Luxury homes’ sellers behave just like any home-seller regardless of the property price tag. Right?
High-end buyers act just like any buyer, irrespective of the price level. Right?
When I was brand new in the real estate business (the day before yesterday), eager to learn from the seasoned pros, I was told again and again that all buyers and all sellers are the same, that they share the same motivations to either buy or sell, whether they are in the multi-million dollar price range or dealing in the low 6-figure market.
There is some truth to that. People of all income levels get into a transaction, at either end, because they want to or because they have to. And they all are human, in other words emotional when about to sign a contract. No matter how much money they have and how expensive the property is, they want to get the best price and the best terms.
So far so good. We are all alike, well, up to a point. Eventually I grew up in the business and I saw the light. The luxury market is a different animal. For one thing, everything being equal, there is a lot more commission dollars to be made at the high-end. You don’t have to perspire piling up sales to arrive at a good income. Besides, when you are recognized as a luxury market tenor, you don’t have to work quite as hard to convince any seller or buyer that you are good. They believe it. That’s why they want you.
So I decided to become a high-end specialist. An expert of sort. And I found out fairly quickly that, even though people are all built the same way, they don’t act the same way. Depends on how much they have in their bank accounts. Big money has a way to change how the brain works.
First of all, very successful people (financially speaking) are acutely aware of who they are and what they want. They work with real estate agents who understand that much and have the ability to explore all possible legal/fiscal/financial options, and deliver on the expectations.
At the high-end level, nothing is black or white. There is rarely a straight and easy itinerary to go from A to Z, from a house selection to an offer, from an offer to the sale and from the sale to the after-sale. Let me mention a few examples of what makes working in the luxury market an always interesting challenge.
- From small (relatively speaking) to big (huge) and back to square one: I remember reading a story last year in the Wall Street Journal about a wealthy couple who bought a couple of pricey attached townhouses in an upscale district of London. The opportunity to combine them into a large mansion was tempting and so they did it. Expensive proposition, no doubt. A few years later, they decided to sell. The price was rather steep. The luxury market was now soft and weakening. No acceptable offers. No sale. So what is our couple to do? Elementary: break down the mansion back into 2 townhouses! Same total price at the end for the sellers, except that now it was split between 2 properties, each one offered at a price easier to digest, for a “fast” sale.
- Costly leases: When money is no object, the choice between buying, leasing, living in a hotel suite or riding the waves on a yacht is a hard one to make. Why choose anyway when you can go from one to another, whenever you feel like it. In the world of luxury, it is not uncommon for a special few to spend a fortune leasing a home or two at a price that could easily equal or even exceed the cost of buying a fine home. This scenario is very appealing if and when you buy a lot and need to wait a couple of years for the house to be completed. Same thing when you do a major remodeling job in your house. Until then, however long the wait may be, you’ve got to live somewhere, somehow.
- Expensive & expansive rent-back: Nothing too terribly unusual about sellers remaining in the property past the close, whether the sale price is $500,000 or $50,000,000. Let’s just say though that, in the latter case, the seller is likely to be given a lot more latitude, the wealthy buyer is not exactly on the street and the arrangement may turn out to give both sides better negotiating terms and a lot more appreciable breathing room. What’s a week, a month or even a year anyway? Let’s be practical; when you need to pack containers’ worth of clothing and 10,000+ square feet of furniture, art work & accessories, you need a little time and peace of mind. For that matter, in that price range, I don’t know too many buyers who would just move in without breaking a few walls, updating kitchen & baths, adding some trendy amenities, etc... Personal touch-type-thing. The buyer’s own signature on a house that no longer reflects the previous owners’ taste and lifestyle. More time to move out and to move in is a perfect accommodation in the luxury market.