Buy a condo, get a sports car.
While this sort of two-for-one arrangement has become common in markets where there are a lot of luxury property listings, add-ons like this aren’t always what makes the sale—and in some cases, can actually harm a negotiation, experts say.
In some cases, luxury extras— like six-figure classic cars, yachts, helicopters and fine art—can add value, especially when they’re relevant to the lifestyle of the would-be buyer. Other times, they don’t impact the end deal, but are a way to attract attention and get media coverage. And then there are the cases in which including luxury extras with a listing are seen as a sign of desperation, and a cue for brokers to negotiate hard on price.
“When it comes to these houses that come with a boat or a Porsche, in general, it’s a gimmick,” said Gary Gold, executive vice president of Los Angeles agency Hilton & Hyland. “But if we’re talking about a $25 million house on Kauai that’s fully furnished and comes with cars, or a property on a golf course that includes a bonus golf cart, that makes sense. Those aren’t coming out of left field.”
When Mr. Gold considers where this practice of throwing in an extra car came from, he sees a direct link to how resort homes are generally sold fully furnished with everything you need already there.
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When Los Angeles developers saw how many buyers of homes in the $10 million to $30 million range were using properties as the equivalent of a vacation home, and only staying there for two or three weeks of the year, they adapted that practice to this market.
It was about five years ago that Mr. Gold noticed that many luxury spec homes in neighborhoods like Beverly Hills and Bel Air were coming fully furnished. Today, he estimates that more than 50% of these properties priced above $20 million come with high-end, modern furniture.
In Manhattan, the developer of a new West Chelsea townhouse, listed for $36.8 million, is applying the same logic, and including a 2016 Bentley, valued at $368,000, as well as modern furnishings, which the client can purchase with the property.
“We wanted this mansion to be the complete, turnkey package,” said Compass broker Alyssa Soto Brody in an email. “The home is already breathtaking, but we wanted this home’s buyer to be able to just walk in and start enjoying.”
A much more extreme example of this same practice is Bruce Makowsky’s 924 Bel Air Road. Listed for $250 million, this 38,000-square foot spec mansion comes with 100 curated art installations, millions of dollars’ worth of classic cars and motorcycles, a deactivated helicopter and a $1 million outdoor TV.
“He did something in an extraordinary way,” Mr. Gold said, “and he’s shooting for a certain type of person that’s going to be completely enamored with the whole thing. I think it’s cool.”
If these are cases where the luxury add-ons make sense from a utility or lifestyle perspective, there are also times when extras are included in an organic way, leading to increased exposure and a sale.
Brad Robson, a listing agent for Place in Brisbane, sold a property that fits that criteria in late-November. The Chelmer house has four bedrooms, three bathrooms, and came with a 1993 Porsche Carrera 911, valued at $100,000. It sold a week before it was meant to go to auction for $2.31 million—an amount that Mr. Robson said the seller was “thrilled” with.
“I don’t believe the car was the reason that we sold it for a premium price,” said Mr. Robson, noting that the seller was looking to unload the car at the same time as the house, so they decided to make it a package deal. “What it did was generate a huge amount of interest over and above what we would have gotten without it.”
Because it’s incredibly uncommon to include an extra like this with a sale in Brisbane, Mr. Robson said the curiosity from would-be buyers was genuine. “If everybody was doing things like this, I certainly wouldn’t,” he said.
In the end, the buyer “loves the car, but isn’t sure what he’ll do with it just yet.”
But when the extras are thrown in as an afterthought—neither part of a lifestyle package or included in an organic way—there’s a chance the whole thing will backfire, said Dolly Lenz, the founder of Manhattan-based Dolly Lenz Real Estate.
“As a buyer’s representative, if I see a developer or seller offering a car, trips or other incentives, I see that as a major sign of weakness, and a cue to negotiate hard on behalf of our buyers for those units,” she said. “It’s just so silly. Anyone buying these properties could afford those things on their own.”
Mr. Gold agreed, noting that he recently told a client selling a $3 million West Hollywood house to forget about throwing in a $60,000 car, as he was inclined to do.
“That would have been a mistake on so many levels,” Mr. Gold said. “It makes it look like you’re desperate, adds an unnecessary cost, and now, you need to find someone that loves your home and also loves Porsches.”
Not to mention that this type of maneuver can be frustrating when it comes to paperwork tied to the sale. “In general, people don’t want to pay property tax on an extra like a car or artwork,” Mr. Gold said, so they separate the home from the add-on. “You’re basically adding an unnecessary cost that could impact how people look at your house.”
Here is a look at other news from around the world compiled by Mansion Global:
For Expats Entering Dubai’s Property Market, Buying Beats Renting
If you’re planning on entering Dubai’s market for any significant period of time, you’ll get more bang for your buck as a buyer. One key factor: Dubai purchasers face high upfront costs including the standard 25% down payment and the Dubai Land Department fee in addition to broker fees. Per an analysis from Souqalmal.com on the cost of buying versus renting a two-bedroom apartment in Dubai Marina over the course of seven years, after the initial outlay, the cost of owning would add up to Dh803,600 (US$219,000), compared to a cost of nearly Dh1 million (US$272,000) for renting in that same time period. And that’s without taking into account appreciation in property values. (Khaleej Times)
Defying Expectations, Sydney Home Prices Kick Off 2017 With Continued Gains
In spite of predictions of a slowdown, Sydney’s real estate market started off 2017 with yet more price hikes, with CoreLogic recording a 1% price increase for January, marking year-on-year growth of 16%, and bringing the median home price up to $850,000. “Obviously there is still heat in that market, there is still people wanting to buy and not enough stock actually available for sale and that is creating even more upwards pressure on values,” said CoreLogic head of research Cameron Kushner. All told, Sydney prices have close to doubled in the past eight years, and rental yields are now at 3.8%, the lowest in the country after Darwin. Elsewhere, prices in Hobart jumped 5.8% in January, and in Melbourne they rose by 0.8%. Sydney’s growth is expected to continue throughout the new year. (news.com.au)
Russians Searched For More Miami Real Estate In November Than Any Other Nation
Russian interest in South Florida properties spiked in a major way around the November election, according to the Miami Association of Realtors’ recently released list of the top countries searching for properties during that time. The number of Russians searching for Florida properties in November was at its highest level since the association started tracking the data in 2013, followed by Colombia, Venezuela, Argentina, Canada, Brazil, India, the Phillipines, Spain, and the U.K. The increased interest could be due to hopes that President Donald Trump will reverse 2014 sanctions against Russia that have made it more difficult for buyers from that country to enter the U.S. property market. (The Real Deal Miami)
B.C. Will Lift Its Foreign Buyer Tax For Purchasers With Work Permits
British Columbia Premier Christy Clark announced at an event last week that the government plans to exempt foreigners with work permits from having to pay the area’s onerous 15% foreign buyer tax when buying properties. Scant details are currently available as to the timeline of the rollout, or whether this will apply to foreigners with work permits who have already purchased and paid the tax. However, a government spokesperson noted that the changes are intended to go into effect “as soon as possible.” (Business Vancouver)
Growth In U.K. Home Prices Hits Its Lowest Point In 14 Months
Annual growth in U.K. home prices edged down in January, dropping to 4.3% from December’s 4.5%, according to data from mortgage lender Nationwide. These represent the U.K.’s weakest growth numbers since November 2015, and fit the pattern of an expected market softening for 2017, thanks to a combination of inflation with shaky job and wage growth. “The outlook for the housing market remains clouded, reflecting the uncertainty surrounding economic prospects more broadly,” said Nationwide Chief Economist Robert Gardner. While it’s encouraging that the economy didn’t slow as much as expected after the Brexit vote, said Mr. Gardner, “the economy is likely to slow through 2017 as the squeeze on household budgets intensifies and heightened uncertainty weighs on business investment and hiring.” Nationwide expects the rate of growth to drop all the way down to 2% over the course of the year. (The Guardian)
A Frank Lloyd Wright Home In Connecticut Is Asking $8 million
A Frank Lloyd Wright-designed home has hit the market in New Canaan, Connecticut, at an asking price of $8 million. The seven-bedroom, 8.5-bathroom home sits on a 15-acre property that includes a waterfall and overlooks the Noroton River. The home itself is designed in a classic hemicycle shape, and includes signature Wright touches, such as glass walls and wood finishes throughout. The property also includes a pool, tennis court, rooftop observatory (with telescope), a barn, and a guest studio. (Architectural Digest)
Pacific Northwest Home Prices Continue Their Rapid-Fire Growth
Home prices in the Pacific Northwest have continued rising at a brisk pace, according to the latest S&P/Case-Shiller Index. The 20 city-index for November showed an overall increase of 5.27%, with the U.S.’s Northwest cities seeing the most significant gains—10.4% growth in Seattle, 10% in Portland, and 8.7% in Denver. Nationwide, the National Home Price Index rose by 5.6% in November. While high demand and low inventory have continued to put pressure on home prices across the country, Zillow chief economist Svenja Gudell said, “Even as the pace of home value growth keeps rising, growth keeps rising, growth in rents is flattening out and stabilizing, which—combined with a series of other factors—will likely begin impacting the for-sale market sooner or later.” (Business Insider)
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