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The Art of Puffing. Puffing is a real test on the state exam and we Realtors have a license to puff. Puffing means we can say that your home is the best or your microwave oven is fantabulous and beats any out there. Nothing wrong with that. We all actually puff. I just explained it on air. Which brings me to the value of Mar-a-Lago.
Last week, I settled a local residents question on the value of paved roads. I get questions like this all the time. This week the question of “what is the valuation of the estate?” was asked of me but I had to do it on prime time.
I was in Austin Texas at a Zillow conference this week and CNN wanted me on at 10pm in the first slot. I’ve done live locally in Studio and on Fox Business in a daytime setting out of studio. This was different. I had to go to a small studio with a backdrop of the Texas Capital. The room is pitch black with the camera pretty much in your face with 2 glaring lights. They wouldn’t show me the monitor and the reporter, Abby Phillips, because of a 15 second delay so you just have to imagine she is in front of you and answer from your earpiece.
The question Abby wanted to know was what is the valuation of Mar-a-Lago? You can watch the clip here.
My perspective, as a “cold show me the money Realtor”, is selling to the highest bidder….
Now, Mar-a-Lago was in the news because its valuation of being between 18 – 33 million was being questioned as too low. Well, the news is that most of us have valuations well under the real value. Some of that is because the whole state of Florida would go up in a state of arms if taxes were at actual value. Sometimes someone calls me and complains about their property tax. I look it up and often its 50% less than market value. I tell them they are getting a deal and they walk away in a better mood. Homestead property can only go up 3% a year (way under appreciation and recent inflation in 2020 and 2021). Homeowner property that is not homesteaded has a 10% limit and some of those properties are now seeing taxes jump at that rate.
Mar-a-Lago is now in that category of seeing taxes go up at 10% which it did last year. Still, the baseline of $37,000,000 is insanely low. There are plenty of examples of Palm Beach Estates selling north of $100,000,000 on prime lots. The owner of Mar-a-Lago isn’t going to complain about their taxes being too low. Same as me and you. Please don’t throw tomatoes at the monitor if you don’t like my answer. First, it’s your monitor and not me live. Also, it could break the screen and bruise a tasty tomato. I’m just answering as the simple Real Estate expert.
On the flip side, is it worth a billion?!? Well, yes and no imho. (Again, everyone hot into politics, please don’t throw tomatoes at the simple Realtor). The best use of a property is what drives the highest value. And the best use of the property here is to bulldoze it. Blasphemy, some of you might say and me included as it’s a historical estate. I’ll explain though.
Rush Limbaugh’s mansion and estate recently sold for $155,000,000 million. It is 2.3 acres. The Surfside land sold for $120,000,000. That was 2 acres. If $60 million an acre is the land value, take 17.5 acres that Mar-a-Lago sits upon X 60,000,000 and you are north of a billion dollars. I’ll have developers in a bidding war to construct super luxury condos or two dozen lavish mansions before the end of the day. And that’s not puffing!
However, in 1969, it became a national historic landmark. There are over 2,500 national landmarks in the United States. Those landmarks are protected. The Statue of Liberty and The Hearst Castle and The Alamo (I just visited) are examples and remember, as Sam Houston said, you can’t tear them down. I suppose one could get a variance. I’m not going there!
Therefore, let’s assume, the end Buyer is purchasing the house and resort. If you are buying the house (37,414 square feet), ocean view (across the street), Intracoastal, and an incredible piece of property that’s a lot to consider. Still, the highest sale in Palm Beach Island to date is $170,000,000. There is extra value because of the club mixed use. So, most buyers have to look at the business part of it and selling it to a player in that business, especially for reciprocal events. And even if y’all (I’m still in Texas as of writing this) did me a solid and Go-Funded me the monies to buy Mar-a-Lago, I couldn’t charge as much for initiation and fees. That’s because no one would be interested in hobnobbing with me other than our dog and cats these days. Taking just the valuation of the estate, my best estimate is between $350,000,000 – $500,000,000 with a probable selling price of $375,000 – $400,000,000 as of today.
However, However, Ken Griffin has compiled parcels of over 25 acres of direct ocean in Palm Beach and is constructing a compound of over 50,000 square feet of new construction. Jeff Bezos just 3 days ago announced he had bought two lots in Miami over $80,000,000 each. So, with new comps, we might be heading in the direction of the Billion Dollar Home. Maybe the value will be north of a Billion?!? As they say, it just takes one.
Jeff Lichtenstein, originally from Chicago, got his start in the home furnishings textile business where he traveled over 35 weeks a year selling fabrics. After the family business was sold, Jeff moved to Florida and became a real estate agent. Today he is the owner and broker of Echo Fine Properties, a luxury residential brokerage voted best brokerage of the year. Jeff manages a non-traditional model of real estate that mimics a traditional business model. Echo has 80 agents, an average of one million dollars per transaction and over 500 million in annual sales. Between traveling for work and annual family trips to national parks with his wife and 2 now adult children, Jeff has visited 49 states. He is also one of the few Chicago White Sox fans you’ll ever meet. Some publications he has been quoted in.
Author of business & leadership book How Making a Sandwich Can Change Your World – The Amazing Success of the PB&J Strategy – Available to Buy Now!
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