Luxury Real Estate Misconceptions
We’re continuing our discussion of luxury real estate misconceptions. You might think I am obsessive or a little bit OCD about this whole concept of comps and comparables: Do we need them; do we use them and do the wealthy accept them?
Somebody mentioned at the recent NAR convention in Anaheim, California that wealthy people don’t care about comparable sales and market data. They advised to pick a high number, execute incredible marketing and get the property sold.
I’m finding in this market, as I have through my 37 years that people of the high-end are astute and business driven. If anything has changed in the market it’s the propensity of high net worth individuals to treat the purchase of luxury real estate, whether it’s a second or third or fourth home like they do their business.
One recent buyer said to me that the “metrics of the data points of the market” are not lining up as we were negotiating a sale. How is that for bringing your business into the process of buying a second home?
I understand that no one thinks that anything is comparable to their own property. Our job is to make the incomparable comparable as we discussed last week.
For example I’m doing a CMA now on a house with a multi-million dollar indoor pool. We make the incomparable, comparable by adjusting for the differences among the comps and the subject.
Luxury sellers are skeptical. They want to know where your numbers come from. That’s why we develop a quantitative way to adjust the comps to make the incomparable, comparable.
Help your luxury sellers get over that little hump that “those other properties aren’t like mine”. High end buyers and sellers are extremely market and market metric driven. They love facts, figures and spreadsheets. They love to see a process and just don’t throw money around.
We recently had a buyer of a home priced at over $6 million press us for the costs of utilities and maintenance prior to the closing. He wanted to know the costs to run the property so he could plan. This buyer like many in the high end, don’t throw money around just because they can. Numbers, benchmarks, reasoning and process matter in the high end.
Hopefully this clears things up a little bit about pricing. If you have any questions email me, Jack@jackcotton.com. Don’t forget if you bought Selling Luxury Homes to reserve your 20-minute phone consultation with me. Just fill out the form and fax it to me. Until next time make it a great week.
