Penny for Your Thoughts
Following the Advice You Paid For
While we often value the unusual and sometimes absurd, we hold true to the idea that all properties need to be valued in accord with standards and best practices. Each property is unique with its own set of circumstances and the team at Argianas is entrusted with telling the property’s story.
Argianas & Associates was called upon to value an old Gold Coast mansion that served as a home and work headquarters for a prominent Chicago area dignitary. Although the property had a rich legacy, years of neglect left it in need of substantial repairs and upgrades.
beauty in the eye of the beholder
No matter how impressive, and regardless of beauty, historic mansions suffering from deferred maintenance can be problematic, especially if the property is landmark protected or has been granted historic facade easement preservation status. These factors must be considered in a property’s valuation.
In the current instance, the interior required structural and finish upgrades, and new mechanical operating equipment (HVAC, plumbing, and electric systems). In effect, one might say the building’s interior warranted a complete gut and replacement.
trusting your brain trust
The team at Argianas provides professional appraisal services. Often a misconception is made between appraisal services and brokerage services. Appraisers derive the opinion of the market value of a property whereas a broker might be more interested in an achievable purchase price. Contrary to the adage “it’s worth what somebody is willing to pay,” price and value are not always the same.
We’ve talked at length about price, value, and cost in prior blogs and how they all represent different concepts. With the Gold Coast mansion in question, and especially for historic properties, the difference between reproduction vs. replacement costs might be considered depending upon the need for an appraisal.
Appraisal reports and the opinions of value they convey are based on qualitative and quantitative data. While internal decision-making may deviate from the market value when deciding on an offer price, the opinion of value remains.
opportunity costs | give ’em the razzle dazzle
When brokering luxury estates and historic homes, the first time on the market is often the best time to make an impact with prospective buyers. True to form, the pricing of the property must accurately reflect the market. “Part of pricing a luxury estate correctly is having a finger on the pulse of the market,” shared Chief Appraiser & President Charles Argianas. “If the property is priced too high to start buyers may feel that the seller is not serious and/or does not understand the value of the property.”
In the current scenario, like-kind properties had been purchased based upon interior remodeling/property upgrades to modern standards. Some buyers seek such properties to renovate and resell or “flip.” However, some buyers acquire historic buildings for their own personal use or occupancy, in which event we frequently see large sums expended as a labor of love on restoration.
In our assignment and regardless of our valuation, the asset was initially priced too high, and it took almost five years before the property sold at a realistic asking price.
Above our paygrade
We are honored to serve the clients we do; while we can and do give direction and share our experiences, they are just that, shared experiences. In the end, the decisions that our clients make are theirs alone; however, we hope in the process that they gain perspective and a sense of objectivity through the work that we provide.
Are you a dignitary and/or a decision-maker with the need for our services? Give us a call at 630.390.0113, for a no charge initial consultation. Good real estate decision-making started with a clear understanding of the correct legal interests involved, problem identification, formulation of a scope of work, and ample discussion to demonstrate our skills for valuation of this property type.