-seat Mercedes van with his name on the side and blue lights racing across the ceiling. Our guide, Lin-Lin Tsou-Otani, a former Cupertino High cheerleader, is waving figurative pom-poms about the merits of buying in her hometown. She asks if anyone knows what MLS stands for.
“The Multiple Listing Service!” a Hong Kong retiree in a NetApp windbreaker chirps, thumbing through a packet showing the day’s pickings. He recently moved here because his son is studying computer engineering at San Jose State. We roll by tourists posing next to the Apple logo at the company’s Infinite Loop office park, then pass some dull-beige $1.2 million townhouses and duller one-stories. Out of earshot of her potential clients, Tsou-Otani tells me, “There’s nothing super-great about them.” But she knows her audience, and they’re not here for architectural grandeur. The people seated before her (other than the fi lm crew that’s taping a promo and her husband and parents, who are here to fill the van with Asian faces) are seeking sound investments and top public schools. They include a middle-aged Chinese couple angling for their young son to get into the town’s prize district, one so coveted that it has inspired a peculiar brand of white flight in recent years as white families have been outcompeted by Asian ones. When we pass Lynbrook High School, Tsou-Otani announces its nosebleed score on the Academic Performance Index: 946 (out of a high of 1,000). “OK,” she says as we pass the public library, whose parking lot is full on a sunny Saturday morning, “we're just going to talk about race. Eighty percent of the Lynbrook students are Asians.”
The Google bus driver moonlighting as our chauffeur parks and places a step stool next to the bus, and we clamber out and don booties to tour an Eichler. “A lot of people don’t want an Eichler, but you’ll want the land the Eichler is on,” Tsou-Otani tells the buyers. Later on, she announces a one-story that’s yet to be built, telling me, “I will say, people coming from China, especially, love new construction. And they will pay a premium for new construction.”
The people on this tour have plenty of dough, but they aren’t the real ballers, the multimillionaires with a factory in Shanghai or Beijing. Those guys are looking for an offshore place into which to sink $5 million to $20 million, a brick-and-mortar bank account with Facebook neighbors and Stanford bragging rights. Often they don’t even do the house-hunting themselves: They’ll send an assistant to swoop up a $13.5 million Atherton mansion without ever setting foot inside—as happened last year on Atherton Avenue in the West Coast’s highest-income zip code. If they do come to California, DeLeon is ready to sate their swanky tastes, touring them around—Look at the bay! Check out the hills! Notice: no smog!—in his realty’s jet. Foreign nationals can get an EB-5 visa, which entitles them and their families to apply for a green card, by investing $1 million and creating 10 jobs—an easy enough mark to meet if you’re tearing down and building a Silicon Valley house. They pay in cash, often moved through a Hong Kong account to avoid the Chinese government’s ban on transferring more than $50,000 overseas each year. Sometimes the house just sits empty, a “ghost house” that irritates neighbors and planners. Maybe someday, in retirement, they’ll move in.
For obvious reasons, these buyers like to keep a low profile. “We’re doing everything we can to bury their identity; they don’t want the spotlight,” DeLeon says, adding that most buy using LLCs. Their reticence, and that of the equally publicity-averse tech buyers, explains why DeLeon turned down an offer to appear on Bravo’s Million Dollar Listing San Francisco—and why my requests to be taken on a plane tour or go clubbing with the high rollers or attend a holiday client party at the Palo Alto country club were politely rebuffed.
The high rollers—and the merely rich buyers in the van—are fueling a house-buying frenzy in Silicon Valley and its swanky San Mateo County environs. Nearby Palo Alto is one of the fastest-appreciating cities in the country: The value of residential real estate there skyrocketed 71 percent between 2010 and 2015. Palo Alto is a brand name for the Chinese: “It’s like buying a Louis Vuitton handbag,” DeLeon says. Yet, as he points out in the strategic-buying catalogs that he gives to his investment-savvy clientele, it’s still cheap by international standards: Property in Palo Alto averages $1,339 a square foot, a fire-sale price compared with $6,080 a square foot in Hong Kong or $4,509 in London.
Not that that’s any consolation to longtime Valley dwellers. The exorbitant cost of buying a house has made locals as frustrated as their priced-out San Francisco counterparts. At a Palo Alto open house, a dentist who emigrated from Taiwan some years ago complained to me that she can’t compete with Chinese money. An Asian-American man at another open house who said that he worked in finance lamented the impossible prices: “The market is Google, Facebook, and China.”
DeLeon, who’s helping stoke this white-hot market, knows that he’s not everybody’s favorite guy. Putting on his best cranky-dowager voice, he imitates a pedestrian who launched into him while he was filming a promo video: “I’ll never use you because my son can’t buy here. You’re driving up prices.” His standard response: “Your home is worth a lot more because of me.” DeLeon calls what’s going on in Silicon Valley “as close to an economically perfect market as exists in the nation”: limited supply, sky-high demand, and nothing sitting on the market for longer than a week.
After Tsou-Otani wraps up the Cupertino tour, dropping off the buyers near their cars in a senior center parking lot, I visit DeLeon at a Palo Alto open house. Massive shoots of bamboo are perched on the front porch (another Chinese-friendly touch). The decor typifies DeLeon’s style of renovating and staging homes for sale: hardwood floors, stainless steel appliances, high ceilings, and tons of windows. It’s modern but neutral, to appeal to the widest audience possible.
DeLeon, clad in a custom-made three-piece suit, is courting people in the kitchen. He says that he was out dancing in San Francisco until 5 a.m. (at 43, he’s recently divorced and sees his four children on weekends) but doesn’t seem fazed by his late night: If anything, he’s even more energetic than usual. As he talks in his rapid-fire manner, his eyes flick around the room, sizing up who’s coming through. Buyers are DeLeon’s passion, the people to woo and impress. In this city, he explains, you can largely typecast by age and race. The Indians and the Chinese with kids are looking to buy; the older white people are usually curious neighbors—but the guy in the shorts with the scruffy hair could be a billionaire. Conversation turns to an aging Palo Alto bungalow with cracked walls and a mold infestation that DeLeon sold last year—what most would consider a teardown. A local woman ended up buying and renovating it. “A Chinese buyer would have torn it down,” DeLeon says. “But we honkies are cheap—we want to preserve homes that shouldn’t be preserved.”
DeLeon’s aura of self-confidence borders on self-caricature, more ridiculous than arrogant. His shtick—he once outfitted himself as a Vegas-era Elvis for a commercial and is fond of one-liners like “I believe in the Church of Ken”—endears him to some clients and repels others. When I first met him, in his office in a converted bank building on El Camino Real near downtown Palo Alto, commercials featuring him were playing in the lobby. He told me with a kidding-not-kidding wink, “I’m the most interesting real estate agent you’ll ever interview.”
There are various keys to understanding DeLeon, with his un-PC demeanor and his irrepressible conviction that he will always come out a winner. Start with the fact that he was reared in Boca Raton, the moneyed South Florida enclave where the likes of Donald Trump and Rush Limbaugh have had second homes. DeLeon grew up in a ranch house (“nothing amazing”), the son of a city auditor mother and a math professor father who sat down to do nightly proofs with him. A straight-A student, DeLeon played tennis and surfed on summer break, ducking team sports: “I was never one for groupthink,” he says. Life was going nothing but Ken DeLeon’s way until his only sibling, his 17-year-old older sister, took her own life. “It was only me and her, so it was really hard,” he says. “My sister’s fatal flaw was letting other people define her life. Her death was because of what people, in this case her own boyfriend, thought of her. So I said that I’m going to proclaim my own greatness and not care what other people think about me. That leads to mediocrity or, in my sister’s case, death. It’s about personal growth, not popularity.”
DeLeon attended UC Santa Barbara, mostly for the surfing, then headed to UC Berkeley for law school. He liked the Bay Area’s progressive vibe, but his main interest in getting a law degree was to springboard himself into business. That plan was temporarily derailed when he was 26, back in Boca Raton visiting his parents after passing the California bar and signing on at a Silicon Valley law firm. As he was walking in town with his father, a motorist hopped the curb and smashed into him, hurling him into the air, through the windshield, and into the passenger seat, where he was repeatedly punched by the driver as the car hurtled pell-mell through town. He says that he was sure he was going to die.
DeLeon is adept at packaging his life into the language of inspirational self-help myth, to be doled out, often along with bullet-pointed slides, in presentations to students at Palo Alto High School, or before businessmen at the Palo Alto country club, or in front of 2,500 real estate professionals at a Vegas conference (usually with the tagline “Why do bad things happen to sexy people?”). As he tells it, it was while he was recovering in a hospital bed that he realized that the purpose of his life wasn’t just to be happy, as he’d previously thought. His focus shifted, he says, to “growth, evolution. I wanted to actualize my potential and help those around me actualize theirs.”
DeLeon became a lawyer working on intellectual property. Married and with four young children in Palo Alto, he was making a decent living but felt restless. He was a good lawyer, but he realized that he wasn’t ever going to be the best lawyer. Nor were there any innovative business models he could apply to the legal profession. Where there was room to really beat others, to engage in a little creative disruption and make insane amounts of cash, was in real estate. DeLeon, who had already made a hobby out of flipping fixer-uppers, signed on as a rookie agent at Coldwell Banker, focusing on Palo Alto houses. Diagnosed with lymphoma in 2008, in his mid-30s, he shaved his chemo-thinned hair into a mohawk and continued to sell, joking with his clients that he would fight just as hard to get them a house as he was fighting cancer. As he zoomed around to Peninsula open houses in his Mercedes with “SXYRLTR” vanity plates, he began taking mental notes on the industry’s shortcomings—shortcomings that he believes start with other real estate agents. Noting that most agents just fall into the business, he goes so far as to call them “not bright.” (When I note that he’ll piss off his competitors with this appraisal, he replies, “It’s the truth,” then softens his statement to “not as smart as lawyers.”) By the time that they’ve acquired enough expertise to think about reinventing the industry, he says, they’re making so much money that they don’t have to. And they dilute their expertise, chasing deals all the way from San Francisco to San Jose.
In postrecession 2011, DeLeon says, he grossed million in sales to tech buyers like Facebook executives and high-end venture capitalists, ending as the top-grossing agent in the country—the first time that a Bay Area agent had done so. He also noticed that the Chinese were starting to buy everything in sight. Later that year, he opened his own agency with real estate tax attorney Mike Repka, who became the first of eight employees. To drum up more attention, DeLeon placed a series of hokey ads in which he posed as a member of the Village People and Elvis. He attracted a bevy of tech buyers, but as “a white guy who didn’t speak Mandarin,” he wasn’t tapping the region’s other gold mine, the Chinese. To become the top Chinese broker in Silicon Valley, he needed a fixer, a cultural emissary. That’s when he met Kim Heng.
Heng grew up in the oil field deserts of northwestern China, emigrating in the 1990s on a student visa to study at Johns Hopkins. After a stint selling Dell computers in Texas, she decided to up the ante and sell homes. She honed her chops in Austin before moving up to the bigger, more lucrative pond of Silicon Valley in 2010. That year, she stuck a Post-it on her printer to motivate her: “I will earn $100,000 a year within five years”—enough to comfortably raise her nine-year-old son as a single mom.
Heng sent a résumé to DeLeon after seeing the agency’s ads plastered on bus shelters up and down El Camino Real. She’d visited an open house, had seen the food spread and the staging and the coffee cart, and was impressed: She’d finally found an agency as ambitious as she was.
Repka hired her on the spot. Her job would be to bring in the Chinese high rollers. “If you’re successful, we’ll all be successful,” Repka told her. Heng is a polished saleswoman and—not insignificant when you’re appearing in Chinese-language TV and radio spots—beautiful, with a sonorous voice. She filmed commercials in Mandarin and crafted ads for Chinese newspapers featuring the Great Wall in a mashup with the Golden Gate Bridge. DeLeon, Repka, and Heng began traveling to luxury real estate showcases in Shanghai and Beijing. For high-end listings aimed at big spenders who buy sight unseen, the agency would spend $9,000 on professional videos, using a drone-mounted camera to shoot aerial footage. It all paid off, big time. And DeLeon isn’t letting up. In June, he opened a brick-and-mortar agency in Beijing, to which Heng will travel four times a year to work with local agents.
Several things set DeLeon’s business apart from that of most other realtors. For one, he offers his sellers one-stop shopping—his agency covers the inspections, plus up to $50,000 in marketing, designers, and handymen for the higher-end properties. “That amount of money isn’t rational,” he says, “but we know that they make another $200,000 to $250,000 because of that marketing.” In return, DeLeon doesn’t offer discounts on the 5 to 6 percent commission that he charges sellers, money that he splits with the buyer’s agent.
But the biggest difference between DeLeon Realty and the rest of the real estate industry is the brokerage’s employment model. Almost all real estate agents are independent contractors working on commission, but DeLeon’s are employees. The agents are paid in the ballpark of $100,000 to $110,000, plus annual bonuses, plus perks—like a Princess cruise in January for themselves and a companion. One employee, Chris Fisher, believes that it’s a better deal for newer agents who otherwise wouldn’t have as many leads. “A new or average agent, we’re competitive, but a 10-plus-years agent, it’s more to their benefit to be independent.”
The only person who gets the commissions on sales is DeLeon. “Someone has to support everybody,” he says. “I’m taking all the risk and getting all the reward.” Before he makes a profit, he must fund his $10 million overhead (a more than $4 million payroll and up to $6 million in marketing). He describes his profit margin as 15 percent of the 2.5 to 3 percent commission that his company receives per sale, which still leaves him a rich man, albeit not by Silicon Valley CEO standards (15 percent of a 2.5 percent commission on $558 million in revenue is approximately $2 million).
In a less radical departure from industry norms, DeLeon’s agents work on either the buyer or the seller team—never both. Repka explains why: “Often a seller’s agent meets an unrepresented buyer at an open house and tells her, ‘If you go through me, I’ll tell the seller that no one else is interested and get it for you at a lower price.’ So the buyers get a better deal, but the sellers get messed over.” DeLeon heads the buyers’ team, which accounts for 45 percent of his company’s sales. Repka, whose tax expertise made him the logical choice to lead the sellers’ side, says, “I don’t care if Ken comes in with an offer or Coldwell Banker comes in with an offer. They’re all treated the same and leveraged against each other. But the client doesn’t have to worry about me getting paid more if one deal goes through versus the other.”
Heng is also an employee, but she certainly doesn’t need the Post-it note anymore. When she first moved to the Bay Area, she almost withdrew her son from his $425-a-month Chinese classes. Now she hires a private tutor who comes to their Palo Alto home, though she insists that she’s much more laid-back than many moms she’s met in town. “I don’t have time to be a tiger mom,” she says. “I’m spending all my weekends working with DeLeon.”
When the Wall Street Journal named DeLeon’s firm the nation’s top-grossing real estate team in June, not everyone was convinced that they, too, should start worshipping at the Church of Ken. First, there’s the fact that DeLeon’s team is gigantic—43 employees—much bigger than the average real estate team. The second-place title went to two Beverly Hills agents; third to a team of five in Miami Beach.
Then, there’s the boom. “DeLeon is in the hottest real estate market probably anywhere in history,” says real estate publisher Inman. “If you’ve been a realtor in Palo Alto for the last 20 years, you can put a cup out on University Avenue and you’ll make money. So sometimes agents get this overwhelming view of themselves, when the externality of an incredible housing market is about 60 percent of their success.”
More disconcerting, DeLeon is surfing an international market that got a little choppier in August, when the yuan tanked and the Chinese stock market crashed. But realtors who work with Chinese buyers say that the downturn might actually benefit DeLeon, because the highest rollers may be more motivated than ever to stash their money elsewhere. And if the Chinese market dries up, DeLeon will move on. His agency has already been advertising in Indian media and traveling to Indian tech centers as well as Vietnam. In two to three years’ time, he wants to enter the San Francisco market. “We’re already having clients asking for it.”
Back in the kitchen at the Los Altos open house, I ask DeLeon what his endgame is. He doesn’t need any more money: He lives in a $7 million house in Palo Alto, has four investment properties, and has flipped three other houses in the last four years at a significant profit. He’s hired a filmmaker to make a documentary about himself. He says that he wants to do more public speaking and ramp up his charitable giving: In 2014–2015, he donated $200,000 to local schools and adolescent counseling groups. And he wants to build houses, to completely vertically integrate the business.
But in the end, DeLeon hasn’t come so far from the days when he worked on proofs with his dad after school in Boca Raton. He’s still keeping his eye on the numbers. He even gets his custom suits tailored in Hong Kong. Real estate there may be astronomically more expensive than in the United States, but tailoring is half the price.
Originally published in the November issue of San Francisco