Reassessing Madoff’s Oceanfront Digs
(01/15/2009) Real estate professionals who are familiar with Bernard and Ruth Madoff’s oceanfront house in Montauk have scoffed at the idea that the property is worth a mere $3.3 million.
News reports have consistently cited a “market value” of $3.3 million since the story of the executive’s alleged $50 billion Ponzi scheme broke on Dec. 11. According to the East Hampton Town Assessors Office, the 1.2-acre parcel was last assessed in 1983 at $2.7 million.
 Doug Kuntz
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“The value right now is based on the assessment, and this is not market value,” Jeanne Nielsen, a town assessor, said. “I’m sure it’s worth much more than that; this is a magnificent waterfront property.”
Ms. Nielsen suggested that the $3.3 million number was derived by “taking the assessed value and dividing it by the [New York State] equalization rate” of .61 percent. The equalization rate is an estimate of a municipality’s level of assessment compared to the actual market value.
With factors like the ocean in play, a figure based upon that formula could certainly be inaccurate for some properties.
“A four-bedroom condo at the Panoramic Village sold for $4.2 million. Just based on that sale alone, this house would be worth $8 million to $10 million,” said Joan Hegner, a broker for Corcoran who has been in the business for 32 years in Montauk.
Ms. Hegner said that she and her husband, Raymond Hegner, who also works for Corcoran, were familiar with the property. “A good friend of ours lives above him, so we know the house,” she said. “It happens to be a very unique location because the house sits right on the beach,” she said, a lot closer to the water than present-day zoning laws would allow.
David Webb, a builder in Montauk, remembered building the house for the couple some 25 years ago. “Actually, they were very fair to work with,” he said of the Madoffs on the phone on Tuesday.
The house, which to Mr. Webb’s recollection is a two-story, four-bedroom, four-bath traditional residence with a pool, was designed by the late architect Gene Futterman. “It was challenging. It’s a very steep bluff and it’s right at the bottom of the bluff,” Mr. Webb said.
“I would say it’s at least double that, if not more,” said Kathleen Beckmann, another Montauk real estate veteran, of the house’s reported $3.3 million value. Ms. Beckmann also remarked that the dwelling was “unique in how it sits on the property” just at the ocean’s edge.
“It’s quite unique, it’s got columns, it’s postmodern, it’s very well done, it’s charming. We’d all like to vacation there,” she said.
“Things along the Old Highway don’t sell that often. I sold one seven years ago, and it’s just west of Madoff. At that point they paid $6.5 million and the homes were similar. Six is probably low” for Mr. Madoff’s house, Ms. Beckmann said.
“Homes on the Old Montauk Highway range in value from $4.5 million to $8 million on average, depending on the ocean frontage and the square footage of the house,” said John Keeshan, by his account “the oldest living” real estate man in Montauk.
“I haven’t personally inspected the property, but a good rule of thumb, a starting point,” without even looking at the property, he said, “would be somewhere between $4 million and $5 million anyway.”
“Even in this market,” he added, “because there are always people who are looking for that kind of extraordinary oceanfront property, and have the means still to buy it,” probably in cash.
The question of what the Madoffs’ house might be worth is further compounded by the desirability of Old Montauk Highway, which is “three to four miles long,” according to Mr. Keeshan. “You take out a good amount of that which is state parks, etc., you don’t really probably have more than I’d guess two miles of what is available . . . maybe less.”
As for the rest of the hamlet, “there’s still Surfside down past the Catholic church. Those beaches are very picturesque, they’re magnificent, but you need a rope to get to the beach,” said Mr. Keeshan.
The place where Mr. Madoff’s property is situated is one of very few with easy access to the ocean.
In today’s market, a vacant, 1.5-acre oceanfront parcel — just slightly larger than Mr. Madoff’s property — is listed with the Corcoran Group at $8.9 million. A five-bedroom, oceanview house on a 1.2-acre lot in Hither Hills is listed for $7.5 million with Mr. and Ms. Hegner.
“All types of properties are showing a large amount of appreciation,” Ms. Nielsen said. “Another sale at the beginning of the Old Highway was $2.2 million at the beginning of ’08, and not waterfront.”
“If you’re getting $2 million to $3 million still across the street, what is it on the water?”
Regardless, Ms. Nielsen said, she hopes that Mr. Madoff’s house is eventually sold by the government at a fair market price and that the money is used to pay off some of his investors, including her friends Laura Stein and Gene Wolsk.
The couple, who are neighbors of Mr. Madoff’s in Montauk, recently decided to sell their house to recoup some of the losses they had suffered as a result of doing business with him.
The Steins were not the only South Fork residents to take a hit. According to Ms. Nielsen, “not even Steven Spielberg deserves what he’s getting from Madoff.”