Developing a Luxury Home Market Strategy
Real Estate markets are evolving, sometimes on a monthly basis. They change from state to state, county to county, neighborhood to neighborhood & home to home. Markets are complex systems comprised of appraisals, inspections, mortgage financing, zoning, covenants, restrictions, taxes, schools, buyers, sellers, new construction, existing construction and so much more. Each component exerts its own force. Each component impacts price and time on market. Each component deserves undivided attention to detail, knowledge & experience.
How you approach a marketing strategy is critical to minimizing time on market and maximizing realized selling price. Pricing strategy is only one component of marketing. The traditional approach to pricing employed by most agents is to do a quick search for comparable homes and their recent selling price.
They call it a “Free Market Analysis” Click, Click, Click…
It’s that easy! Wouldn’t that be nice… if it worked. It doesn’t work in the luxury home market.
“Our home is so unique…”
The luxury home market is comprised of more “Unique” homes than other markets. “Unique” to a seller means “Wow there is nothing like this and I should get a high price. It’s one of a kind!” “Unique” to a buyer is another story. In some cases it can mean “Just what I’ve been searching for over the past ten years!” in other cases it can mean “Did you see that ugly sun room off the kitchen? What possessed them to put a ten person hot tub in the middle!” Note: The “past ten years” is not a good sign for time on market and “ten person hot tub” does not add value. It’s important to understand how the “Unique” qualities of your home impact pricing as well as time on market. Click, Click, Click won’t determine that impact.
“The buyer is paying 50% down. A lower appraisal won’t matter…”
Recent and ever evolving changes to banking regulations tie appraisals and mortgage financing together in a complex system that is not easily understood by sellers or buyers. It can quickly untie the link, between the price you paid and what you can expect to sell the property. It happens in an instant. Understanding how to maneuver through this labyrinth and successful experience can be the determining factor to close a deal. That successful experience does not come overnight and is seldom achieved by part time agents.[/cp_one_half]
Like it or not, a market bristling with “New Construction” in the Luxury Home Market will impact selling prices on homes even less than 2 years old.
“Our home is better than new. They don’t build them like this any more!”
Understanding the relationship between the depreciation of your home’s mechanics as well as the depreciating infrastructure of kitchens and baths is a must. This moves beyond the immediate neighborhood and extends to similar neighborhoods in the surrounding area. Drive similar priced Cadillac, Lexus or Mercedes vehicles off the lot and they will depreciate at different rates almost immediately. Your preference or thoughts don’t matter. The Market will determine the depreciation. Your agent must have an intimate working knowledge of this relationship to form a strategy.
“Sure, just cut down a few trees and you can put in that in-ground pool. The lot is perfect…”
Zoning restrictions and covenants vary from township to township. Covenants can maintain the feel and spirit of a neighborhood over some time period. They do expire. Once they do sheds and above ground pools can pop up where they were not possible before changing the character of the neighborhood. Zoning restrictions and “green space” restrictions can prevent the removal of bothersome trees that have grown to large and outlived their purpose. All of these can impact on what a potential buyer can do to the property. That impacts value and time on market. Knowledge of these restrictions is important when an agent tries to match potential buyers with properties. No one wants a surprise at closing or a reason to back out.
“The last home just sold here. It’s a very popular area and what a view from the rear deck…”
That development “to be built” covering that hill across the meadow might not be the look a potential buyer wants. The value of the homes to be built and the timing of their construction will impact time to market you home as well as the potential price you may realize. Being “in the know” on local construction helps to eliminate surprises and time your sale.
Listing a home is one thing. Developing a marketing strategy for a luxury home today goes far beyond staging and professional photographs. It takes experience and knowledge and the ability to get around those surprises. The ability to quantifying the impact of each of these market influences is essential to a realistic marketing plan for Luxury Homes today.
Create a market strategy for your success. Trust the Power, Knowledge and Experience of Kevin Mihm to build your strategy.
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