How do you really tell what a luxury home is worth? With fluctuations in the real estate market, it can be difficult to tell what any home is worth. However, non-luxury homes have the benefit of being able to be compared easily to other, similar homes. If you're in the market for a luxury home, you'll need to know a little more about their value.

Valuing Intangible and Unique Aspects

How much value does being owned by a famous person previously add? How much value does a certain water feature add, if it's a unique water feature? It's these unique aspects that can be difficult to value because there's no market value attached to it. 

The easiest way to value these aspects is to look at what the home sold for last and adjust it based on inflation. Even this can fail, however: what if that famous person became famous after the home was last sold? 

Getting Official Appraisals

An official appraisal for a luxury home can be more of a guess than science, but official appraisals are going to help you prove value to a mortgage company. Ideally, you want to work with an appraiser who is familiar with luxury homes and who understands the value of any unique aspects of the property. 

Factoring in the Neighborhood

A luxury home in a bad neighborhood is going to have its inherent value dragged down, whereas a luxury home in an extremely expensive neighborhood may have its value boosted. Before you make any decisions on the ultimate value of the property, you should also be looking at the other properties that are closest to it geographically. In general, you always want to be in a neighborhood on par with your property or above it.

Consulting With Your Bank

Finally, once you've organized your documents, you'll still need to get mortgage loan. When purchasing luxury homes for sale, you'll usually be getting a jumbo loan. At this time, the bank is going to decide whether your valuation is reasonable. Like you, they aren't going to be very accurate about the value. However, you'll need to be in range of their estimate for the loan to be approved.

Luxury real estate is often more about the feel of the real estate than the cost. In real estate, if a home is worth it to you, then it's worth it. Working with a real estate agent who specializes in these types of sales will help.