Friday, October 16, 2015

What Makes Luxury Real Estate...Luxurious?

We created this article with both buyers and sellers in mind, in an effort to avoid misunderstandings, bruised ego, and delayed or cancelled transaction. Below I’ve listed a number often misunderstood features and items that both sides of a Luxury Real Estate transaction should keep in mind when determining a realistic listing price or offer price for a truly luxurious home.


What is (and isn’t) the ideal luxury location? America’s most highly sought after locations feature an uncommon blend of three distinctly different attributes: A view, a sense of safety and serenity, and believe it or not, good old fashioned practicality.  There’s nothing sexy about practicality, but it’s valuable none the less.  Properties lacking any one of these elements will never capture the high ‘dollar-per-square-foot’ list price of a home that proudly boast all three of them. 

Unique Architectural Design: Beauty is in the eye of the beholder, true, but which architectural styles fetch the highest price in today’s luxury real estate market?  There’s a simple, almost boring answer to this question but it’s an important one. The most valuable homes are simply the homes that most people like! With the highest demand; the more people who are willing and able to buy your home, the higher the sales price. It’s that simple. Unique, striking, and dynamic architecture is a plus for sure, but keep in mind that when the day comes that you want to sell…”Striking and Dynamic” might be not translate to a “Loved By All” bidding war!  

The most valuable properties don’t just possess striking Interior and exterior designs. The design and style must be durable as well. By durable, I don’t mean that the structure can withstand a hurricane or an earthquake, but durable in a sense of “timelessness.” That timelessness ensure that you’re home property will never truly be “out of style”.  Modestly sized, mid-century homes by designers like Wallace Neff and Hal Levitt occasionally sell for over $10 million. I’d call that timeless value.

What’s not Luxury? The clichéd McMansion; just another big house.  5,600 sq. ft. doesn’t make a home luxurious. It just makes it big. America is still reeling from the effects of its unquenchable thirst for size. Tract home developers churned out millions of “Luxury Estates” which really amounted to a bunch of big, poorly specified and poorly crafted big boxes with fancy names.  Yes, size matters.  But size and luxury don’t have to walk hand in hand.  Fine things come in small packages as well. 


One last point about architectural design.  Don’t confuse architecture with design style or even a home’s décor.  Architecture is, for all intents and purposes, permanent.  Homeowners can simply and cost effectively update and upgrade a home’s finishes. Updating the painting and flooring is easy enough. Kitchens and Bathrooms are a bit more involved. But unless you’re a developer or a general contractor, make sure you love the “Sticks & Bricks” of the Luxury Home that you’re buying.  Changing a home’s architecture can become a monumental task.  Moving interior or exterior walls, making room additions, and reconfiguring rooms, with all of the complications of engineering, permits, plumbing, and electrical can be cost prohibitive, or at least a bad investment. Luxury architecture: It’s unique.  It’s custom.  It’s artistic. It’s inspired.


Design.  Whether buying or selling, don’t fret too much current the current design detail of the home. Real estate stylings and décor share the same vicious cycle as fashion.  What’s popular today…won’t be in near future, and often simply because the design and décor industry decided so. 
Take solid surfaces in the kitchen, for example. Solid surfaces in the kitchen serve three practical purposes: 1) Aesthetics. 2) Durability. 3) Ease of cleaning.  But if these surfaces are beautiful, long-lasting, and easy to maintain, why are luxury homeowners “upgrading” to concrete, quarts, marble, or even going back to tile?  In my opinion, it’s because they saw it in a magazine or on TV.  You know, on that show that’s sponsored by the big Home Improvement center! 

Photo courtesy of Pyrolave

I recently called on a property located on The Strand in Manhattan Beach, CA.  The listing agent humbly conceded that the home I was calling on was “dated” and needed upwards of a $500,000 in upgrades.  And I quote, “…the property still has granite counter tops. Can you believe that?” Evidently the owner was not “keeping up with the Kardashians”.  So, what’s hot this week?  Enameled Lava counter tops! Yep. You can run out right now and pay an estimated $400 per square foot for counter surfaces if that’s something that’s important to you.  Personally, I’d look into buying another investment property before I spent that much “upgrading” my counters.  Or would I?

Quality and Finish. One of the primary differences between a Luxury Home and a home that’s simply ‘big’ is the quality of materials and craftsmanship.  Take marble flooring for example.  Marble floors adorn the most opulent foyers, but how much does marble flooring actually cost?  You can get marble tile flooring for under $3 per sq. ft. if you’re not too picky.  Another $6 per foot to install and that 1,100 sq. ft. foyer and living room comes in at a cool $9,900.  However, for a finer cut of marble at $20 per sq. ft., and a more highly skill tradesman for $10 per sq. ft., setting the price tag for that Luxury foyer and living nearly $35,000.  Oh. I’m sorry.  You want real luxury?  Use marble slab at upwards of $100 per square foot and yes, you’ve got yourself a $110,000 entry to your living room.     


Is the home built Outside-In?  Another important feature of a Luxury Home is a floor-plan and


design that invites the beauty and views of the outside to become part of the inside.  This type of design, bringing the outside in, truly is a timeless attribute.  Whether you’re in Uptown Manhattan, Trousdale Estates, or Lake Tahoe’s Emerald Bay, soaking up the views from the comfort of your family room won’t just bring a smile to your face…but might bring an extra zero to the end of your listing price as well!


Tall Ceilings. At the time I wrote this post, I was sitting in an elegant formal living room. Albeit modest in terms of square footage, it was truly luxurious in terms of the sheer volume of space and the feeling it conveyed.  Its footprint is only 14’ by 20’. That’s 280 square feet; not huge by luxury home standards. However, when you add the ceiling height (22 feet) to the equation, the sense of grandeur is unavoidable.  It provides an anchor; a center for the entire home.  Yes, at 14’ x 20’ x 22 feet high, the living room is actually taller than it is long.  Compare this room with a room of the same square footage but an 8’ ceiling height. At 14’ x 20’, both rooms would be 260’ square.  Add volume to the equation and you go from 2080 cubic feet with an 8’ ceiling to 6,160 cubic feet. That’s 296% bigger.  It’s three times the size, and it feels like it.  So, unless you’re in the most highly sought after neighborhoods, or happen to own a mid-century architectural gem, a property has got to have one or two rooms with ceiling heights in the 12’-16’ range, or higher. There are very few homes with 8-foot ceilings throughout that truly warrant a “Luxury” price tag.


Storage. Convenient. Neat. Aesthetic.  Perhaps I’m biased on this one, being involved in many, many activities. But seriously, how can we live without lots of closets and ample additional storage that’s out of sight, but not out of mind.  If I had a buck for every three or four car garage I’ve seen that somehow doesn’t have room for A car…much less 3 or 4.  We’re American.  We keep stuff! Kitchen cabinets, a pantry, hall closets, linen closets, walk in closets, storage sheds out buildings, and on and on.  If designed intelligently, adequate and convenient storage might be the one feature that gets your contract signed.
I’ve not discussed a number of other items such as garages and car-ports, maids’ quarters, humidors, or bomb shelters, but I think you get the point. Certain traits and characteristics are timeless and will bring timeless value to any home, not just those of the rich and famous. So keep these in mind, whether the next home you buy cost $500,000 or $5 Million.


Tuesday, October 6, 2015

How to Get My Real Estate Offers Accepted: 15 Relevant Strategies

The plight of many of today's buyers: "I'm willing. I'm able. I'm motivated. I'm just so tired of submitting offers that never get accepted!"

I often compare getting a real estate offer accepted to the simple but never easy task of hitting a golf ball properly. It seems like it would be easy; cut and dry. But when you actually try to execute you realize how challenging it is.  There aren't 2 or 6...but about 15 things you have to keep in mind in order to execute properly: Grip, stance, weight, balance, head position, back-swing, and on and on.  Not executing properly on the residential purchase agreement will either leave you listening to the crickets or worse...paying too much for a property that may not be worth it.


How to: Note that this list is bullet-ed as opposed to numbered.  Numbered lists lend themselves to a sequence. Do #4 immediately after you do #3.  Bullet-ed lists are simpler.  When you do them all...you're finished.


  • The most outside-the-box strategy used today was the ONLY effective strategy decades ago, but it's making a comeback.  Ask your Realtor to hand deliver your offer! Yep!  "Get in that fancy car and drive it to the seller's agent’s office." It's really easy to ignore an e-mail, phone call, or text message.  It's much harder to ignore a human being; one who's gone out of his or her way to hand deliver an offer.  Make sure your agents are going above and beyond.

  • Do your best to truly understand the seller's motivation. Price isn't always king! Neither is cash; especially in short sale situations where the seller may stand to net zero out of the deal. Maybe the seller needs to find another property.  Maybe the sellers need to close immediately and are less concerned with proceeds.  Maybe the seller would like to do a three week rent-back after close of escrow to help accommodate the move?  Learn your sellers' motivating factors and you've won half of the battle.

  • Demonstrate to the seller that you are not just willing, but able to close. Include bank statements, or Proof of Funds to Close with your offer. Pre-Approval, FICO scores, etc.  Your job is to give the sellers peace of mind that the transaction will close if they go with your offer.

  • Offer the right price and back it up with Market Data. Sadly, many agents just don't have their head int he game.  Agent Bill is selling his Aunt’s house.  He's new.  Give him the market data necessary for him to go to the seller and show why your offer is the best offer.  "Look Aunt Mary!  See the market data?  This is a great offer.  I think you should accept it."  Done.  

  • Offer your maximum down payment.  If you're writing an FHA offer, perhaps you can put 5% down rather than the typical 3.5%.  Writing Conventional? Can you put 25 or 30% down instead of 10 or 20%?  Make each element of your offer the strongest it can be.  

  • Offer to close quickly. Ask you lender if he/she can perform quickly.  With all else the same, a buyer will typically accept the offer with the shortest time to close.  It shows your commitment and eagerness to perform. With lender laws and stipulations over disclosures getting more complicated by the week, securing an effective lender who's capable of performing on time is crucial.  

  • Limit Contingencies with this caveat: Protect yourself first, aggressively pursue the property second.  A contingency on a contract may make a seller nervous. However, you may be able to shorten your inspection contingency period, from 17 days, to 15...or to 10.  If your agent is proactive, he/she may be able to line up inspectors in advance, thus not necessitating the entire 17 day contingency release period.

  • Offer a Significant Earnest Money Deposit. This can be up to your entire down-payment.   Remember, it's not at risk until you release all contingencies, but it might show the seller a level of commitment that no other prospective buyers are willing to (or even thought to) show.

  • Write a personal letter. Seriously! More often than not, there is a human being on the other side of this transaction. Expressing, in writing, why it's important that your offer is accepted may be the deciding factor. This is the "get off the pot" clause.  You may be spending a half a million dollars or more on a home.  Step up!  Put in the 12 minutes it might take to draft this letter, even it you have to do it 3 or 4 times.

  • Escrow Period. "We're willing to wait if you accept our offer now!" "We can close our FHA loan in 28 days if that would help!"  Communicate your willingness to be flexible.

  • If you don't NEED closing costs covered, don't ask. Buyers' Agents often ask for closing costs credits as strategy to help their buyers get into a home.  However, as a listing agent, why am I going to accept an offer requiring my sellers to hand over a portion of their proceeds if I have another offer that doesn't?  "But can't we raise the offer price to cover the additional credit?" Yes. But if you don't need to...don't.  Raising the offer price might push the contract price above the appraised value of the home, leading us all back to the negotiating table.  

  • Submit an as-is addendum. If you're willing to buy a property truly as is, let the sellers' know up front.  Add to your offer the fact that you're actually simply going to buy the home in its current condition, regardless of what turns up on inspection. 

  • Ask if you can, submit a back-up. Can't even find an "Active" property that suits your needs? To me, every property is active, even if it's not on the market at all.  Ask your Realtor to see if you might be able to submit a back-up offer even if MLS doesn't say you "can."  A simple call from one agent to another might plant a seed that turns into a smoothly closed escrow just weeks later.  Remember, if you don't ask...the answer is no. 

  • Put your money into escrow prior to approval on a short-sale offer. Showing the listing agent that you're willing to put your deposit money into escrow demonstrates yet another level of commitment. Remember: your funds are not at risk until you've removed all contingencies.

  • NEVER count out negotiation with a builder.  Even if you don't "feel" that a new home is right, don't leave yourself in a position where you look back a year later and think, "Wow, we could have lived here!" Another caveat: Don't go into the builder's sales office unarmed.  Although I work with builders very, very often and have huge respect for virtually all of them, it costs you nothing to have your Realtor register you and to have him or her negotiate on your behalf.  Imagine if you could have a "Professional Auto Negotiator" with you when you buy your next car...at no extra charge!  That's the circumstance with builders.  Those of us who close many deals in new construction understand the process thoroughly; know what to watch out for; know what the builders might think is ridiculous; get the deals done. A Realtor's commission from the sale of a new home typically comes from the corporation’s ad budget, not from the price of the house. If you've experienced success not outlined here, we'd love for you to share in the comments below, or by sharing via social media.


~RESN
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