A Wee Scottish Loft
It's for sale -- or at least it was a couple of weeks ago.
Lee Castle, a 30,000 sq. ft. property of great historical significance,
built in 1304.
Situated in 261 acres on the outskirts of Lanark, within approximately
one hour's drive of Glasgow, Edinburgh, and Prestwick Airport.
36 rooms including Banquet Hall, Grand Ballroom, and Private Family Chapel.
14 bedrooms; 5 bathrooms; gym, indoor swimming pool, and sauna;
two lodge houses.
Comes with all contents plus a right to the
titles of Baron and Baroness of Lee.
Vendor will look at offers -- although a bid of US$9,700,100 in an
eBay auction at the start of this month didn't meet the reserve.
For more details (and the skirl of the pipes!) go to http://www.leecastle.com/intro.php.
(Note, May 2005:
Unfortunately, the above two links no longer exist. However, it is
still possible to bring up a
2003 website that provides an account of Lee Castle)
Of course,
there are other choices.
For example, a real estate firm that
specializes in selling international properties has eleven castles available
in Europe, with asking prices starting at a mere 500,000 Euros.
And not the least, there have been reports that you can pick up half a dozen castles in Germany and elsewhere for a mere dollar bill apiece if you're willing to restore them to their original condition.
In any case, it's this sort of thing that makes involvement in the real estate business as fascinating as I find it to be. Although a degree of science enters into it, there's also much that's a long way from being cut and dried.
How, for instance, do you put a value on a castle?
Two approaches -- and neither of them
works!
One way to determine the worth of a property is to calculate the cost
of replicating it. With newly constructed homes, this isn't too difficult.
It's simply a case of adding the price of a vacant lot to the cost of construction.
The result is what can be called the builder's sticker price.
Resale values are less exact, but the same Cost Approach can be taken
if an appropriate deduction is made for depreciation. Thus, the lot
and building can be valued at their current replacement cost reduced by
an allowance for intervening wear and tear.
However, the older a home gets, the more the upsurge in market values
makes the cost approach an unreliable one. For example, what was bought
for say $25,000 in the 1970s is now going to sell for at least
six times that figure. In fact, the lot alone will probably fetch more than
the total original purchase price.
This factor leads to the idea of comparing like with like in what's known
as the Market Value Approach. Although it relies on a less scientific
(or, if you wish, not so simple an arithmetic) calculation, it gives
due attention to what similar properties are being listed at, what prices
have recently resulted in sales, and what prices failed to find buyers.
Perhaps we need to borrow a claim from the pollsters that the results are
"accurate within two points 19 times out of 20," but it's a workable
concept and finds favour with appraisers in general and almost all lending
insitutions in particular.
Nevertheless, the question remains: how do you put a value on
a castle?
Go into the archives to find the material and labour costs several hundred
years ago? Decide that the place was built to last (as it obviously
has done) and largely ignore depreciation, especially if you assume there's
been ongoing maintenance through the centuries? Etc?
No, doesn't seem very practical.
Search the land titles offices around the world for records of this and
that castle that sold at one time or another? Adjust the figures for
what appraisers call the Age Factor (i.e. a figure that reflects the percentage
increase in selling prices since the date of the last sale)? Etc?
No, not really.
One of a kind
There is an art in the real estate business and much of it lies
in determining the true worth of what's often referred to as One of a Kind.
Interestingly enough, if you want a custom built, brand new castle --
which the aforementioned development
people can give you -- you'll simply be faced with a sticker price that's
no different in its calculations than if you are purchasing a new home (which,
ahem, you are doing). Moreover, it isn't altogether
impossible to find some comparables. The information won't exist in
your local MLS database, but there are sources that contain enough of it,
as long as you know where to look (and will pay for the searches, which more
than likely you'll be asked to do). Indeed, the real estate
firm I've mentioned could be a worthwhile starting point in this regard.
Even so, the value is going to lie mainly in another of the ideas the
real estate business draws upon. It's known as the Principle of Substitution
and runs on the lines of what the economists call the Marginal Utility Theory
of Value.
Both of them have the same root: sufficient consideration of what
else the money could buy.
The eyes of the beholder
It can, in fact, be said that, despite the usefulness of both the Cost
and Market Value approaches, the idea of comparing like with unlike
also plays a part in deciding what a property is worth. You can either buy
the place or use the money for something else. There's a need to feel
that what you're going to get is better than deciding to do without it.
In effect, I suppose the real question of affordability isn't whether
you can pay the purchase price. It's a matter of parting with the
money for what you've just got to have -- be it a 36 room castle
or something a little bit smaller.
Duncan
Pollock, Real Estate Broker,
427 Gate Street, Niagara-on-the-Lake, Ontario, Canada L0S 1J0
Tel: 905-468-3154 Fax: 905-468-3812 Cellular: 905-704-9037
email: duncanpollock@sympatico.ca
Note: E-mail
addressed changed as above on Nov 3 2007
website: http://www.duncanpollock.com