Luxury homes face a longer and bumpier road to the closing table than most homeowners. There are a number of reasons for this: A smaller pool of buyers that are savvy and, because of their affluence, are in no hurry to buy. Several cogs can end up in the luxury home sale wheel and further slow the process to a crawl and kudos to you for wanting to know about these upfront.
The luxury home seller
One thing we’ve noticed with our high-end home sellers in Anchorage is that they have a mindset that theirs is the most luxurious home on the market. Now, that may be true, but combined with the attitude of most high-end buyers who can afford to be choosey and you’ve got the makings of protracted negotiations.
Understand that this sale is a business transaction and try to keep emotions out of it. If a buyer requests changes, say lighting or flooring, it’s not meant as an insult to your taste. The longer you take to determine whether or not you will give in to the requests, the longer the home will take to sell.
Regardless of 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 agent carefully
“How do you make the incomparable, comparable?” is a question posed frequently by author and luxury real estate expert Jack Cotton as he travels around the country counseling luxury home real estate agents.
Pricing these homes is challenging even for the experienced agent. It requires a skill set that other 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. The agent you hire must have a robust marketing budget to cover the unique marketing methods required when getting the word out about your home. The newbie or part-time agent (and many, many full-time agents) lack even a minuscule marketing budget.
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 million dollar-plus luxury estates. “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 seasoned luxury home real estate specialist, the sizzle is the lifestyle the home represents. He or 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. Some marketing methods include holding charity events at the home or a benefit to market the home through social connections.
The luxury home buyer
With so many homes from which to choose, and a cushion of affluence beneath her, the luxury homebuyer can afford to take her time and be choosy. Sometimes her 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. In fact, last month the index for jumbo loans tightened, while those for conventional loans loosened. Since these loans are a bit more difficult to acquire than they were before the housing crisis, the loan process may slow the sale of the home considerably.
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. Overall, though, the successful sale of your home depends on you working with your agent as a team.