$10 Million House: Making Sense of Zuckerberg Purchase

As a San Diego real estate professional, I pride myself in staying up to date with all real estate trends and news not only for my clients but for myself as well. Whether it be real estate in Chula Vista, San Diego, California or the world for that matter I always like to stay in the know. I must admit however, I often come across real estate articles that quite frankly steer people the wrong way just for the sake of catchy headlines such as this one from CNBC regarding Facebook Founder and CEO Mark Zuckerberg which implies he grossly overpaid for his latest real estate acquisition: $10 million house: Did Zuck overpay for SF home? (Go ahead, read it… I’ll wait.)

There are a couple things about this article that you must consider when determining if Mark Zuckerberg did in deed over pay for this property which involves some research which I was able to do in less than 2 minutes so it’s not like CNBC couldn’t have done so.

1. According to Zillow, a real estate valuation website, the property next door is currently valued at over $6,300,000. As much as I am not a big fan of Zillow valuations, it is by far a better indicator of value than the assessed value mentioned:

In that MLS document, the assessed value of the home and 7,980 square foot lot in 2012 was $1,559,572. That’s far, far less than the latest price tag of $9,999,999.

Are you kidding me? Assessed value!?! Clearly the author has no clue about California property taxes and how Prop. 13 works. The property could be work $50 Million and the assessed value would still be where it is unless it was sold. These are the types of things that make me question the integrity of the writers.

2. We cannot confirm Mark Zuckerberg has anything to do with this property.

Zuckeberg’s name is in no way attached to the house.

Need I say more about that? We have no idea if he has anything to do with this.

3. The property in question was never listed for sale.

That is a crucial detail  in determining whether he overpaid for this property. After all, if someone knocked on your door and said “I want to buy your home, what will you take?” The number would undoubtedly be greater than fair market value right? You didn’t ask to move, you love your neighborhood, you’ve raised your kids in this home, you may have planned on retiring in this home. How could you just sell it on a whim?

It’s almost like those lawsuits for “Pain and Suffering”. You are now confronted with an offer that will uproot your family so there better be some compensation for that. You see, offering a seller that has made the decision to sell is much different than a homeowner who is perfectly happy with his home.

I specifically recall speaking with a man by the name of John who lives in Eastlake Vistas, a suburb of Chula Vista, California. I asked him this simple question: “At what price are you a seller? He thought about it for roughly 10 seconds and replied “$1 Million”. I promptly followed up with “If I had a buyer offer you $1,000,000 today… you would take it? Guess what his response was… NO. He couldn’t! He was so in love with his property, the thought of moving even for $1 Million wasn’t worth it to him.

Bottom Line

Homes listed for sale and homes not on the market are like comparing apples to oranges. You can’t. And at the end of the day, people with that kind of wealth are generally savvy enough to know what is a good deal and what is not, even at 28 years old. Did he over pay? Maybe, but then again, I think he’ll be just fine.

[Tweet “Did he over pay? Maybe, but I think he’ll be just fine. #Zuckerberg”]

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