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Transcript of Appraising Luxury Homes
Appraising Luxury Homes
Presented By: Tim Wilmath, MAIHillsborough County Property Appraiser’s Office
Prepared For: Florida Chapter IAAO Fall ConferenceClearwater Beach, FloridaDecember 1st, 2005
Introduction
Luxury Home Statistics
Market Approach
Conclusion
11
22
33
44 Cost Approach
Obsolescence – Sometimes its obvious55
Appraising Luxury Homes
Luxury Home
Statistics
What is a Luxury Home?
How Many Million Dollar homes in Florida?Source: U.S. Census Bureau 2004 American Community Survey
...................................> $1,000,000
...1,034,386........................62,765
How Many Million Dollar homes in the United States?
Luxury Home
Statistics
Top 10 Counties with Million Dollar Homes in Florida
#1 - Palm Beach County..............................................................9,558#2 - Miami-Dade County.............................................................7,182#3 - Broward County...................................................................5,704#4 - Sarasota County...................................................................4,441#5 - Pinellas County....................................................................2,935#6 - Lee County...........................................................................2,180#7 - Hillsborough County............................................................1,778#8 - Orange County.....................................................................1,701#9 - Brevard County....................................................................2,180#10 - Duval County.....................................................................1,346
Luxury Home
Statistics
2003 Total 2004 Total
Sales Volume Sales Volume
California 1 $12,624,537,202 $19,958,968,283 58%
Florida 2 $2,008,970,243 $3,037,526,890 51%
Massachusetts 3 $1,362,212,903 $1,997,908,899 47%
Illinois 4 $990,207,302 $1,320,085,874 33%
Connecticut 5 $839,105,004 $1,315,635,586 57%
New Jersey 6 $928,679,672 $1,241,335,774 34%
New York 7 $590,013,162 $865,705,111 47%
Washington 8 $452,174,738 $684,680,735 51%
Hawaii 9 $469,544,650 $646,087,234 38%
Arizona 10 $353,281,162 $488,318,097 35%
Source: www.coldwellbankerpreviews.com* Home sales in excess of $1,000,000
TOP 10 STATES WITH THE MOST COLDWELL BANKER
LUXURY HOME SALES BY DOLLAR VOLUME
JANUARY 1 to DECEMBER 31, 2004
% ChangeState 2004 Rank
Luxury Home
Statistics
“Florida had 4,698 million-dollar home sales in 2004”
Luxury Home
Statistics
HOW MANY HOMES IN FLORIDA ARE CURRENTLYFOR SALE WITH AN ASKING PRICE OF:
Over $5,000,000?
Over $10,000,000?
Over $20,000,000?
Over $30,000,000?
............................................560
............................................120
............................................48
............................................5
Source: Florida Association of Realtors
Luxury Home
Statistics
Top 5 Most Expensive Homes Currently For Sale in Florida
# 5. Located on Star Island in Miami. (home owners include Shaquille O'Neal and Gloria Estefan).
The home contains approximately 19,500 square feet with 8-bedrooms and 8 baths on 2 acres.
Other features:a gym, outdoor tennis court, indoorracquetball court, pool and 250 feet of dock space, and a separate guesthouse.
The home sold for $18,800,000 in 8/2004.
Asking Price?
$32,000,000
Luxury Home
Statistics
Top 5 Most Expensive Homes Currently For Sale in Florida
# 4. Located in in Palm Beach
This new home contains 16,600 sf of living area, with 8 BR/11.3 baths with 225 feet of beachfront on the Atlantic Ocean.
The foyer contains a cascading fountain and is topped by a 25-foot-high rotunda. The master suite occupies an entire wing of the second floor. The property also contains tennis courts, a putting green, guesthouse, and yacht dock.
Asking Price?
$33,000,000
Luxury Home
Statistics
Top 5 Most Expensive Homes Currently For Sale in Florida
# 3. Located in Palm Beach
This Italian Renaissance-style estate, known as the “Villa di Venezia” was originally built for Harold S. Vanderbilt.
Built in 1929, the home contains over 20,000 sfof heated area, 9 bedrooms and 9+ baths, and 3.7 acres on the Atlantic Ocean.
The property was purchased by Veronica Hearst widow of billionaire newspaper heir Randolph Hearst) in June 2000 for $29,800,000.
Asking Price?
$36,000,000
Luxury Home
Statistics
Top 5 Most Expensive Homes Currently For Sale in Florida
# 2. Located in Palm Beach.
“Palazzo Serena” contains contains 17,000 sf of living area on 6.5 acres with 380 feet on the Atlantic Ocean in North Palm Beach. Features include a two guest cottages, tennis court, beachside gazebo, swimming pool with waterfall and spa, and terraces, and a wet bar hidden behind a built-in bookcase in the library.
Asking Price?
$36,500,000
Luxury Home
Statistics
Top 5 Most Expensive Homes Currently For Sale in Florida
# 1. Located on Star Island in Miami
This home contain over 20,000 sf with a total of 15 bedrooms and 17 baths. The site contains 2 acres along BiscayneBay.
Features include:A 10,000-bottle wine cellar. A gun safe room secured with a fingerprint scanner, library walls clad in silk, and a hand-painted murals on the ceilings. The swimming pool features custom mosaic tile and views of Biscayne Bay.
Asking Price?
$50,000,000
Luxury Home
Statistics
Highest Price ever paid for a Single Family Homein the United States occurred in October 2004
Located in Palm Beach.
The “Casa Aptava” contains over 20,000 sfbuilt in 1923. The main house consists of 10 bedrooms, 14 baths, and 2 pools. The homealso includes 7.43 acres of land, with 400’ on the Atlantic Ocean and 200’ along the Intracoastal Waterway.
The property was designed by Abram Garfield, son of former U.S. President James A. Garfield.The sellers were Ron Perelman, CEO of Revlon and actress Ellen Barkin.
Selling Price?
$70,000,000
Luxury Home
Statistics
Luxury Home
Statistics
2nd Highest Price ever paid for a Home in Florida
This property, the “Maison de L'Amitie” is located in Palm Beach. In December of 2004, Donald Trump purchased the residence at auction.
The home contains over 43,000 sf of living area,with sunken gardens, pool and fountain, tennispavilion, steam room, an art gallery,a conservatory and a beauty/barber salon.
The renovation of the property is being led by “The Apprentice” winner Kendra Todd. Trump intends to list the property for sale at an asking price of $125 million dollars.
Selling Price?
$41,350,000
Luxury Home
Statistics
Who are the buyers for these Luxury Homes?
Source: Coldwell Banker Previews International
31% are cash buyers
68% are considered “New Money”
#1 profession - “Large Business Executive”
67% are between the age of 35 and 55
88% of luxury homebuyers are married
Designer kitchens are the top priority
Valuation Approaches
1. Sales Comparison Approach
2. Income Approach
3. Cost Approach
Sales ComparisonApproach
The sales comparison approach is a method whereby the appraiser estimates value by comparing the subject to similar properties which have recently sold. Adjustments are then considered for various applicable factors.
Sales ComparisonApproach
If you are appraising million dollar homes
in Palm Beach, you got it made.
Sales ComparisonApproach
“Billionaire’s Row” – Palm Beach
“Billionaires Row” Single Family Sales> $5,000,000 from 2004 to 2005
Address Sale Date Price Heated Area Price per SF
1300 S. Ocean Blvd. Oct-04 $70,000,000 21,100 $3,317.54
1960 S. Ocean Blvd. Jan-05 $33,600,000 20,219 $1,661.80
1290 S. Ocean Blvd. Jan-05 $32,000,000 17,871 $1,790.61
1370 S. Ocean Blvd. Sep-04 $22,400,000 17,894 $1,251.82
1125 S. Ocean Blvd. Aug-04 $11,500,000 8,643 $1,330.56
500 S. Ocean Blvd. Jul-05 $11,000,000 8,758 $1,255.99
1920 S. Ocean Blvd. Mar-04 $10,275,000 8,706 $1,180.22
700 S. Ocean Blvd. Jul-04 $9,450,000 4,575 $2,065.57
1045 S. Ocean Blvd. Sep-04 $8,908,720 6,263 $1,422.44
1020 S. Ocean Blvd. Jan-05 $8,800,000 5,999 $1,466.91
3090 S. Ocean Blvd. Feb-04 $8,450,000 7,941 $1,064.10
1040 S. Ocean Blvd. Jul-05 $7,665,000 4,360 $1,758.03
1902 S. Ocean Blvd. Jan-05 $6,600,000 5,982 $1,103.31
1740 S. Ocean Blvd. Nov-04 $6,400,000 8,292 $771.83
516 S. Ocean Blvd. Dec-04 $6,250,000 5,071 $1,232.50
Average 9,802 $1,481.23
Sales ComparisonApproach
So what do you do if you have no sales?
Listing Search Tools
Sales ComparisonApproach
LuxuryRealEstate.com
LuxuryHomes.com
DuPontRegistry.com
UniqueHomes.com
PlanetRealtor.Com
Sales ComparisonApproach
Sales ComparisonApproach
Sales ComparisonApproach
Sales ComparisonApproach
If you have no recent luxury home sales in your market –
.....Go Back in Time
Sales ComparisonApproach
If you have noluxury home sales (even older ones) –
.....Go out geographically
Sales ComparisonApproach
Resist the temptation to use “standard” homes as comps for luxury homes!
≠
Median Price Per SF of Waterfront Single Family Homes in Florida
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
$450.00
2000 2001 2002 2003 2004 2005
< $1 million Sales Price
>$1 million Sales Price
2005 Median Price per SF Waterfront non-Luxury Home - $168.73
2005 Median Price per SF Waterfront Luxury Home - $392.87
Sales ComparisonApproach
2005 Median Price per SF Non-Waterfront non-Luxury Home - $115.62
2005 Median Price per SF Non-Waterfront Luxury Home - $267.71
Median Price Per SF of Non-Waterfront Single Family Homes in Florida
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
2000 2001 2002 2003 2004 2005
< $1 million Sales Price
>$1 million Sales Price
Sales ComparisonApproach
CostApproach
If you have no sales whatsoever – Go to the Cost Approach
1. Replacement Cost
2. Depreciation
3. Land Value
CostApproach
Marshall and Swift Cost Options
CostApproach
CostApproach
Standard single-family residences
High-Value residences
CostApproach
According to Marshall & Swiftthe Economic Life of a High Value Residence is 65 years
Paul Revere boughtthis house in 1770, when it was already
90 years old!(built in 1680)
CostApproach
A luxury home’s land
value is straight-forward
using comparable sales.
Cost
Approach
The Cost Approach requires an accurate estimate of depreciation – especially if you have no help from the Market Approach.
Cost
Approach
Two Most frequent appeal arguments for Luxury Homes:
1. Functional Obsolescence - Too large – Super-adequate - Over-improved for neighborhood, too lavish – no buyer would pay cost for extras
2. External Obsolescence – No buyers exist for this home
Cost
Approach
The 66,000 sq. ft. compound contains a 60 foot long swimming pool with underwatersound system.
The property is assessed at $140 millionresulting in taxes of $1.1 million per year
Functional
Obsolescence
In 1985 Donald Trump purchased “Mar-A-Lago” in Palm Beach for $7,000,000. The following year, the Palm Beach Property Appraiser assessed Mar-A-Lago for $11,500,000.
You’re Fired!
Palm Beach County Property Appraiser v. Donald Trump 549 So. 2d 1098; (1989)
“The difference between the appraisals was the additionaldeduction from the market price for the “Superadequacy” of Mar-A-Lago.
It was not for the trial court to consider which method was superior as long as the property appraiser’s valuation took into consideration the statutory factors”
Functional
Obsolescence
Price Per SF of Palm Beach Home Sales
$0.00
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
$3,500.00
4,360 5,071 5,982 6,263 8,292 8,706 17,871 20,219
Price per SF
Includes 15 waterfronthomes sold in Palm Beach for > $5 millionbetween 2004 - 2005
Functional
Obsolescence-Size
Price Per SF of Palm Beach Home Sales
$0.00
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
$3,500.00
4,360 5,071 5,982 6,263 8,292 8,706 17,871 20,219
Price per SF
Linear (Price per SF)
Functional
Obsolescence-Size
Includes 65 homessold in Avila S/Dbetween 1994 - 1999
Price per SF of Avila Home Sales 1994 - 1999
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
Price per SF of Avila Home Sales 1994 - 1999
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
External
Obsolescence
“No buyers exist for this home”Turnley v. City of Elizabeth 68 A 1094 (NJ 1908)
“We are not disposed to give much force to the argument that because there are very few actual buyers for so costly a residence the valuation to be placed upon it under the statutory criterion should be correspondently depreciated.
The criterion established by the statute is a hypothetical sale; hence the buyers therein referred to are hypothetical buyers, not actual or existing buyers”
Cost
Approach
Obsolescence should be obvious!
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
External
Obsolescence
Functional
Obsolescence
Functional
Obsolescence
Cost
Approach
A Quick Review
Luxury Home
Statistics
Highest Price ever paid for a Single Family Homein the United States occurred in October 2004
Sold for$70 Million!
Sales ComparisonApproach
Sales ComparisonApproach
If you have no recent luxury home sales in your market –
.....Go Back in Time
Sales ComparisonApproach
If you have noluxury home sales (even older ones) –
.....Go out geographically
Sales ComparisonApproach
Resist the temptation to use “standard” homes as comps for luxury homes!
≠
Median Price Per SF of Waterfront Single Family Homes in Florida
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
$450.00
2000 2001 2002 2003 2004 2005
< $1 million Sales Price
>$1 million Sales Price
Luxury homes sell for more per square foot than standard homes!
Sales ComparisonApproach
CostApproach
Large doesn’t automaticallymeanobsolete!
Functional
Obsolescence-Size
Price Per SF of Palm Beach Home Sales
$0.00
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
$3,500.00
4,360 5,071 5,982 6,263 8,292 8,706 17,871 20,219
Price per SF
Linear (Price per SF)