Executives looking to sell their homes face tough competition in the current real estate market according to area real estate agents.
Based on statistics provided by area realty groups, there is a two- to three-year supply of high-end homes on the market. In this buyer’s market, the data show sellers can anticipate a three- to eight-month turnaround time for luxury homes.
While it is the quietest sector of the real estate market, owners who have realistic expectations of their home’s worth and become actively involved in its sale have a better chance of succeeding, said Marty Sowa, president of the Realtors Association of York and Adam Counties and manager of Country Home Real Estate on Market Street in York.
“Your home is only worth what someone is willing to pay. If you bought your home five years ago and paid $500,000 and you think it is worth $595,000, you might find in today’s market the actuality is a buyer may only offer $475,000,” Sowa said.
This grappling with the realization of what price a home can garner is one of the biggest obstacles facing sellers of luxury homes, he said. In the higher-end market, the math makes it much harder for homeowners to accept, and there is a larger psychological impact when a 5 percent reduction in price can equate to $25,000 or more, Sowa said.
Yvonne Kuhn, an agent with Manheim Township-based Coldwell Banker Select Professionals who specializes in the Lebanon County market, said sellers of luxury homes need to realize they are competing with new homes where builders are offering $10,000 to $15,000 in credits right off the top.
“Your home has to be just as nice or better than a model home,” Kuhn said.
Some luxury home owners expect to make a profit on a home they purchased four years ago, she said.
“Without any additions or upgrades, you are just not going to make a huge profit in this market,” Kuhn said.
In evaluating properties, buyers are looking for incentives such as seller assistance with closing costs, she said.
Among real estate professionals, selling luxury homes is part of what Sowa referred to as a stacked transaction. Many first-time buyers of fine homes are dependent on the sale of their mid-priced home, which is dependent on the sale of someone’s lower-priced home. Arranging the financing for first-time homebuyers of lower-priced homes becomes crucial to start this domino effect, he said.
One factor contributing to the high supply of luxury homes is reduced relocation packages being offered to executives, Sowa said. Prior to the recession, he said, it was not uncommon for companies to buy an executive’s home as part of a relocation package. Today, the same companies are less inclined to take ownership of a house that could potentially stay on their books for 12 months and turn into a loss that would hit the bottom line, he said.
For those shopping for higher-end homes, Sowa said there are tremendous values available, and interest rates are low.
He also counsels upper-end sellers to not let a deal die on the table and to continue negotiating if a buyer is even warmly interested.
Kuhn also emphasized the importance of moving quickly to close a deal. She said executives do not have six to eight months to wait to make a decision about a home.
“They visit an area maybe two to three times and make a decision. Most of the process of elimination is done through email or online research,” Kuhn said.
Jeri Bedard, a Dauphin County agent for Pittsburgh-based Howard Hanna Real Estate Services who has been in the real estate business more than 19 years, said she sees some trends emerging in the luxury real estate market.
The built-in home office is taking the place of the traditional living room, she said. She also sees buyers looking for media centers in the family room to house large-screen televisions and want it equipped for surround sound. In the bathroom, Bedard said, there is interest in spa-like amenities, with features such as a rain showers. She said outdoor living and entertaining areas are another feature executives look for in a home.
The kitchen is one feature Bedard, Sowa and Kuhn all agree upon as a prime selling point. They all said having a spacious kitchen with upgraded appliances weighs heavily in a buyer’s decision, especially as more emphasis is being placed on cooking and family and in-home entertaining.
“When you’re at this level (of the housing market), your house doesn’t have to be featured in the pages of Architectural Digest, but it does have to have the wow factor when you walk in,” Sowa said.