Luxury Homes & Luxury Real Estate Blog

The Institute is pleased to announce that it recently celebrated a significant milestone when it surpassed its 1600-member mark a full year ahead of original projections. This rapid growth, when combined with recent studies, serves as an important indicator that real estate agents are hurriedly moving into the expanding luxury home market.

According to a recent report by the Harvard University Joint Center for Housing Studies, the number of “million-dollar” homes in the last decade grew 150 percent more than total number of U.S. homeowners. Luxury condos, coops, and secondary residences were not included, indicating that the true growth rate of “million-dollar” homes is much higher.

This increase in the number of luxury homes, combined with the recent record pace of home sales, is an attractive prospect that has resulted in a dramatic increase in the number of new real estate agents. In response, many agents are seeking out the less-populated territory of luxury real estate.

The difficulty that agents are finding, though, is how to differentiate themselves in an increasingly crowded marketplace. Many are turning to the distinctive value of designations and specialized training, such as that offered by The Institute.

David Cole, a real estate agent with Prudential Gore Range Properties, has worked in the upscale Vail / Beaver Creek market for over 30 years. Over the past decade, Cole has noticed a significant increase in the number of real estate agents in his county: “We are way over-populated, with over 600 Realtors® in a county whose permanent population is less than 45,000. Realtors® who have an edge on the market get the majority of the business, while others seem to get what’s left.”

Like many other agents looking to stand out, Cole recognized the increase in the number of luxury homes and sought out The Institute’s training and certification program.

“Back in the early nineties,” Cole explains, “we started to see development of spec homes valued at up to a million, but now we are seeing spec homes worth 7 – 10 million. I recently moved my office into Beaver Creek, so I’m hoping [the training and certification] will help me further the luxury market here.”

“The competitive market which David Cole talks about is consistent with what’s happening nationally,” agrees Institute founder and President Laurie Moore-Moore.  “With one Realtor® for every 78 U.S. home-owning households, it’s easy to understand why differentiation is a key to success.  Savvy agents recognize they must have skills over and above those of the competition and must be able to communicate to the consumer that they are unique and better able to meet affluent buyers and sellers’ needs.  As a result, our training has been in demand, as have our marketing tools.”

“Just 14 months after opening our doors,” Moore-Moore continued, “we have trained more than 1600 members on four continents, and the demand for our training is growing.  We are excited by such a positive response.”

Jamie Kennedy sells his 2505 square foot home in LA for $1,300,000.

Vicki Lawrence lists her five bedroom house in Long Beach for $5,000,000.

Steve Carell sells his home in Los angeles for $1,500,000.

Marie Osmond lists her two story house in Utah for $1,200,000.

Anna Paquin pays $1,575,000 for a 2,255 square foot house in Los Angeles.

Tommy Lee buys a 8,841 square foot house for $6,750,000.

Ashlee Simson sells her four bedroom home for $5,700,000 and buys a 5,896 square foot house for $4,500,045.

What is it that distinguishes a mega-million dollar home ($25 million-plus) from one that is “only” worth 10 million? Surely a difference of $15 million or more means that the difference is glaringly obvious. Sometimes, though, the difference is not as easy to recognize as may be thought.

A quick perusal of some ultra-expensive listings reveals that the extra value is not always visible in the listing information. The chart below compares five homes, four of which are paired by similar geographic locations. Two of the homes are under $25 million, but they share similar locations, amenities, and specifics with their mega-million counterparts.

So what is it about these homes that make them so much more valuable? According to Trinkie Watson, an owner-broker on Lake Tahoe’s west shore who specializes in lakefront residences and estate and ranch properties in the Tahoe area, extraordinary value is usually in the unique details, and could be anything: “Sometimes it’s the size of the property, or the number of improvements, or the quality and size of the main house. Could be a fabulous house on the water on a small lot, or large acreage with modest improvements—but a lot of lake frontage and ability to improve further. In a city like San Francisco where the lot sizes are somewhat similar, it would be bay view and elaborateness/date/size of house. At Tahoe, it can be the land itself that has huge value.”

Note the $42 million dollar apartment in the chart above, sold by The Corcoran Group in New York. The condo features 25-foot high glass walls; wraparound outdoor space; 8,400 square feet of living space; and a 360 degree view of the city, Central Park, and the Hudson river. A less expensive condo is available a few floors down, with the exact same amenities. The difference, however, (aside from square footage) is that the more expensive property includes unfinished space. The buyer is getting more space with the purchase, but it is the possibilities that truly boost the value.

When Forbes released their 2003 list of Most Expensive Homes in America, they pointed out that none of the properties on the list from the previous year had sold. Many went off the market or reduced their prices, but just as many also came on to the market with elaborate price tags. The question this raises is what motivates someone to ask or pay an elaborate mega-million price when the actual cost is far less?

In the Forbes list, the average asking price was $49.05 million, up from $48.4 million the previous year. While Forbes lists the reasons for asking mega-million prices as “hubris, greed, and pride,” a closer examination seems to reveal something even greater: Emotional investment.

Real estate mogul Edward S. Gordon built a nine-hole U.S.G.A.-rated golf course and elaborate gardens and ponds on his Bridgehampton property. How much of an emotional investment did he make? Enough to make the family feel justified in the possible record-breaking $75 million-dollar price tag.

Emotional investment, when combined with a mega-million price tag, is a difficult commodity to market, as can be seen in the longer-than-average listing periods for the mega-million properties. These long listing periods, though, are to be expected. The pool of likely buyers for any home is already limited according to who have (or will discover) an emotional connection with the property. When the high price tag is added, it narrows down the pool of possible buyers even further. Thus, the search to find those select few must be more targeted and will likely take much longer.

However, the property that gives the owners the possibility of making their own emotional investment, such as the unfinished space in the record-breaking New York apartment, makes a property even more desirable, because it appeals to a wider audience.

Does this mean that mega-million properties can only be sold if they are unfinished or “blank canvases”? Absolutely not. The key, though, is to sell its emotional potential. Even though the affluent like to handle their transactions in a business-like manner, it’s an old sales axiom that the ultimate purchasing decision will be based on emotions.

Because the characteristics of the luxury buyer require a business-like approach, the emotional appeals should act as a supplement, not a replacement, for logic and reasoning. What this means for the agent, then, is that they must approach the property with a straightforward, business-minded strategy, while remaining acutely aware of the emotional possibilities.

Anthony Armstrong

When the garage resembles an airplane hangar, that’s just one sign that you may have a property to market for more than a million dollars.

The Evening News and Tribune scoured real estate listings as part of its Snapshot project, highlighting the most audacious advertisements. But as this isn’t Beverly Hills or Martha’s Vineyard, properties commanding a seven-figure price tag were scarce: three in Clark County and three in Floyd County.

Finding a seller who was willing to be spotlighted was equally difficult. The paper gained access to only one house: 5450 Moser Knob Road in Floyds Knobs. The other properties included two farms and a commercial lot in Clark County as well as two Floyd County houses with dimensions similar to the hilltop estate featured in this article.
Eric Dietrich has been selling homes for Semonin for three years and has spent 15 years in the industry, including building some homes himself. With obvious relish, he takes a first-time visitor straight to the selling point: “the million-dollar view,” as Dietrich calls it.

From the south side of the house spreads a glimpse of New Albany in the foreground and Louisville in the background. Even on a hazy day, it’s not too shabby.
The garage accommodates an RV. Two pool rooms — one for swimming and one for billiards — have a comfortable atmosphere. The four bedrooms and five and a half bathrooms are spacious.
“This house really is the ultimate in luxury and leisure,” Dietrich said. It’s priced at $1,050,000.

Built in 2000 to the specifications of its only owners, Matt and Sarah Roberts, the home has spent a couple of months on the market, which is not unusual for a top-end property.
Since only the top 1 percent of shoppers can afford homes in this range, “they stay on the market a little longer,” Dietrich said. However, since there are so few homes offering this level of luxury in this area, those who seek it don’t have many alternatives.
Sometimes its the minor rarities that make a house stand out. This one has a pasta faucet, which is a faucet above the stovetop for filling pots with water, a trash compactor and even a urinal in the kids’ bathroom.
“There’s no rhyme or reason to what makes someone click with a house,” Dietrich said.
Hard mathematical reality dictates that the market downturn has thinned the herd of million-dollar houses, and prospective buyers often go for a few percentage points below the asking price.

But Dietrich is looking forward to a rebound: “If inflation can stay in check, hopefully by the middle of 2008 we can have some normalcy return to the market.”

Eric Scott Campbell

Gene Wilder lists 2,756 square foot house in Bel-Air for $2,750,000.

Tom Joyner and Donna Richardson Joyner list their Beverly Hills home for $5,600,000.

Joan Cusack pays $5,300,00 for a mansion on Chicago’s Gold Coast.

Larry King sells his house in Beverly Hills for $7,140,000.

Gwen Stefani pays $2,395,000 for a 3,351 square foot house in Los Angeles.

Martin Scorsese sells his town house on Manhattan’s Upper East Side for $6,160,000.

David Spade lists his four-bedroom home in Malibu for $16,000,000.

Peter Gallagher pays $3,000,000 for 5,225 square foot house in Los Angeles.

Kanye West buys a six bedroom house for $7,150,000 in Beverly Hills.