Selling a Teardown in Winnetka Under the New Bluff Rules

As The Real Deal reported, Vijay and Shiraz Kotte paid $12.3 million in 2023 for a century-old Spanish Revival mansion on Sheridan Road, the kind of property most buyers would restore rather than raze. A year later, the Village of Winnetka passed a construction rule that the Kottes believed would cost them millions in value. So they joined a lawsuit against it.

By August 2025, the mansion was gone. By December 2025, the Kottes had dropped their lawsuit. And today, on the same lakefront lot, they are building one of the largest lakefront homes in Winnetka, roughly 28,690 square feet, at an estimated construction cost of $10 million, fully compliant with the very ordinance they once fought to overturn.

The ordinance at the center of the dispute also governs other lakefront projects.

How Winnetka's Bluff Ordinance Applies to Lakefront Projects

In 2024, Winnetka moved to limit construction on and near the bluffs along Lake Michigan. The measure was widely understood as a response to billionaire Justin Ishbia's proposed $77 million megamansion on Sheridan Road. The Village of Winnetka says the ordinance establishes bluff regulations for development in the steep slope area along Lake Michigan.

The ordinance is relevant to sellers and buyers along Winnetka's lakefront. Vijay Kotte, CEO of Chicago-based GoHealth, told village officials at the 2024 meeting where the ordinance passed that he would have reconsidered both the purchase and the price he paid had he known the restriction was coming. The Kottes bought before the rule existed and are building after it took effect, on a lot they already owned. Buyers of bluff-adjacent land in Winnetka should account for the rule when evaluating a purchase.

What Building Under It Actually Looks Like

The Kotte project is the clearest live example of what compliance costs in practice. The permit application shows the couple received approval to build in June 2025, and reporting on that application found little conflict between the design and the ordinance's terms once the plans were submitted. The new house does not simply replace the Clement Stone Mansion, a landmark built in 1912 that had passed through owners including hotel magnate Albert Pick and Wander Company president James G. McMillan before self-help author W. Stone Clement lived there until his death in 2005. It replaces it under a different set of rules than existed when the mansion was standing.

The Closing Quirk Nobody Warns You About

The bluff ordinance is the headline-grabbing piece of Winnetka's teardown market, but it is not the only mechanic that catches people off guard at the closing table. Lysinski & Associates notes that Winnetka operates its own municipal electric utility, an arrangement most Illinois villages do not have. That means a Winnetka closing cannot complete until the seller's final village electric and water charges are settled directly with the village, a step that simply does not exist in most Illinois residential closings and routinely surprises out-of-market buyers, sellers, and even attorneys who have not closed a Winnetka deal before.

For a teardown specifically, the list gets longer. Winnetka is home to the landmark Crow Island School and houses designed by George Maher, Walter Burley Griffin, Howard Van Doren Shaw, and David Adler. A survey gets reviewed for easements that could conflict with the new footprint. And the gas line, run by Nicor, needs coordinated municipal shutoff rather than a simple disconnect, since a teardown is treated as a development project rather than a routine sale.

None of these steps are unusual on their own. What makes Winnetka different is how many of them stack on a single transaction, and how few closings anywhere else in the region combine a municipal utility payoff with bluff-compliance review and historic-district screening in the same file.

What the Numbers Are Actually Telling You

The headline price data on Winnetka can be read as a straightforward story of appreciation. As of the update posted May 31, 2026, the average home value in the village stood at $1,876,083, up 11.8% over the prior year. Read alone, that looks like ordinary North Shore demand.

Look at what actually changed hands and the picture sharpens. The median sale price in Winnetka reached $2,247,500 in May 2026, well above that broader average value figure. A median sitting that far above the village-wide average value is what you would expect in a market where the transactions actually closing skew toward the high end, the kind of sale where a buyer is underwriting a construction project on the land rather than simply purchasing the structure sitting on it.

That distinction matters for how a seller should think about pricing an older home in Winnetka right now, particularly on or near the bluff. The conversation is less about what the existing structure is worth and more about what the lot can support once the ordinance, the demolition permit process, and the closing mechanics are all accounted for. A buyer's team is already pricing that complexity in. A seller's asking price should reflect the same read of the market, not a comparison to a home sale that closed before any of these rules existed.

A Few Questions Worth Settling Early

Does the bluff ordinance only affect homes directly on Lake Michigan? It targets construction on and near the bluffs specifically, which means the properties most affected sit along the lakefront corridor rather than the village broadly. Anyone considering a rebuild in that zone should have the parcel checked against the ordinance before finalizing design plans, not after.

Is the electric utility payoff only a teardown issue? No. Because Winnetka runs its own electric utility, the final payoff applies to any residential sale in the village, not just projects involving demolition. It is simply more visible in a teardown closing because it appears alongside several other village-specific steps at once.

Is a demolition permit the same as a building permit here? The Winnetka Village Code treats them as separate steps.

If you are weighing whether a Winnetka property still makes sense as a home to keep, a home to sell as-is, or a lot to rebuild under the current rules, that is exactly the kind of conversation worth having before you list or make an offer, not after. Ron Ehlers has spent years working through these closings on the North Shore, bluff ordinance and municipal utility payoff included. Let's Connect and walk through what your specific address is actually worth to build on.

This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.