Prime real estate: What will $10 million buy?
The rich are different from you and me. So are their houses, and how their houses are bought and sold.
Even in a stagnant real estate market where the most action is in the under-$300K range, 10 houses in Albemarle County are listed for sale for $10 million or more.
Back in 2001, local jaws dropped when soon-to-be convicted Tyco swindler Mark Swartz laid out a reported $17 million for historic Enniscorthy and its 1,400 acres in Keene. That record was soon surpassed in 2005 when Castle Hill and its 1,200 acres sold for $24 million. Now it's 2010, and Castle Hill is back on the market with a slimmer 601 acres for $14.5 million.
After a decade of $10 million-plus sales– Chapel Springs for an estimated $16 million, Bundoran Farm for $33 million– we were getting sort of blase about multi-million dollar sales. And then Patricia Kluge listed Albemarle House for $100 million, making it the grande dame of the over-$10-million listing set.
So what does $10 million buy?
"One is not just buying a piece of property," observes Ross Stevens, who has two listings in that category. "They're buying a lifestyle."
Charlottesville's best-place-to-live status is well known. He cites its four distinct seasons, proximity to Washington, the Outer Banks and ski resorts, and its historical university town with a Blue Ridge Mountain backdrop. "The teaching hospital is a big plus," he adds. "People can look at retiring here."
"For $10 million plus, you get a lot relative to other desirable locations in the country," says Jim Faulconer, who has currently has three listings in that price range. He points out that while a house in Malibu or Montecito can cost $10 million, "here you can get a whole estate for that."
When you buy in the upper echelons of the market, the estate will have a name. It'll have a sign out front identifying it as Kinloch or Castle Hill. It will have a gate and a long driveway, buttressing it from the public thoroughfare.
Buyers expect a really quality house with well over 100 acres, says Faulconer, depending on the house's location. And location is always a factor. "Even large estates sell better if they're less than 15 miles from town," he says.
There are other amenities, besides swimming pools and tennis courts. In a horse-loving county with two hunt clubs, barn facilities are typical, as are other outbuildings to house the staff and equipment needed to maintain the estate.
"Privacy, views and location" are standard in the $10-million up range, says realtor Roger Voisinet. "The house is almost always updated, and it's probably going to be larger than what you need and not very energy efficient."
In an exceedingly slow real estate market, it would seem that any publicity would be welcome. Not at the rarefied end of the market. Broker Frank Hardy, who specializes in high-end properties, refused to speak to the Hook about the multi-millions in real estate he wants to sell.
The estates don't flaunt for-sale signs, and for further secrecy, one of Hardy's listings carries a fake address in the MLS.
"Obviously estates are by appointment only," says Stevens, who eschews for-sale signs on top-end properties. "Maybe they had a problem with a drive-by," he suggests.
Privacy is a concern not only for movie or rock stars, and LLCs– limited liability corporations– frequently help conceal ownership.
And a high-end agent makes sure that those taking a look at grand estates are serious buyers, not just nosy parkers– or newspaper reporters.
Once a buyer is found, forget the tedious haggling.
"Price isn't really a factor," says Justin Wiley, who's a listing agent for the aforementioned $14.5 million Castle Hill and the $13.5 million Old Keswick. It's more that "the buyers normally interested in this price point are holding back."
While normal folks may have to wait for a current home to sell or to get mortgage approval, the super-rich don't have such concerns.
"A lot of times, it's cash with no worry about contingencies," says Jim Bonner, president of the Land Office at Roy Wheeler.
And sellers can afford to wait, sometimes several years, without dropping the price, he says.
"I've had people who had to sell," says Bonner. "They discounted the price 30 percent." That creates a flurry of activity, because even the rich apparently like a bargain.
So who are these buyers who can pay cash for an eight-figure abode?
Certainly there are locals who can plunk down $15 million for a dwelling, but many of the estate buyers typically come from the northeast, urban areas, say agents. For a while Californians flooded the area, but that migration has slowed.
"When you've got all the rich Yankees liquidating assets and coming down here, money is no object," says attorney Fred Payne. "People with that magnitude of money are not as liquid as they used to be. They've realized [$10-million houses] are not a good investment."
And despite the past year's economic nosedive, Wall Street chugs on. "People are still getting paychecks and making a lot of money," says Jim Faulconer. But they're not necessarily looking for high-end homes in Albemarle County.
"It's very slow right now," reiterates Ross Stevens. "A lot our estate sales correlate with the stock market."
"It's pretty flat," echoes Jim Bonner. "Not many people are in that lofty category– and we never had a lot in that category."
He suggests caution, even among the well-heeled. "We're still seeing declines in the market," says Bonner. "Buyers are not keen on buying into a declining asset."
But when they do decide to take the plunge, there are plenty of multi-million properties out there, beckoning to be called home– even if it's the second or third one.
LOCATION: 355 Albemarle House Drive
SQUARE FOOTAGE: 23,000
OWNER: Patricia Kluge
ASSESSMENT: $17,336,300 (for 98 acres)
AGENT: Michael Rankin, Sotheby's International Realty
FEATURES: David Easton-designed Georgian built in 1985 with eight bedrooms, 13 bathrooms, a theater, a spa and sauna, and an Islamic gallery.
DISH: Not just the most expensive house in Albemarle, the estate is one of the priciest in the country. It more than doubles Albemarle's previous top sale, $46 million in 2005 for Biscuit Run, soon to be a state park. Odds of Kluge getting her asking price? "Let's see," says Stevens. "Let's look at what the most expensive [residential] sale has been, and it's only a quarter of that. Maybe a sheik. It's going to take a special person to use that type of space."
LOCATION: 1921 Georgetown Farm, Free Union
SQUARE FOOTAGE: 7,850
OWNER: Edgar Bronfman
AGENT: Jim Faulconer, McLean Faulconer
FEATURES: Five bedrooms, eight full baths, tennis courts, pool.
DISH: Former Seagram's head Bronfman served as president of the World Jewish Congress and is the grandfather of songstress Lauren Hoffman. For a few years Georgetown Farm raised buffalo and beef that were sold to local restaurants and stores, as well as supplying a retail store at Albemarle Square. The buffalo no longer roam here, but the farm offers plenty of grazing room for whatever livestock the new owner fancies.
LOCATION: 1205 Kinloch Farm, Keswick
SQUARE FOOTAGE: 10,000
OWNERS: Bob and Janice Aron
AGENT: Frank Hardy, Frank Hardy Inc.
FEATURES: 1740-built house with horse barn and a conservation easement. Three baths and two half baths?
DISH: Hardy lists this property with a fictitious "0 Gordonsville Road" address, so the $15 mil property seems quietly for sale. The owners are members of the National Thoroughbred Racing Association and the location is in the heart of Keswick Hunt, just down the road from several other estates on the market.
LOCATION: 741 Woodlands Road
SQUARE FOOTAGE: 17,100
ASSESSMENT: $4,347,900 (for 50 acres)
OWNERS: Craig and Katharine Winn
AGENTS: Frank Hardy, Frank Hardy Inc., and Jim Faulconer, McLean Faulconer
FEATURES: Five bedrooms, 7 1/2 baths, close to town.
DISH: Value America founder Craig Winn built this manse in 1998, before the dot.com bubble popped and investors in his company found their stock shares worthless. Can't swing $14.95 million? Seventy acres are available for $11.95 million, and $9,950,000 buys 50 acres. Not in a conservation easement.
LOCATION: 6132 Gordonsville Road, Keswick
SQUARE FOOTAGE: 8,551
OWNER: Route 231 LLC
AGENTS: Frank Hardy and Justin Wiley, Frank Hardy Inc.
FEATURES: Formal gardens, National Register of Historic Places, Virginia Landmarks Register.
DISH: The 1765 historic estate built by Dr. Thomas Walker figures prominently in Albemarle's history dating back to the Revolutionary War, when a leisurely breakfast served to Lieutenant Colonel Banastre Tarleton allowed Jack Jouett to make his famous ride and alert Governor Thomas Jefferson that the British were coming. In 2005, its sale became the largest deal thus far when John D. Carr and Raymond E. Humiston III paid $24 million for 1,200 acres, which they put in a conservation easement. "It's the perfect colonial house joined to the perfect federal house," says Wiley.
Clover Hill Farm
LOCATION: 300 Clover Hill Farm, Keswick
SQUARE FOOTAGE: 4,415
OWNER: C&C LLC
AGENT: Frank Hardy
FEATURES: Three bedrooms, two full bathrooms.
DISH: If the number of bedrooms and baths sound modest, don't worry, three guest houses can accommodate visitors. The Bloch family sold Clover Hill for $13 million in 2006.
LOCATION: 2262 Old Keswick
SQUARE FOOTAGE: 8,500
OWNER: Peggy Augustus
AGENTS: Justin Wiley and Frank Hardy, Frank Hardy Inc.
FEATURES: Seven bedrooms, six full baths, top-notch equestrian facility.
DISH: The original 1736 structure was built by Castle Hill's Thomas Walker and thought to be a hunting lodge, and the front porch is believed to have been designed by Thomas Jefferson, says Wiley. "Keswick Stables is very well known in the horse world," he says, and numerous winners have been bred and raised there.
LOCATION: 2789 Chapel Spring Lane
SQUARE FOOTAGE: 2,500
OWNER: Chapel Springs Family LLC
AGENT: Jim Faulconer, McLean Faulconer
FEATURES: Million-dollar horse barn, lots o' riding trails.
DISH: It was known as Burning Daylight Farm when Halsey Minor put the property on the market for $19.5 million in 2003. Concrete magnate Wick McNeely bought it in 2005, and signed a $16.08 million deed of trust. On this property, the horse barn is more valuable than the 1989-built 2,500-square-foot house.
LOCATION: 6131 Gordonsville Road, Keswick
SQUARE FOOTAGE: 9,500
OWNERS: Al and Cindy Schornberg
AGENT: Frank Hardy, Frank Hardy Inc.
FEATURES: Keswick Vineyards comes with the sale.
DISH: Director Hugh Wilson sold Edgewood in 2002 for $5.1 million. When the Schornbergs planted grapes, some of the neighbors had a hissy fit about this particular agricultural use. Located across the street from Castle Hill.
LOCATION: 1000 Ivy Creek Drive
SQUARE FOOTAGE: 4,241
ASSESSMENT: $1,889,100 for 25 acres
OWNER: Two Stumbling Brandos LLC
AGENT: Ross Stevens, Stevens & Co., and Murdoch Matheson, Frank Hardy Inc.
FEATURES: Contemporary with three bedrooms and three baths behind Farmington. Stupa temple.
DISH: Former newspaper man Tom Worrell built this Shelter and Associates post-and-beam house in 1980, and for a while it housed Buddhist monks. Now it's in the most exclusive close-in development, five minutes from St. Anne's-Belfield. Reliable sources say Dave Matthews owns the property, but agent Stevens refuses to confirm, stating only it's owned by Two Stumbling Brandos LLC.
LOCATION: 200 Seven Oaks Farm, Greenwood
SQUARE FOOTAGE: 6,870
OWNER: Seven Oaks Farm LLC
AGENT: Ross Stevens, Stevens & Company
FEATURES: National Register of Historic Places and Virginia Historic Landmark. Greek Revival with spacious pool house, studio, gym, stables and vineyard.
DISH: By the time magnate Coran Capshaw bought the 1847-built manse in 2000 for $2.25 million, the seven oaks were pretty much gone except for one sickly survivor. He rehabbed the place in 2001 and put it back on the market a year ago for $12.5 million.
Conservation easements: Protect– and profit
BY LISA PROVENCE
What's the theory behind giving tax breaks to wealthy property owners who decline to create subdivisions on their rolling acres?
"A conservation easement is going to lower the fair market value," explains attorney Fred Payne.
Of the 10 priciest offerings in Albemarle, only four– Albemarle House, Georgetown Farm, Emerald Hills and Keepers– are not held in a conservation easement, something that keeps Albemarle green and puts extra green in the pockets of the owner.
According to Rex Linville at Piedmont Environmental Council., Albemarle County has more than 81,000 acres permanently protected, 5,100 of them gaining protection last year. (The number includes Biscuit Run, which– though not technically in a conservation easement– was sold to the Commonwealth of Virginia for a state park in a deal offering the same Virginia income tax credits that conservation easement holders get.)
A conservation easement is a legally binding agreement that limits future development of the property so those pastures remain dotted with horses and not subdivision houses. And such an easement can be very appealing to the rich looking to ease the annual tax bite.
For example, say a $10-million farm put under easement now has a market value of $7 million.
"In essence, they just gave a charitable gift worth $3 million," says Linville. On the federal income tax level, that $3 million counts as an income tax deduction– with certain restrictions. Meanwhile, Virginia gives a 40 percent income tax credit for the $3-million loss of value, which translates to a $1.2 million income tax credit.
"One of the nice things is they're transferrable to other Virginia taxpayers," says Linville. "One of the reasons we've been able to capture more moderate- and lower-income landowners is because of the ability to take advantage of that."
There's also a real estate tax benefit from here to eternity.
"I downplay that," says Linville. "They're already taking the land use tax rate." (In Albemarle, property used for agricultural purposes can be taxed at a much lower rate.)
According to Linville, putting property into a conservation easement purely for financial reasons doesn't really add up.
"The main reason to do it is to preserve the land," he says. "And the tax incentives are great."
And while it lowers the fair market value, that doesn't seem to have hurt the four $10-million-plus properties for sale around Keswick, all of which are under conservation easement.
"That's probably one of the most highly protected stretches in the Piedmont," says Linville. And that protection from small-lot subdivisions, he adds, "only makes the area more desirable."