Pricing a luxury home is more art than science. Here’s everything you need to know to get top dollar in Portland’s competitive real estate market.
When it comes to luxury homes, no two are alike. That’s what makes pricing a luxury home more art than science. You can’t simply compare square footage, lot size, number of bedrooms, and general condition of the home.
What Is a Luxury Home?
Most luxury homes were custom built in a coveted location and often have unique features that reflect the esthetic of the original home owner. In the luxury home category, you’ll find a wide array of eye popping amenities. Imagine acreage, stunning views, swimming pools, water features, waterfront, boat houses, tennis courts, professionally landscaped grounds, gated entrances, chef’s kitchens, spa-like bathrooms, outdoor entertaining areas, outdoor fireplaces, outdoor kitchens, custom flooring, floor-to-ceiling window walls, and other luxuries that make your heart go pitter-patter.
There’s nothing cookie-cutter about a luxury home. In fact, DISTINCTION is the hallmark of a luxury home.
Arguments over what factors qualify a home for luxury status abound, but this is Portland, not Los Angeles, and we like to keep things simple. So although not every home with a price tag of $1,000,000 or more is actually a luxury home, that’s the line we’re going to draw in the sand. In Portland, it usually requires at least $1,000,000 to create a truly distinctive home in a setting to match.
But wait! Don’t jump to another blog post just because you have a home you want to sell in a lower price category. Everything we say here about pricing a luxury home for sale applies to lower priced homes as well.
Related: Guide to Selling Your Home (Our proven strategy for getting your home sold fast for top dollar.)
Every luxury home in the Portland Metro area has a different combination of luxury amenities. It’s like comparing a Cheetah to a Peregrine Falcon. They are the two fastest animals in the world, and yet the differences are enormous. Which one is worth more and how much more?
Pricing a Luxury Home for Sale
At SkyBlue Portland, we specialize in these unique properties. We have a finely tuned process for evaluating a home’s worth in today’s competitive marketplace. And we work with each of our luxury home sellers to price their home to maximum advantage and ensure that it attracts maximum attention right out of the gate from potential luxury home buyers.
Market research is key. We spend umpteen hours each week touring luxury homes for sale in Portland Metro neighborhoods. We focus on neighborhood first, because pricing is determined by competition within a rather small geographical area. You can’t for instance, compare luxury homes in two different areas. The exact same luxury home will sell for a different price in two different areas.
What makes real estate such a difficult asset to price is that price is ALWAYS determined by local competition at a given moment in time, what people are willing (and able) to pay at a given moment in time, and what a bank is willing to loan at a given moment in time.
Notice the emphasis on time. The value of a particular home is not determined solely by its quantifiable, measurable features. Its value is determined by what buyers are willing to pay for the home TODAY. And that amount may vary from what they are willing to pay for the same home TOMORROW (or next year).
The value of a home today has nothing to do with what the current owner of the home paid for it or what the current owner needs to net to move on to the next home. That fact can be a hard pill to swallow.
Related: When the Price Is Right: How to Price Your Home for Sale
But remember when I said that pricing a luxury home is more art than science? This is where we can help you most. Because we know a secret that few other real estate agents really understand.
Are you ready?
Perception Is Everything
We know that in real estate today—and especially in luxury homes—PERCEPTION is EVERYTHING. Perception is driven by EMOTION. And emotion can be INDUCED.
The truth is that humans are driven by emotion in all things, no matter what our rational minds tell us to the contrary. We make split second decisions on EVERYTHING. And then, when the mind receives that information, it tries to rationalize the decision that we already made. Funny, huh?
I’m talking about SEDUCTION here. I’m talking about creating an experience that captures the heart and mind of every potential buyer that walks through the front door of your home. And actually, this begins long before that eventful first step.
Related: The Easiest Way to Botch Your Home Sale
It begins on the web—where almost all buyers begin their search for the perfect new home. If you don’t wow them on the web in 60 seconds or less, you will never see them at your home.
The more potential buyers we can get into your home, the better the chances for multiple offers, some of which may be above asking price. That’s another weird thing about the human psyche. We want what others want. The more people that want it, the greater our need to get it. In real estate, this is called a bidding war, and it can be a very good thing for the seller.
Selling the Dream
That’s why we partner with the best home staging, photography, 3D virtual tour, video tour, and aerial photography professionals in Portland. These cutting-edge firms don’t just arrange furniture and take pretty pictures. Any competent designer or photographer can do that. They tell stories. They create dreams. And dreams, as we all know, create desire.
Related: To Stage or Not to Stage Your Home for Sale
These dreams they create don’t just affect the perceptions of potential home buyers. They also affect the perception of the home appraiser. Shocking, right?
But it’s a statistical fact that homes that are professionally staged and photographed appraise for more than homes that aren’t.
Why? Because professionally staged and photographed homes are perceived to be better maintained and in better condition than unstaged homes. Perception is everything and can equate to tens of thousands of dollars in the sale price of a luxury home.
The Competitive Advantage
Pricing a luxury home in today’s market requires a deep understanding of the market, the neighborhood in which the home is competing, and the psychological factors that influence today’s home buyers.
Understanding the complex dynamic between these factors gives home sellers a competitive advantage in today’s real estate market. And we can help.
Let us show you what a difference we can make in selling your luxury home quickly and for top dollar in Portland Metro.
Next Steps
If you’re curious what your home is worth in today’s market, visit our automated Home Value website. This will give you an estimated value of your home based on public information about your home and current sales in your neighborhood.
If you’d like to get a Full Market Study on you home, contact our Lead Listing Agent, jb@skyblueportland.com and he’ll get the ball rolling.
Fascinating! Tell Me More
- 10 Things, Besides Location, Luxury Real Estate Buyers Should Obsess Over | Forbes
- Field Guide to Listing & Selling Luxury Properties | National Association of Realtors
- Luxury Homes Are Selling for More Than the Asking Prices in Many Parts of the Country | Detroit Free Press
- The Elusive Luxury Home | Bankrate
- What Defines a Luxury Property? | PropWise
When you get into six and seven digit price ranges for a home, it’s important to have knowledgeable representation. If I was selling a home that was worth that much, I would do everything I could to get as many people into the home as possible. Like you said, the more potential buyers you can get, the better your chances are of getting an offer. Excellent article!
Thanks Andy! Since I wrote this article, we have launched an exciting new marketing plan, which you can see at https://www.skyblueportland.com/sell/. It includes professional photos, 3D virtual tour, and video tour with aerial photography. Plus extensive social media marketing. Our homes are selling before buyers even hit the front door. Well nearly anyway.:-)
It is really so important post for me and other people who are in search of luxury homes. I am pleased to read your fabulous post. Thanks for sharing it.
Peter, thank you, much appreciated. 🙂
I had no idea that the value of a home today has nothing to do with what the current owner of the home paid for it or what the current owner needs to net to move on to the next home. This was a surprise to me because I would have thought that you could just sell your home for as much as you wanted without a problem. When my husband and I bought our first home we didn’t think anything of the sale value after we owned it. I guess I will have to take more care of my home to ensure that we pay off the cost of the home.
Lillian, yes, this comes as a shock to many home sellers. What sets the sales price of any home is what the market will pay for it and what the bank will appraise it for TODAY. To establish the price, the home is compared to other like homes in its general neighborhood. This is called a competitive market analysis. Because of the web, buyers can now easily compare properties and tend to avoid those that seem overpriced. Thus, it’s incredibly important to price your home for sale perfectly–even a little below what we estimate it will bring. This tactic often reaps multiple offers and a bidding war. We’ve had great results pricing our clients homes for sale to maximize the return on their investment. We’d love to earn your business when you are ready to make the next housing move. 🙂
I had no idea that luxury homes are custom built and can reflect their previous owner. My brother in law has been building a custom home for his family, and they are almost done with it. I will have to let him know that his home can be considered a luxury home.
Gregory, thanks for stopping by. Luxury homes (homes priced at $1,000,000 or more) often have special features that make them unique, even quirky. Occasionally we see a luxury home that prompts the question, “What were they thinking?” Like the “medieval castle” we toured just last week. So price isn’t always an indicator of taste. Building a home to meet your own specific tastes and requirements is a wonderful way to go–when time and budget allow. 🙂
I didn’t know that a professionally staged and photographed homes appraised for more! I know in the past I’ve never hired professionals to stage or photograph my home and I wonder if I might have gotten more if I had. I like the idea of hiring someone who can take the best possible pictures for you so you don’t have to worry about it, too.
Kyle, professionally staged, photographed, and marketed homes definitely sell and appraise for more. There are lots of published statistics to back this up. At SkyBlue Portland, we go further than that though–just to make sure our home sellers reap the most profit possible on their home investment. We prepare a folder of information (comparable listings that justify the sale price, a list of all upgrades to the home, special features of the home and neighborhood, etc.) to make sure that this information is quick and easy for the appraiser to review. And we talk to the appraiser in person. Appraisers appreciate this extra effort, as they, like everyone else, are short on time. Another thing that we do is conduct a thorough comparative market analysis to set the asking price in the first place. This is part art and part science (based on years of experience selling homes in the Portland Metro market area). When we get this number right (almost always), the result is multiple offers, most above asking price. Hope this helps. 🙂
This is a really informative blog and the content is solid. I look forward to more articles, as they are really well written. Thanks for such an interesting and wonderful blog.
Thank you, great to hear. 🙂
I think it’s interesting that it’s so difficult to sell luxury homes these days. It seems like a pretty competitive market! I think it would be a good idea to get a good real estate agent who can give you the upper hand!
Thanks for stopping by, Braden! 🙂 There aren’t as many buyers in the luxury market, so effectively reaching ALL of them, with the best marketing campaign possible, is absolutely key.