For the past six months, people wanting to sell luxury homes have had to realize a cold, hard fact: Nobody's buying.
While the real estate market at the bottom of the spectrum has seen increased sales activity, things have been different for luxury properties. This is for three primary reasons: 1) The decline in the market hit the most expensive properties in earnest beginning in late 2008, 2) The global financial market hit the wealthy hard, 3) Large loans have become extremely difficult to get.
Still, there are ways to increase your chances of selling even when no one's buying (like now). I'm going to group them as three "P"s. (It seems almost anything in life can be boiled down to three "P"s, huh?):
1) PRICE -- In this market "Price," may seem like the only "P" that matters. That's almost -- but not entirely -- true. If you are a seller justifying your price because you think your house is better than something on the market or better than some recent sale, then you are thinking wrongly about your price. With this frame of mind, you likely won't sell your home, or you'll sell for less than you could by pricing it more competitively. I'm sorry. That's just the reality of this market. However, if you happen to think your price is lower AND a better home, then you've got the right frame of mind.
2) PRESENTATION -- With luxury homes, you can't just be priced better, you have to look better, too. Think about it. If you've got a good amount of money, and you're going to buy a house in this market, you're not going to buy something that isn't ALREADY in good shape. Nobody wants fixers these days -- espcially the few-to-almost-zero luxury buyers out there.
3) PEOPLE -- OK, this is where the real challenge comes in. Getting your home -- instead of all the other luxury homes on the market -- in front of the most number of potential buyers. There are very good ways to do this, but many luxury agents don't do them. I'm talking more than just advertising in the same old places. Also, with so few people actual buyers out there for luxury homes, you also must consider getting your home in front of people who don't even know they're buyers right now but have the means to buy. This is extremely important, and dare I say, a specialty of mine.
5 comments:
Hi, Thanks I enjoyed your blog . You have a lot of good information that I can share and emplement into my realestate investment business. I also have a wholesale real estate website I will book mark your site.Thank you for the great info. Clint Mello www.myrockrealestate.com
The biggest stumbling block in that market right now is the vicious circle: In order to move into a high(er) end house, usually someone has to sell their house first. Since inventories are up, sales are down, and prices may be down, the first house cannot sell so they cannot make a deal on the second house. Also with longer DOM statistics, very few sellers are taking contingency offers. This really puts the kibosh on increasing the numbers of sales in that price range. The exceptions are first time buyers who have cash in hand or buyers who can hold their existing property and handle the debt on both the old and new properties.
Very good points, Raj.
However, since early April we have actually seen an increase in sales of the highest priced homes. It's not back to the good ole days, but it's a defineable increase in luxury home purchasing.
Secondly, trading up -- selling a less expensive home to buy a more expensive one -- is the most solid residential real estate move you can make in this market. If you're doing it smartly, the savings on the more expensive home should more than make up for the loss on the less expensive home.
But to do it, you do indeed need cash!
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