Luxury homeowners in the market to sell their homes face a longer and bumpier road to the closing table than most homeowners: a small pool of buyers, the challenge of setting a price for a unique piece of real estate, and savvy buyers that – because of their affluence – are in no hurry to buy.
Several cogs can end up in the luxury-home-sale wheel and slow the process to a crawl.
The Luxury Home Seller
“Luxury home sellers are typically of the mind-set that theirs is the most luxurious home on the market,” said Debbie Lynch, an agent with Power Brokers International in Beverly Hills, Calif. Combine that attitude with that of the high-end buyer who can afford to be picky, and you’ve got the makings of protracted negotiations.
“They see a buyer’s request for changes, such as in lighting or flooring, as an insult to their taste. Getting them to agree to make the changes is therefore a bit challenging and more than a bit time-consuming,” Lynch said.
No matter how affluent you are, your home represents a substantial financial asset, the sale of which needs to be approached as a business deal. Nothing during the process should be taken as a personal affront. Remain unemotional to help the sale run to a smooth closing.
Choose Your Luxury Home Agent Carefully
Because pricing and marketing luxury estates differs from that of lower-end homes, luxury home marketing has become a niche within the real estate industry, spawning what is known as the luxury home specialist.
“How do you make the incomparable, comparable?” This question is posed frequently by author and luxury real estate expert Jack Cotton as he travels around the country counseling luxury home specialists.
It requires a skill set that other real estate agents haven’t acquired. The necessary knowledge involves experience in adjusting various amenities in a “quantitative manner … for the differences among the comps and the subject,” according to Cotton.
Then, there’s the marketing of luxury homes, which in no way compares to the marketing of homes in the lower price ranges.
Don’t Sell the Steak – Sell the Sizzle!
Although Elmer Wheeler’s admonition was popularized almost three-quarters of a century ago, it still holds true today, especially when marketing multimillion dollar luxury homes.
“The sizzle is the tang in the cheese, the crunch in the cracker, the whiff in the coffee and the pucker in the pickle,” Wheeler added.
To a savvy luxury home real estate specialist, the sizzle is the lifestyle the home represents. She understands the affluent buyer – his hot buttons – and targets them with the precision of a laser beam.
The luxury homebuyer pool is a tiny pond compared to the ocean of buyers in the lower price ranges. Competition for these buyers is sometimes quite fierce. To make the home stand out among the competition requires creativity while remaining stylish and sophisticated.
“The quality of the marketing pieces should reflect the quality of the property,” Jim Prange reminded luxury home specialists at the Realtors® Conference & Expo 2010.
Luxury home marketers need to be able to creatively market the home to affluent buyers. This could include holding charity events at the home or a benefit to market the home through social connections.
The Luxury Homebuyer
With so many homes from which to choose, and a cushion of affluence beneath him, the luxury homebuyer can afford to take his time and be choosy. Sometimes his demands may seem trivial to others, but they will certainly slow down the sales process and, in the end, may make or break the deal.
Buyers of high-end real estate are often put through financial hoops when acquiring a mortgage, which can slow down the loan process. In general, jumbo loan requirements include:
- Employment verification.
- Proof of substantial assets for a large down payment and reserves.
- Verification of high credit scores.
- Low debt-to-income ratio.
The speed of the loan process has a great deal to do with the liquidity of the buyer’s assets.
The most important aspects of selling your luxury home include choosing the right real estate agent, savvy marketing and being unemotional and flexible. Accommodate those short-notice, private showings. Be ready to hold the home open, if necessary, and provide refreshments. Selling your luxury home successfully depends on you and your agent working as a team.