Copyright © [2017] [Devon Thorsby] usnews.com
If you say a word enough times, it starts to
lose its meaning. And in real estate, where the right description can draw
buyers to a home on the market, using the right terms is crucial.
So when half the homes on the market are
suddenly marketed as “luxury,” the definition of the word starts to melt away.
“It’s entirely overused,” says Michelle
Farber Ross, real estate broker and managing partner of MMD Realty in Fort
Lauderdale, Florida.
Luxury real estate is
defined differently across different markets, as property values, median
resident income and area development varies widely depending on the metro area.
For example, the Los Angeles area has a significantly higher top end of the
market and a higher cutoff point for buyers to afford these properties compared
to smaller markets like Oklahoma City.
But the term luxury
has been used to describe everything from the ultra-luxury homes of
the world's wealthiest 1 percent to a modest kitchen with new appliances. How
can you interpret how luxury is defined in your area, and how can you leverage
that information to better express your expectations as a homebuyer?
Whether or not you fall into the real estate definition of luxury living,
knowing how your market defines high-end properties will allow you to better
understand the qualities you need and want in a home.
Where
Does Luxury Begin?
In many large U.S. cities and metro areas,
the typical luxury price point is $1 million and above. But in a city like New
York, which attracts a high number of foreign investors seeking property in a global
trading hub, $4 million typically becomes the cutoff point, Farber Ross says.
The Institute for
Luxury Home Marketing, which specializes in training real estate professionals
in high-end home sales, defines luxury agents as those performing in the top 10
percent of their given market. “It’s a way to flatten the country” and make
markets more comparable to each other, says Diane Hartley, general manager of
the Institute for Luxury Home Marketing.
And in many smaller
cities across the country, that top 10 percent can easily be below $1 million
because real estate sales are relative to what is selling nearby. But
regardless of whether the property is $1.1 million or $11 million, the purchasing
process for these high-priced homes is different from the majority of
property sales – and they also differ among each other.
What
Makes a Home Luxury?
There’s no checklist for labeling a property
as luxury, although many features are common among upscale properties in major
U.S. cities. Prime location, high-end interior finishes such as marble
countertops, professional-quality kitchen appliances and customized closets and
hotel-like amenities such as concierge services, a top-of-the-line fitness
center and spa center are often staples of a luxury building.
But not every
high-end home is the same. Often it’s the unique features that separate
luxury real estate from the rest, explains Jeremy Swillinger, a licensed
real estate salesperson at Level Group Inc. in New York City.
In major cities such
as Los Angeles, San Francisco and Chicago, owning a condo in a building designed
by a renowned architect – or “starchitect” – can set a property apart from
others as luxury, Swillinger says.
“Prestige is one of
the top two priorities [buyers] are looking for,” he says. The other priority
is often based on the individual's own priorities, whether it's services at the
ready to make managing the property from abroad easier, having enough space to
entertain or a state-of-the-art kitchen design.
Translating that idea
of prestige into a suburban or rural setting, luxury may be defined by being in
a gated community or as part of an association that gives you access to an
exclusive country club within the neighborhood.
Of course, that’s all
in addition to a home that goes above and beyond what’s typical for the market.
In New York City, where doormen are common and studio and one-bedroom condos in
Manhattan typically start above $1 million, rooms are designed for the purpose
of being unique compared to not only the other homes in the building, but also
everything available in the city.
“It’s no longer just
installing a Sub-Zero refrigerator [in the kitchen] – it’s a full room design,
from the flooring to the cabinets and appliances to the lighting,” Swillinger
says.
How
to Interpret Luxury in a Real Estate Listing
Identifying a luxury home from a description
– or a luxury buyer from an initial phone call – is all about reading into the
details, Swillinger and Farber Ross agree.
“If there’s nothing
else defining their use of the term ‘luxury’ in a description and my client is
a discerning buyer … I would say that’s a red flag,” Farber Ross says. “That’s
just an agent kind of aspiring for it to be luxury property versus the fact
that it actually is. And in a couple days when they post the photos, you can
tell in the way they furnish the property,” whether they include elite
appliances and high-end finishes throughout each room.
If you’re questioning
whether your home would be considered in the top 10 percent of your market, talk to an agent who is familiar with the area and high-end properties. An
agent seasoned in both will ask questions to establish a feel for what the
property offers. Rather than focusing on that vague idea of luxury, compile a
list of the features your home has, along with details that set the property
apart from the rest of the neighborhood and city.
It’s a similar
process for buyers, Farber Ross says. In an initial conversation, she typically
asks about the must-haves in a home, preferred activities and hobbies the
potential client expects to be able to do with ease.
“As these questions
are getting answered, you get a real feel for what kind of buyer they are,” she
says.
But whether you’re
buying or selling, it’s recommended to remove “luxury” from your expectations
until you’re able to provide a clear-cut description of the property. New
floors or top-of-the-line appliances should be described by name, Farber Ross
says, noting luxury is truly defined in the details offered. "Be more
specific in the amenities, in the finishes, or if it's a renowned architect for
the building," she says.
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