When piano man Billy Joel's ex apartment on the 44th floor at The Excelsior Building in New York City re-listed for $1.48 million, people were surprised that a fairly unworthy two bed-two and a half bathroom home like that could cost that much.
Same was the case with his Sagaponack beach house, which was listed at a lofty $23 million at a certain point and then price-chopped several times. It currently asks $19.95 million.
But it's not just Billy Joel. Several others like Bon Jovi and Katy Perry have also had problems unloading their homes - listing, de-listing and re-listing them time and again.
This is a classic case of celebrity home price inflation. But what is celebrity home price inflation?
The definition of celebrity home price inflation is self explanatory - it is when a home, which was once inhabited by a celebrity, costs way more than it is worth.
Considering the added price that comes with a popular personality occupying the place, Movoto Realty came up with an infographic that shows people probably over-paid for certain celebrity homes.
The folks at Movoto examined several celebrity homes that sold recently and compared their prices to the average price per square feet prevailing in the area and found that:
- Robert Pattinson's Los Angeles Home sold for 202 percent more than the average price per square feet of the area.
- Leonardo DiCaprio's Malibu Colony home sold for 91 percent above the average price per square feet
- Jim Carrey's Malibu home sold for 61 percent above the average price per square feet as well.
But that doesn't mean all celebrities sell their homes for an inflated profit. Some take losses on home sales despite the glamour that surrounds their property. For example, Katy Perry sold her Los Angeles home 27 percent below the average asking price of the area. Dexter Star Michael C. Hall also closed 17 percent below the average prevailing price in the Los Angeles neighborhood.
See the full Movoto Infographic here.
But do celebrities deliberately use their name to market a property? Does a realtor use the "celebrity slept here" fact to flip a star home for a profit. Maybe!
Many opt for anonymity selling and buying homes under Limited Liability Companies (LLCs).
"A high-profile financial service guy was buying an expensive place in a large, well-known building. We all had to sign confidentiality agreements. A code name was used throughout the process. The purchaser went through all this trouble and then listed his current address as the same address listed on the LLC," said Kelly Kennedy Mack, the president of Corcoran Sunshine Marketing Group, to the New York Times in an earlier interview.
On the contrary, many are happy to have their names on the listing descriptions. Some celebrities even represent themselves in certain deals like Juanita Vanoy, Michael Jordan's ex-wife who recently sold off her Chicago penthouse for a fair profit.
When all boils down to the price of a particular house, knowing and identifying its worth is important. Below are a few things you need to consider while ascertaining the value of a property:
1. Location! Location! Location! (of course)
2. Present condition of the house
3. Compare asking price to recently sold homes in the area. Websites like Zillow, Realtor.com and Trulia offer neighborhood data.
4. Hire a trustworthy real estate professional.
