A luxury property generally takes longer to sell because of price, uniqueness, personalized features and/or location. Simply put, there are fewer buyers that can afford to purchase these trophy properties. In North Texas our high-end luxury market begins at about $3.5 million. Sales in this price range represent less than 1% of the total sales in a given year.
Luxury sellers and buyers are very discriminating, and demand personal service. The demographics for luxury property clients is very different from a typical client, and serving a luxury client goes beyond what a traditional agent or home search website can provide. Luxury properties are unique, and many are customized from the ground up. Others have been curated from the discerning eyes of tasteful owners, master craftsmen, and award-winning designers and architects.
Luxury real estate that is put up for auction typically sells at higher prices because of the exceptional market exposure, and it is becoming a growing trend for luxury sellers to select an auction as a first means in selling their property. Auctions tend to highlight properties so that more potential buyers see it in all its beauty and generate more bidders. Auctions inherently add interest which increases competition. There are generally two types of auctions, those with a “reserve price”(a minimum), and those sold “without a reserve” (no minimum).
There are numerous benefits to a home seller when a luxury property is put up for auction. First, a plan is designed that works with the sellers’ needs. This plan includes setting an auction date, touring the property in person, interviewing the seller, conducting a market analysis, creating the marketing strategy, research the property itself, and more. Next, the plan goes into the execution phase which consists of photographing the property, creating marketing videos, designing the website layout, creating copy, and writing and publishing the press release. Finally, there’s a flurry of promotion that takes place around the property which entails the website launch, broker visits, private showings, social media and email campaigns, and much, much more.
A common question we get from our luxury clients is how to properly value their property. We carefully assess and value each property for its uniqueness. In addition to reviewing comparable properties, we consider the location, the grounds, and, carefully evaluate every detail and every facet. It is the details that bring the most value in a luxury property. We fully understand the value of fine finishes, additions, renovations, and upgrades. Finally, we discuss our findings with you to arrive at the best price. You are always an important part of the valuation process.
How long a luxury property takes to sell depends on the current market, the buyer pool, and of course, the dynamics of the auction itself. Every luxury property is unique, just as every market is unique. You will be involved at all stages, so you will always know what to expect when selling your luxury property at auction. In addition, we will always be on hand to update you on the status of the auction process.
An added benefit of an auction is that they are not subject to a parade of lookers who are just curious about the inside of the property. Every buyer is interviewed and pre-qualified prior to the auction. Buyers are required to deposit a minimum cash investment. At the auction, if a property goes under contract, it then follows the normal 30-45 day closing process and begins with an inspection period.
Typical terms for properties under auction are:
10% Buyer’s Premium; Upfront Marketing $7,500; 6% listing agent commission; Title insurance savings because it is paid by buyer ($6,000 on $2.0 million property); survey paid by seller, if necessary.