It is a given that buyers of celebrities’ properties are often willing to pay more than a listing agent would normally advise as a listing price. The celebrity-owner or even “slept here” name can up the cost by millions of dollars.
Real estate agents are first taught the top determinant of a property’s value–location, location, location. Experience adds a property’s sale value equals only what a buyer is willing to pay for it, which in the cases of the unique and luxurious can be extremely difficult to estimate. Add the celebrity name and it becomes a crap shoot.
Movoto Real Estate, a national online real estate brokerage, ran a blog with an artistic infographic on 12 Celebrity Homes That People Probably Paid Too Much For. One of their examples was the sale of Leonardo DiCaprio’s Malibu house at $6,589 per square foot versus the average sold square foot price in the area at $3,451, “a 91% inflation simply because he slept there.” Read the DiCaprio article below for more details about that sale and pictures.
Realty Today defines celebrity home price inflation as “when a home, which was once inhabited by a celebrity, costs way more than it is worth.” This needs a little fine tuning as again real estate agents know a property is worth whatever someone is willing to spend for it if they can come up with the funds.
It is not a given that a famous name will draw a higher price. Some celebrities try but find themselves de-listing and re-listing or remodeling and re-listing time and again before a buyer comes to the table. Some examples are Billy Joel, Bon Jovi and Katy Perry. In two Los Angeles cases, Perry’s home sold at 27 percent below area average asking price; Michael C. Hall’s for 17 percent below.
There do not seem to be any studies done about whether the celebrity value carries on into future resales of a property. In the case of a legend or a historic figure like John F Kennedy, the name can buy added value for generations. For temporary stars who have faded into B or C lists in popularity, it may take longer to find an enduring fan with enough cash to meet the inflated price.
In some instances, celebrity names tied to a property make it more difficult to live in as the common people continually come nosing around taking pictures and it can become more difficult to sell. Not all celebrities will allow their names to be linked in property transactions although the neighbors may be aware of the ownership. Limited Liability Companies (LLCs) are used frequently to keep the celebrity property owner or buyer’s name anonymous. A giveaway is when the address listed for the LLC is identical to the celebrity’s current address.
Good real estate agents will continue to consider the property location and condition and do a comparative market analysis of any similar properties which have sold in the area. Then the experienced will add in that fudge factor for what they hope the celebrity name may add to the price.
If there is not enough interest in the property in a short period of time, some decorating and remodeling and/or staging of the furnishings may be encouraged. Finally price adjustments are made. A buyer could be found on the first day the property is listed or it may take years. That’s the reality of the realty world, celebrity or not.
The video is of the top 10 celebrity homes as of November 2013 by Hollywood Top10. Note that number one Aaron Spelling’s $150 million mansion sold to Petra Ecclestone, 22- year-old British socialite and heiress, for $85 million.