A Hollywood story

"Sir, how did you calculate a price of 1,200,000 € for a 400 m² home on a 1000 m² lot?" I asked in wonder.

"It's like this. My lowest price for the house is 2500 € per square meter and in this part of town, the land is worth 200 € per square meter. And that adds up to 1,200,000 €. You know, it would be best if you already have a buyer for me, because this is a great deal. A real villa. Excellent view. It's worth even more, for sure! You know, prices are going up every day... and I built it myself" he says.

"So why don't you stay in it then?" I ask, again in wonder.

"I decided to sell. I'd like to buy something a little more reasonable, and you know, the bank is pressing me, so it's pretty urgent. What do you mean your issue doesn't come out till August 1st? That late? You know, I'm really in a rush to sell. So tell me then, what do you think a realistic price is?" he says with a lost look in his eye under the heavy burden of mortgage.

"The realistic price for your house is exactly the amount that the buyer is willing to pay! If you're asking me what the starting price should be, then that is 490,000 €," I respond, and again my head starts to hurt. Yet another buyer has calculated his emotions into the selling price. This is not the Lotto or Who Wants to be a Millionaire, it's Eurovila. And I'm not Regis, I'm Marjana. What's the catch then?

On our market, homes, failed investments, villas and exclusive villas are sold at the same price. And that is not realistic.

It is very difficult to convince the overall Croatian population that it is not true that property prices in Croatia are on the rise (since sellers are raising the prices on their own, without rhyme or reason, and without any possibility of realization).

It is also not true that foreigners are becoming more and more interested in property in Croatia (for those are few and far between and they would prefer to buy the best value for their money, not the most expensive home).

It is also not true that all of our property will rise in value when we enter into the European Union (for there is simply no logical economic basis for this assumption).

How to explain to sellers once and for all - land, land with building permits, houses without building permits, "villas", exclusive villas - what can I actually sell?

If you are selling land which does not already have a building permit, then you cannot sell it at the price of land with a building permit.

If you are selling land with a building permit, then you cannot sell it at a price as though a building has already been built upon it.

If you are selling land upon which construction of a building has begun, then you cannot sell it at a price as though the building has already been completed.

If you are selling land for which, at the time of sale, the municipal urban plan has not yet been approved for that area, then you cannot sell it as though it is building land.

If you are selling land with a completed structure upon it, then you cannot sell the structure at one price per square metre and the land at another price per square metre, for the simple reason that the building is already constructed, as the building and the land are sold at a single price.

If you are selling land and a structure for which expansion is possible, then you cannot sell it at a price in which you have already calculated that expansion. This is only the possibility that the buyer, if he decides to expand, will have to invest in, but not something that you can charge for.

The calculation of the sale price of a building is comprised of elements such as the price of land, the price of project documentation for the location and building permits, the price of building permits, the price of all municipal utility hook-ups, the price of building, all installations, the price of completing the interior, with the artistic impression of that building in the existing environment added on. If your villa, providing it is really a villa, is surrounded by other villas, then you can sell it as a villa.

If your "villa" is a sore spot among farms with pigs and chickens, then you have made a bad business decision and built a fine home, only in the wrong location. Unfortunately, the majority are still rushing out to buy reasonably priced building land in out of the way areas and building nice homes to suit their tastes, but their neighbourhood is full of stables and cows. Then they attempt to sell at the price of an exclusive villa. Not every home is a villa and not every home can be considered exclusive. Never will a single, solitary villa be sold at the price of a villa, for one rose among the nettles does not a rose garden make, it is still only a meadow with a single rose.

There are two measures of excellence. The first is of a subjective nature (meaning, only to you) while the objective one (meaning, to everyone) is a completely different matter.

To put it simply. Bertha Haystack is a fabulous girl, but only to her Bill and her mother. That is called the subjective perspective.

On the other hand, Pamela Anderson is also a fabulous girl, but she is fabulous to Bill, Bob, John, Kevin, Armand, and her mother and all the men in the world. Which means that, objectively, she looks great.

Both women are well built, have two eyes, a nose, hair, two arms, two legs, two boobs, a waist and hips, but Pamela Anderson has all this distributed just a little more nicely. 100-60-90. As we would say, exactly as it should be.

Unlike Pamela, Bertha is also a fine lady, and she is well built, but her measurements are 120-100-140. As we would say, she's got it where she needs it, but she's got a lot where she doesn't need it. To explain better.

Pamela walks like a diva, smiles like a diva, acts like a diva and is somehow catlike, while Bertha walks like a giant, smiles like a giant, acts like a giant, and also looks like some kind of animal.

Not to mention clothing. On Pamela, a short top looks enticing. On Bertha, it just looks too short. When Pamela puts on her make-up, she looks glamorous, where as Bertha doesn't know how to put on make-up, and so she looks like she's not made up. Pamela is a great driver, she drives fast beautiful cars, while Bertha didn't even take the driving test. Bill has to drive her around.

Now, someone could be mean and say that's true, but Pamela is all artificial. Perhaps she is, but all this was done with the goal of looking even better, and it worked. It's not true that with all the same surgical "assistance" that Bertha could look like Pamela.

Of course, only Bill, for his own personal reasons, can elevate the beauty of his Bertha, and say that Pamela is nothing special.

We could tell Bill, "The fox said that the grapes were sour, only when he couldn't get to them".

And the fact that he would never trade in his Bertha for Pamela is praiseworthy, but it's subjective. For Bertha is his villa, but only until the first fight. Then she gets a different name. Pamela earns a lot of money, but only in Hollywood, which doesn't mean that she would earn a lot here. Her stardust can only be financially rewarded in the city of stars. Poor Bertha would not shine very bright on the Hollywood sky. And that is the truth. But, as they say, the truth hurts. Let's get back to the beginning of the story.

It is not possible to build an exclusive villa on any building land, as an "isolated" villa is not exclusive, unless it is surrounded by other exclusive villas. The surroundings of the property you are trying to sell are not unimportant. Nor is the size of your lot unimportant. A luxurious villa cannot be built upon 600 or 800 m² of land, but only on 3000 or 5000 m². Only then, and when surrounded by other villas, can it be glamorous and objectively excellent. Only then can it have a Hollywood price.

If your home is exclusive only to you and you decide to sell it at an exclusive price or not sell it at all, then I'm afraid you'll be exclusively spending your old age in your "villa".

If you are waiting for a wealthy Russian, Brit or German or someone else who is willing to overpay for your hovel, then you are living a dream. Wealthy people would never be wealthy if they allowed themselves the luxury of "throwing" their money away. You may sell to them at a realistic price, but don't get carried away thinking that you'll earn money off them. It's another story if your home is objectively excellent. Hollywood like. A dream home. If a wealthy man wants to buy your home and no other, then price will not be an issue. And believe me, there is a better chance of Bertha meeting a prince than the prince buying Bill's house.

It is almost impossible that a person with "shallow pockets" could build a home to knock the socks off the wealthy. Why? Style is something that cannot be bought, but which requires financial resources to polish it off. In the selection of the best building lot, the finest materials and top quality furniture, the overdraft limit on your bank account should not be the limiting factor!

If you've built a luxurious home on two mortgages and other loans, then be sure that in the end you'll have to sell it urgently. At below cost. In order to prevent complete financial ruin, as the banks have no emotions. They are emotionally attached only to default interest and auctions.

A wealthy person would rather buy land in a superb location for 300, 500 or 800 thousand €, tear down the existing home and build a truly luxurious villa of 1000 m² for 1,000,000 €. For his invested 1,500,000 €, he will have a villa worth 3,000,000 €. For himself and to suit his style. Surrounded by other villas. You see, if Pamela were to buy a villa in Hicksville on the island of Pag, then that would quickly become an elite destination. The price of land and houses there would certainly rise. Who ever would have heard of St. Tropez if Brigitte Bardot did not go there in the last century? And this new century is seeing new divas head to new destinations. And God willing, perhaps a diva (even if by mistake) could finally choose one of our domestic destinations.

There is a charming joke. A well known doctor bought some land and built a beautiful villa. Six months later, a gypsy came and bought the neighbouring plot of the same size, and built the identical, beautiful villa. The gypsy came to visit to doctor one day, and he said, "You see, the two of us have almost the same plot of land and identical villas, but mine is worth 1 million € and yours is worth only 500,000 €." "How do you mean?" asked the doctor. The gypsy responded, "It's like this, if I decide to sell my home, I can say that my next door neighbour is a well known doctor, and if you decide to sell your home, you can say that your neighbour is a gypsy..."

Therefore, think once again more about whether the home you want to sell (objectively excellent) is an ordinary home, a villa or an exclusive villa, and don't automatically blurt out a Hollywood price.

 

Autor: Mirjana Mikulić