Investor Warren Buffet is known for his house nearly as much as his billions. According to Forbes, Buffet is the third-richest person on the planet. Yet remarkably he still lives in the five-bedroom stucco house in Omaha he purchased in 1958 for $31, 500, the equivalent of $250, 000 today.
Most well-heeled home buyers with far less cash than Buffet prefer much swankier digs. The good news: a number of million-plus homes can be purchased today for significantly less than the appraised value or original asking price. And, while Alabama doesn’t have as large an inventory of bargain luxury homes as other parts of the country, deals in this rarified market can be found.
Looking for unfettered extravagance and room for 10 Duggar-size families? Look no further than the Shoal Creek estate owned by Larry House, former CEO of physician management company MedPartners. Listing agent Pam Ausley, with ReMax Southern Homes 280 in Birmingham, says the 55, 000-square-foot mansion was built in 1997 for $35 million, on the market two-and-a-half years at $17.9 million and recently dropped to $13.9 million, which includes all appliances and custom-made rugs and drapes.
The Versailles-inspired house contains 15 bedrooms, 16 full baths, 12 fireplaces, a 25-seat theater and a commercial-grade elevator. Opulent touches such as hand-painted frescoes, gold leaf fixtures and marble floors would indeed please Louis XIV. Horse trails and four pastures are on its 27 acres, along with a barn with living quarters. A guitar-shaped garden adds a fanciful landscaping touch, a decision made by the owner for no specific reason, says Ausley, who calls the house “a steal” because of its size and countless creature comforts.
Ausley’s high-end bargain listings also include the former estate of HealthSouth Corp. founder Richard Scrushy, seized in 2009 when a judge ordered Scrushy to pay $2.8 billion in damages. The foreclosed 16, 000-square-foot Vestavia Hills home is offered at $2.4 million and was appraised two years ago at $4.7 million. It sits on eight acres in the Longleaf neighborhood where Ausley says 5, 000-square-foot homes on ½-acre lots are selling for $1.2 million, making the Scrushy property a sizable bargain.
“The higher the price chain you move up, the more a property has to be a bargain, ” she notes, “and the higher you go, the fewer the buyers.” Luxury homes are selling to high-net worth buyers for cash who expect cost cuts, adds Ausley. Although she doesn’t place the Larry House and Richard Scrushy estates in this category, she says many luxury properties are so highly individualized by the original owner that they have to be “super discounted.”
Roy Claytor, of Crye-Leike in Huntsville, who has been selling high-end homes in North Alabama for 36 years, agrees that custom-built luxury homes can be a tough sell because they represent another person’s dream. “When you build a custom-built home you can have trouble finding buyers, who want their own image of success, ” he notes. “Add that to a struggling economy and you have issues.”
In the high-tech Huntsville area, a luxury home shopper might appreciate a fully digital estate priced well below its appraised value. In the Clift’s Cove neighborhood of Madison is an 8, 710-square-foot house wired throughout with the latest in security and monitoring, telephone and intercoms, heating and cooling, lighting, entertainment and other systems. The asking price is $1.25 million for the two-story brick home situated on 1.2 acres that border a nature preserve.
“This house would easily be priced at $2 million in a stronger economy, ” says listing agent Jim Davis, owner broker of New South Realtors in Huntsville. “It’s the only home in this luxury community on two lots, and it backs up to the Huntsville Land Trust, which can never be developed.” It contains five bedrooms, seven baths, gym, movie theater and a storm shelter. Extensive crown molding, a starburst wood inlay floor and a cobblestone driveway are a few of its distinctive characteristics.
The weak economy also has hurt second home sales. Yet, according to Justin Dyar, of White Pepper Real Estate in Jasper, who specializes in Smith Lake properties, the second home market started improving in 2012’s first quarter. Among his lakefront listings is an outstanding bargain, owing to its acreage more than its size.
Originally priced at $2.45 million, the property has been on the market for a year and is offered at $1.75 million.
At 3, 200 square feet, the home is relatively small by luxury standards, but it sits on 34 acres on the main channel of Smith Lake’s Rock Creek, affording deep water and long-range views. Dyar says, “This much acreage and waterfront anywhere close to this price range is unheard of.”
Associate broker Chuck Norwood, of ReMax of Gulf Shores, says that although his market is stabilizing, luxury home bargains also are on Alabama’s coast. Norwood’s listings include a Mediterranean-style compound recently reduced to $4.9 million that includes two houses on five acres and nearly 300 feet of water frontage on Bayou St. John in Orange Beach.
The property was listed as one of the nation’s top 25 waterfront homes in Ocean Home magazine’s April 2011 issue, and at that time was offered at $5.5 million. A long brick driveway winds through tropical foliage and manicured gardens, ending at the 6, 200-square-foot, three-bedroom, 3.5-bath main house, and adjacent 3, 400-square-foot, three-bedroom, three-bathroom guesthouse. The property also contains a 400-square-foot apartment above the garage, pool house, boathouse with a top floor party room, infinity-edge pool, 90-foot waterfall, citrus grove, a greenhouse and mediation area.
“This property would have sold north of $6 million a few years ago during the gold rush, ” Norwood points out. “Compare it to other like-kind properties in other coastal areas and you would see that for under $5 million it’s a very good deal.”
Selling for considerably less on Ono Island – a barrier island in Baldwin County – is a 3, 399-square-foot, three-story, five-bedroom, three-bathroom home priced at $584, 900. The house fronts Ono canal leading to the Gulf and includes a boathouse with a sundeck, dock and boatlift. The house was appraised in 2005 for $1.6 million and appraised in 2010 for $700, 000, says listing agent Allen Johnson, of Three Palm Real Estate in Orange Beach.
While a variety of luxury home bargains can be found throughout Alabama, not all are being sold the conventional way through agents. An increasing number of sellers are turning to the auction method as their first choice in marketing their property, says President and CEO of Gadsden-based J.P. King Auction Co., which auctions high-end properties worldwide.
“A lot of high-end homes are built custom by the owner for their precise desires, ” he explains. “Those features may not be as valuable to another buyer. That factor, combined with the fact that it can be difficult to find comparables for these types of properties, give an auction an advantage. An auction will also eliminate the carrying costs of waiting for a home to sell through traditional methods.”
Homebuying may be rebounding, but there are still high-end bargains.According to multiple listing service data from realtor.com, in Alabama’s metro markets (which represent 70 percent of all real estate transactions), only 1 percent is listed at $1 million and above. Despite such small inventory, there appear to be more luxury homes in Alabama than potential buyers.
“Even in a normal market, there is a finite group of high earners who can afford luxury homes, ” notes Grayson Glaze, executive director of the Alabama Center for Real Estate at the University of Alabama. “Uncertainty [in the marketplace] acts to lower the demand side of the equation even further. In essence, you have too few buyers chasing too many properties.”
Jessica Armstrong is a freelance writer for Business Alabama. She lives in Auburn.
By Jessica Armstrong