One man’s architectural masterpiece is another man’s teardown…
As any real estate broker will tell you, the single biggest reason a home doesn’t sell is because it has been mis-priced. Correctly pricing the average home is pretty easy. One simply looks at the recent “comps” and the condition of the home to come up with a market price. While sometimes wildly off the mark, Zillow’s “Zestimates” can often give you a good idea what homes sell for in a particular area.
Pricing luxury properties, on the other hand, is not easy. In fact, it can be very difficult. Because of their uniqueness – size, premium features, etc. – many luxury properties simply do not have “comps”. Making matters worse, because the sales volume of expensive real estate is so small, it is often hard to identify pricing trends. As a result, you sometimes see luxury homes sitting for many months on the market unsold.
An added complication that comes with pricing luxury properties is the sellers themselves. Many think, for example, some unique features of their home will make it worth more. An indoor swimming pool encircled with Roman statues, or a gold plated toilet seat, while expensive, does not necessarily increase the value of the property. In fact, it often lowers the price. One person’s art is another person’s tacky excess.
Also, many folks with big wallets have equally big egos. Their opinion – regardless of their expertise – is always the right one, even when it comes to pricing real estate, something they know little about.
But even seasoned real estate professionals sometimes get pricing wrong. Market conditions change quickly, as do tastes. What was once an easy sell at $7 million, may today be a stretch at $5 million. Even underpricing luxury real estate is not unheard of. An avalanche of offers on the first day surely means a property was underpriced. Either way, over pricing or underpricing, makes for unhappy clients.
How to Hit the Bulls Eye When Pricing Luxury Property
As everyone knows from their Econ. 101 class, price is driven by the market; supply and demand. People can slap whatever price they want on something but a property, as they say, is only worth what someone will pay for it. And the quickest, surest way of determining the market price of a luxury property, is the auction.
Not just any auction, but one that is global in scale to capture the transnational nature of the luxury property buyer of today. Luxury buyers are everywhere. They are often wealthy individuals, living in economically unstable countries who seek to protect their wealth by diversifying their portfolios. Luxury real estate abroad is usually their solution. Be they Russian oligarchs, newly minted Chinese entrepreneurs or South African businessmen, finding luxury buyers is a global enterprise these days.
The problem is; how to reach the luxury buyer with a correctly priced product? Finding the luxury buyer but listing a property at the wrong price, is a disaster. Conversely, having an auction – where the market quickly sets the price – but not having the right buyers, is equally doomed to failure.
A Global, Off Market Auction Where the “Price Is Right”
What the market needs is an online global auction platform. Here, the market will set the price and does it immediately. But it has to be an auction platform where luxury properties can be showcased to the right audience, the elite of the brokerage business. Ideally, this platform should be a community and operate in a private, off-market environment, free from the general public’s often distracting gaze.
Some of the world’s most sought after possessions – artwork, rare antiques and collector cars are often sold at private auctions where the seller and buyer wish to remain anonymous. Up until very recently, what has been glaringly absent from the elite off-market auctions is luxury real estate.
An off-market auction platform for luxury properties will the perfect environment for marketing properties at the right price.
Brokers for luxury real estate will no longer have to worry if they priced a particular property right or not. The Primextate platform will provide that for them. Simply set an unpublished “minimum” to protect from selling at a price that’s too low, and the auction platform, with its pool of global brokers, will provide the correct price and the right buyer – fast. Whether the property is a teardown or museum piece, Primextate will answer the universal and hard to determine question – “What is it worth”?