In real estate, there are times when the sellers have all the negotiation power (sellers' market) and times when buyers make the rules (buyers' market). It holds true for the majority of homes, even million dollar homes, but not always. Why? Because a luxury home, requires one of a luxury buyer.
The answer it's very simple.
1. It is a numbers game
At high-end and luxury homes, the market is tighter. There are only so many potential millionaires that can afford a million dollar home. Depending on the area, your home might appeal to 5% of the buyers, where a regular 3 bed 2 bath home might appeal to 90% of the buyers. So when you have way less suitors, it makes sense that you will have to negotiate with every buyer that come your way.
2. It is a preference play
Any client that buys a luxury home is not concerned about savings money for a vacation next year or paying down debt. Clients at this caliber have all their necessities met, so when they purchase a home they look for the WOW factor. They want to have the best home or to build the best home. So think a little bit now. If you have a luxury home, most likely you had it built just the way you wanted. It is only obvious that the next owner will want the same thing. The buyer will look to make a lot of modifications to the home, so not everything that you are "selling" will appeal to him or her. Here is an example. Maybe you had a bowling room, or a tennis court. There is a great chance that the new buyer doen't care for the bowling room and is not so much into tennis. To the buyer, the bowling room will take more work to change into something else, and brings no value other that the four walls it has.
I am not saying that your home will not demand more money in a sellers' market vs a buyers' market. All I am saying is that in every market you will have to negotiate, you will have to market the home and it will take longer to sale than an average home. I don't want you to take this as bad news, I just want to prepare you for the process Knowing how the market works will make it easier to play the "sale game" and get your number $$$.
Alex Sirb is a residential real estate agent in Northern California/Sacramento area, focusing on high-end and luxury properties.
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