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Buy a mansion, cheap

By Judy Martel · Bankrate.com
Tuesday, October 19, 2010
Posted: 10 am ET

While the housing industry is buzzing about further impediments to a recovery caused by the recent foreclosure suspensions, two high-profile mansions sold for a song last week.

Luxist reported that the Indianapolis mansion formerly owned by Stephen Hilbert, former CEO of Conseco, once valued at $25 million, sold for a mere $3 million. The buyer is Forrest Lucas, founder and president of Lucas Oil. Lucas says he'll use the home mainly as a corporate retreat, possibly around the time of the 2012 Super Bowl, which is slated to be played at his namesake stadium in Indianapolis. (Incidentally, he compared the price of the mansion to the cost of a 30-second TV ad during the Super Bowl.)

Dunnellen Hall, courtesy Zillow

And remember the "Queen of Mean," the late hotelier Leona Helmsley, of income tax-dodging fame? The one who bequeathed $12 million to her dog? Dunnellen Hall, the 28-room Greenwich, Conn., summer home she shared with husband Harry sold for $35 million -- $90 million less than the 2008 asking price. The owner is undisclosed, but one thing is evident in both these fire sales: Those who didn't over-leverage themselves and who have available cash are snapping up the indulgences of the credit-bingers.

What do you think of these major price reductions? Is the housing market getting back to normal after being over-inflated for a decade, or are these price discounts a sign of long-term distress?

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5 Comments
Judy Martel
October 25, 2010 at 9:17 am

Omar,
You are probably referring to CDARS. Here is a link to a story about insuring excess deposits (6 ways to insure excess deposits) and I'm also including a link to a Dr. Don column, "How to protect a big stash of cash."
Judy
http://www.bankrate.com/finance/savings/6-ways-to-insure-excess-deposits.aspx
http://www.bankrate.com/finance/savings/6-ways-to-insure-excess-deposits.aspx

omar espinosa
October 24, 2010 at 12:23 am

Much of this story is missing some simple observations about inflation's effects on pricing.

The Hilbert mansion and estate took 5 years and NO less than 35 million to build. The landscaping was a massive undertaking, removing thousands of trees, and moving large hills from the land.

One interesting aspect of the house is that it contains 1.1 million dollars in labor in 88'-93' dollars to apply french wood polish to the millions of dollars of woodwork and paneling of the house. This required over 60,000 man hours and 13 months by a team of experts to accomplish.

It has the longest and largest heated drive way of any private residence in the world. It has its own ((TRIPLE)) redundant 250 kw natural gas power generation system--as in 3 separate 250kw generators.

It's built like a fortress, mostly steel i-beams and concrete, limestone and brick with the occasional 2x6. The walls are mostly double hung one inch green board covered in true plaster.

This was to prevent all the planned fresco paintings from flaking off, only a few were ever applied to the walls.

Adjusted for inflation alone, this home would take more than 65 million to build in current 2010 dollars. It would take even longer to build because the restrictions that have been place on much of the fine and rare woods used in the home would delay completion.

The real value of this house is aprox. 65-70 million dollars.

On the other hand Dunn Ellen hall cost just over a million to build in its day. If we adjust for inflation and give a margin of error to pad the figure we could say it took 25 million 2010 dollars to build.

Then the helmslys put in aprox 11 million 1980's dollars into it for remodeling which is about 22-25 million dollars today.

If we round up we get a grand total of 50 million dollars to build, and it sold for 35 million, it thus retained its value better than most Las vegas real estate. ((HAHA))

The hilbert mansion has to be one of the great deals since the great depression when single, double and triple digit million dollar homes sold for 30-100 grand !!!

Oheka castle sold for 30-50,000 even though it took over 10 million to build in its day. Marble house contained over 7 million dollars of marble in its day, 140-175 million dollars in just marble LOL.

Got to love excess.

Phil Pense
October 22, 2010 at 8:43 pm

I remember a bankrate article years ago about accounts over the limitations of FDIC protection. I believe it was a bank-issued document and it began with the letter "C" and I believe it was followed by the letter "R". Emailed the article to myself and now I cannot find it. Did not win millions but have a balance over the FDIC limit. Hoping someone else saw that article.

Judy Martel
October 19, 2010 at 1:53 pm

Yes, it was meant to say the 2012 Super Bowl. Thanks for pointing that out.

Pat Evans
October 19, 2010 at 12:50 pm

Was Mr. Lucas talking about 2012 or something? The 2011 Super Bowl which is for this season is being played in Dallas, not Indianapolis.