When most people sell their house, they look at comparable homes in the neighborhood and price it accordingly.
But what if their house is unique, or huge, or has a heliport. It’s not as easy to compare it with their neighbor’s home when setting a price.
So there’s already a tendency to aim a bit high with the price. On top of that, luxury sellers often use something “fantasy pricing” because they have an “inflated opinion of the properties they own,” said Donna Olshan, president and owner of Olshan Realty Inc.
“They think they have something very unique that someone will overpay for when [in reality] most often the market will speak and tell them otherwise,” Olshan said.
Additionally, wealthy sellers are less likely to take the advice of their brokers, Olshan said. She believes this is because they don’t always need the money from the sale. The transaction won’t change their lives, so they will sell when they want to.
“Unfortunately, by not taking the broker’s advice more often, properties also have longer marketing times than the balance of the market, no matter what the conditions happen to be,” said appraiser Jonathan Miller of Miller Samuel Inc.
For luxury homeowners who don’t want their property to languish on the market, here are some tips.
Don’t Be Overly Emotional
As hard as it might be for some luxury home sellers, they should listen to what their listing agent has to say based on data and market research.
“[Brokers] have the ability to be detached and see the market more clearly than you,” said Miller.
Olshan said that realism often isn’t in sellers’ DNA, and that it is very easy for them to fall for brokers who promise the highest—albeit fantasy—sales price. And this is particularly true when it comes to luxury homes.
“What they need to do is try to understand the data that is being presented,” said Olshan. “It’s a business transaction and they need to take the personal out of it.”
Another way for sellers to keep realistic expectations is to be informed and understand their market. Public records, market reports and brokers and other real estate experts’ blogs are just some sources available to sellers to help them grasp what is going on in their area.
“Be fully engaged. As a team, you [and your agent] can work it together,” said Miller.
Mind the competition
While sellers of luxury homes want to think of their homes as unique, the reality is that buyers will consider many properties. In a market with high inventory rates, it is even more critical for sellers to take into account that they have more competition, said Miller.
“You can’t be aspirational in your pricing,” he explained, adding that an unrealistic price would yield no results and “waste everyone’s time.”
And in a flat to sliding luxury market, like Manhattan, an overpriced listing won’t sell, said Miller.
“The disconnect between the list price and market value is the most I’ve observed in my thirty-plus years of valuation,” he said.
Maximize Your Asset
“If you want to move your property efficiently, you price it right from the beginning,” advised Olshan.
Sellers can set and obtain a higher price if they prepare their properties before they hit the market, said Olshan, who has 36 years of experience as a broker. Changing the lighting in a gloomy estate or hiring a staging company to make a house look its best for would-be buyers can make a huge difference.
Olshan said that her office was able to obtain $1 million more for one estate than it initially deserved “because the staging was so fantastic.” She also recently convinced a seller to invest $50,000 in staging for a property that would not have fetched more than $599,000. After the enhancement, the house sold for $795,000 in its first week in the market.
“[Sellers] can unlock equity in their property by making it show better,” said the author of the weekly Olshan Luxury Report.
Olshan sums it up: “The secret to the sauce is this: you get the property to look the best you can, you price it right and you show it whenever there is a request to show.”
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