Luxury homes, defined as those which are at least three times the average sales price for a given market, can be difficult to price.
As is the case with any real estate listing, it’s important not to rely on Zillow or other online estimates when determining home value. Virtual tools like these may be adequate for pricing properties in cookie-cutter neighborhoods, but they should otherwise be avoided. High-end properties require more sophisticated methods.
The strategy you use to determine home value should reflect the property you’re working with. For example, a comparative market analysis may be effective in some circumstances, but will often be insufficient when pricing a luxury home. This is because comparative market analyses rely on data from comparable properties, and so luxury properties are often too unique for this to be a viable strategy.
So, if not by using a comparative market analysis, what is the best way for an agent to price a luxury home? First, do not prepare a pricing estimate ahead of the listing appointment. Instead, let the seller know that, given the highly customized nature of their home, you wanted to examine the property in-person before passing judgment on its value. That said, don’t show up empty-handed. Come prepared to the listing appointment with a market analysis report (MAR).
Market analysis reports essentially provide a snapshot of how other luxury homes in the area are performing in the market. By referencing this report and ordering a private appraisal, sellers will glean a much clearer picture of their home’s true value.
With all of this in mind, it’s also essential to remember the impact of the overall market. It’s crucial to keep market trends in mind when pricing a luxury home, just as you would for any other property.
If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.