Laughlin Phillips, the director of the Phillips Collection of art, has sold his family's 20-room Northwest Washington mansion to construction executive John Driggs for $8.75 million, the most expensive residential real estate transaction ever recorded in the District. Driggs, president of a Capitol Heights highway construction and site-development firm that bears his name, completed the purchase last month of the 57-year-old estate and its surrounding 16.2 acres, paying $6 million in cash and financing the remaining $2.75 million with a one-year loan with an interest rate of 9 percent from Phillips. The price of the Phillips estate, one of a dwindling handful of large, baronial estates in the District, easily tops the previous record here: West Virginia Sen. John D. Rockefeller's $6.5 million purchase last March of a seven-bedroom estate on 15.9 acres at 1940 Shepherd St. NW. Driggs said he plans to resell the white-columned, Georgian-style mansion at 2101 Foxhall Rd. NW and three to five acres around it, and develop the remaining acreage into an enclave of 20 to 30 detached homes each costing $750,000 or more. Driggs said the estate already has residential-use zoning that would permit construction of as many as 80 to 90 homes. "We're still working on some economic studies of what to do," Driggs said. "But we hope to start construction within 90 to 120 days. The house will remain intact. We've been reluctant to sell the house until we know how much land [can be used for development] and the configuration of that land," he said. In seeking to redevelop the estate, Driggs becomes the latest in a series of developers to buy large estates in Northwest Washington in order to build expensive homes on relatively small lots. The upscale Foxhall Crescents development, which is near the Phillips property, was carved out of an estate once owned by the late vice president Nelson A. Rockefeller, while the Hillandale estate -- once owned by the Archbold family, members of which were among the heirs to the Standard Oil fortune -- was transformed into an elaborate town-house development. At both Hillandale and Foxhall Crescents, sales of the new homes, often costing $400,000 and more, moved slowly, with Hillandale eventually falling into bankruptcy before the development was taken over by the First Savings Bank of Arkansas and Kettler Bros., a major suburban Washington development company. Despite his plan to build homes that would be even more expensive than those at Foxhall Crescents and Hillandale, Driggs said he does not anticipate problems in selling them. "I think [the two other developments] caught the market at a bad time" in the worst days of the 1982 recession, he said. "There's a decent market above those [$400,000] prices. It's a different time. It certainly has to be one of the most distinctive areas of the city." The Phillips estate was built in 1929 by Laughlin Phillips' parents, art collector Duncan Phillips, who died in 1966, and artist Marjorie Phillips, who died in June. The Washington of the estate's early days was vastly different: Laughlin Phillips said he can remember eggs being sold in the neighborhood by vendors and farm animals crossing Foxhall Road. Now, the tree-filled community is dotted with some of the District's most elaborate homes, four of which are among the top 10 residential properties in the city in terms of assessed value. Duncan Phillips, heir to part of the Jones & Laughlin Steel fortune, used his inheritance to start the family's collection of Van Goghs, Renoirs and other art works that became the Phillips Collection, now housed in a museum at 1600 21st St. NW. The Phillips family lived there until the art collection grew so large that the family needed to build the Foxhall Road estate. The elder Phillipses used the estate's reddish-brick mansion, known as Dunmarlin -- for DUNcan, MARjorie and LaughLIN -- as a salon where they entertained diplomats, politicians and other well-known personages of the day. A luncheon guest was just as likely to be Walter Lippman as Henri Matisse. In recent years, Marjorie and Laughlin Phillips sought to develop part of the land surrounding the 12-bedroom, 15-bathroom mansion, at one point seeking city permission to build 70 homes on the site. Some of the family's neighbors objected to the scope of the plan, and Phillips said it was scaled back to 63 homes. The plan, however, was never carried out. "The recession hit," he said. "There was heavy building in the area. Those didn't do well, which made it hard for us to market [the property]. "It all changed when mother died," he said. "It became attractive to sell the whole thing."