After thinking about it for months, it’s finally time to list your luxury home. In such a competitive market, it can be hard to determine how much you should price your property. Pricing too low could leave you short-changed while pricing too might mean your home may sit on the market for months. Similarly, if you’re in the market to buy a high-end home, then you might be wondering if you’re getting a good deal. If this conundrum sounds familiar, keep reading for tips and tricks on how to tell what a luxury home is really worth.
1. Start by understanding luxury
In order to determine whether a luxury home is priced accurately, the first order of business is to start by defining luxury. While some people might be under the impression that luxury homes are defined solely by a price tag, this isn’t entirely true. Instead, there are a number of factors that help differentiate luxury homes from other properties. Luxury homes are often custom builds of premium building materials and with unique touches that aren’t replicated in other houses.
Although money isn’t the only defining factor, it does play a role in determining whether a home qualifies as a luxury property. Understandably, this varies from state to state and city to city. High-end properties are typically valued within the top 10% of properties on the local real estate market.
2. Common characteristics of luxury properties
Luxury homes aren’t solely defined by their price tags. Instead, there are a number of common characteristics that you can expect to find in luxury homes. Here’s a look into three features that set high-end properties apart from other homes.
Location
As the old adage goes, location, location, location. In addition to the size and grandeur of a property, the location also plays a significant role in defining whether a home falls under the criteria of a luxury property. Wealthy homeowners desire exclusivity on their property, providing them with peace and privacy from neighborhoods. Whether the location is an exclusive beachfront or an expansive ranch on sprawling acres of land, there’s no question that the location is a crown jewel of home ownership.
Quality
Additionally, high-end homes can be recognized for their exceptional quality, which sets them apart from other homes on the market. The majority of luxury homes are custom-builds where homeowners work closely with a designer and crafter to design a home that fits their unique needs and lifestyle.
High-tech era
Technology has become increasingly integrated with nearly every aspect of our lives and today’s homeowners want it all when it comes to the best tech. No matter where they are located, luxury homes have one thing in common: the best and newest technology. Homeowners today consider high-tech to be a necessity and luxury homes are the epitome of this. Builders are finding numerous ways to incorporate tech into today’s luxury builds. For instance, smart technology now enables homeowners to lock their doors, control their home’s climate, or control lights all from their iPhones.
3. Get an appraisal
One of the best ways to determine the value of your home is by obtaining a professional appraisal. A home appraisal is a process through which a real estate appraiser works to determine the fair market value of your home. It is an objective and independent assessment of a property’s real and current value. The Appraisal Institute, which is an association of professional real estate appraisers, states that a qualified appraiser should be licensed and certified and be familiar with the local area. Furthermore, the appraiser must be impartial and have no direct or indirect interest in the transaction.
A property's appraisal value is impacted by recent sales of similar properties, as well as current market trends. A number of factors are taken into consideration during this process. This includes the square footage, the number of bedrooms and bathrooms, and the home’s amenities, just to name a few. The appraiser is also responsible for performing a complete visual inspection of the interior and exterior of the property. They’ll make note of anything that might negatively affect the property’s value, such as glaring repairs.
Appraisers typically use the Uniform Residential Appraisal Report from Fannie Mae, which is considered the industry standard. The report includes everything from an exterior building sketch, photographs, comparable sales used, and other pertinent information, such as market sales data, public land records, or public tax records. All of this is used to help the appraiser determine the property’s fair market value.
The most common reason for home appraisal tends to be related to home financing, whether that’s buying, selling, or applying for a loan. For instance, for individuals who are entering the market as buyers, an appraisal is typically required to qualify for a mortgage. When you’re buying a home and under contract, this will be one of the first steps in the closing process. If the appraisal comes in below the contract price, this could potentially delay or derail the transaction. If the appraisal comes in, at, or above the contract price, the transaction proceeds as planned.
Additionally, as a seller, getting an appraisal also benefits you as well. It can give you a definitive idea of what your house is worth and provide assurance to a prospective buyer. A low appraisal means that you may have to lower your home’s price to get it sold. After all, no one wants to overpay for a home and an appraisal helps protect potential buyers.
4. Check the Comparative Market Analysis
Known as a CMA, a Comparative Market Analysis is a great way to estimate the value of a home. This comprehensive report, which is frequently used by realtors, analyzes comparable properties recently sold in a specific area to determine the value of a property. A CMA and appraisal are different processes, but both will help you get an accurate assessment of the worth of a property.
Additionally, a CMA takes into account a number of varying factors in order to come up with a dollar figure. This includes everything from the square footage, to the age and condition of a property, to special features, such as landscaping, parking, or a garage. Keep in mind that a CMA is not a hard and fast number, but more of a range. The most experienced agents are known for the accuracy of their CMAs and have a track record to back them up.
5. Property value over time
If you’re wondering if a home’s value can change over time, the answer is – in short – yes. Home valuation can fluctuate over time for a variety of reasons. This can be a result of changes in the market itself or changes in the economy, job market, or interest rates. Ideally, the hope is that a luxury home will appreciate and gain market value.
Homeowners who are looking to increase their chances of appreciation over time can take steps to help their home’s chances of appreciation over time. For instance, making smart upgrades and strategic renovations can help increase the value of a home. When it comes to making renovations, be sure to focus on renovations that bring the greatest return on investment. Some projects with high ROIs include manufactured stone, minor bathroom remodels, or major kitchen remodels.
6. Work with a realtor you trust
While getting an appraisal and running a CMA is useful, another way you can ascertain the value of a luxury property is through the help of a real estate professional. Real estate agents who specialize in luxury homes have an in-depth understanding of the ins and outs of dealing with high-end properties.
When selling, they’ll take the necessary steps to make sure that your home is priced appropriately and market your home to attract interested buyers. For more information on your home’s current market value, be sure to connect with a real estate agent. When buying, your agent will work tirelessly to ensure that you’re getting the best deal for your money and answer any questions that may come up along the way.
Whether you’re buying or selling, it’s important to work with a real estate professional who has extensive experience with luxury properties. Having a luxury real estate agent at your side will help you have a smooth buying or selling process, while also avoiding potential pitfalls along the way.
Whether you’re looking to buy or sell Calistoga luxury real estate, Peter Colbert is there to help guide you through the process. No matter whether you’re looking for a short-term rental or a forever home, Peter is a highly regarded Calistoga realtor and is fully equipped to help you find your dream home. He has years of experience in the real estate market and extensive knowledge of Calistoga luxury real estate. Peter can help you find a place that truly feels like home.
