When it comes to selling real estate, price is everything. Whether a $5 million mansion or a $100,000 fixer-upper, asking prices are usually based on a mix of comparable property listings and sales, house and land size and the property’s condition.
But logic often breaks down with the highest-end trophy homes. By definition they are unique, sometimes one-of-a-kind places for which few (or sometimes no) comparables exist. Value becomes highly subjective.
“I call it pricing using the ‘P.F.A.’ or pull from air,” says Jonathan Miller, chief executive of Miller Samuel, a New York-based appraisal firm. Miller values homes, including trophy properties, and tracks sales data in major markets along the East Coast. “It becomes, ‘find the highest sale you can and come up with any kind of logic to talk yourself into a number that’s 10 percent to 20 percent higher.’”
Some luxury realtors agree, though they tend to phrase it differently: Find the price it would take for a moneyed buyer to sell.
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