8 Keys To Pricing A Property In The Luxury Market
April 1, 2022
Knowing how to price an ultra luxury property can be a daunting task, especially if it is your first luxury listing. Although there are many similarities between pricing a luxury property and a non-luxury property, there are also many different aspects to pricing. This article will help guide you through the best practices for pricing an ultra luxury property.
1) Comparable Properties:
The biggest difference between an ultra luxury property and non-luxury is the lack of comparable properties. When you search the comps, there will not be an abundance of comparable properties. In fact, there may not be anything within a one-to-two-mile radius.
Luxury properties normally consist of custom homes with an exceptional location. Try to stay in close proximity to the subject property. However, if you cannot stay within a one-to-two-mile radius, you may have to go further out.
3) Builder, Architect and Designer:
Regardless of location, the key is to search out comparable properties with the same builder, architect or designer. For example, I listed a Bill Tull home. These homes are rare and are scattered throughout the Valley. His homes are like a true piece of art. I searched out all the Bill Tull homes that had sold in the past year. The fact that the home was designed by him was a major factor in pricing. The subject property is located in North Scottsdale. I had to use homes as close as Estancia and as far as the Phoenix Mountain Preserve.
Condition is extremely important. It may be an ultra luxury home that was built in the 1980’s, but has not been touched in forty years. In addition, there is a difference from a home with dated decor compared with a home in ill repair.
As a luxury agent, you need to be an expert on finishes. You need to have a general idea of what the finishes would cost today. Secondly, when pricing a luxury home, you need to know where many of the finishes were sourced. For example, was the tile imported from Italy?
6) Lot Size:
The lot size needs to be considered. Quantifying the value of the size of the lot can be difficult. You will need to do considerable research to find comparable properties with similar lot sizes.
7) Market Conditions:
Pricing an ultra luxury property in this historical hot seller’s market is quite a bit different from pricing a property in a balanced market or buyer’s market. For starters, you will need to factor in anticipated appreciation from list date to closing date. In addition, you will need to adjust comparable properties based on actual appreciation even if it closed just a few months prior.
8) Celebrity Owners:
If you are listing a home with an owner that is a well-known celebrity, this also affects the price. Normally, this will add value to the property. The Valley is home to many celebrities. Thus, it is common to come across this situation.
In summary, pricing an ultra luxury property is complex. It will take hard work and research in order to locate the best comparable properties. What is critical is to take the time to do the work to avoid overpricing. A property that is overpriced in any market will have serious consequences and often leads to repeat price reductions or the home not selling at all. You may want to also consider having an appraisal on the ultra luxury property coupled with the listing agent’s price opinion. Questions? Feel free to reach out to Allison.
Allison Cahill, Esq.
Allison Cahill & Partners Luxury Properties
Walt Danley Christie’s International Real Estate