Defining luxury; what you should look for in a high-end home (Part 2)

How might we define 'luxury?' 

Instead of offering a host of superlatives, let me tell you a story about Rolls Royce. Perhaps the most notable luxury brand in the world, Rolls Royce is known for their art-in-motion automobiles, distinguishable not only be their performance and details but a unique emblem gracing each and every hood – a statue of a woman who appears to be launching into flight. 

But most people don’t know that the women is actually someone named Eleanor Thornton who was the love of Lord Montagu of England’s life.

But when they were sailing on a steam ship from Marseille on Christmas 1916, a torpedo shot from a German U-boat struck the boat. In the chaos that ensued, Lord Montagu tried to hold on to Eleanor, but she was swept away by the sea as the ship sank. Montagu survived only be clinging to a broken lifeboat in the cold seas for 32 hours without food or water. Even though his beloved Eleanor was surely perished, he spent his days and then years looking for her, frail and infirm from the ordeal but unable to let go one more time.

Years earlier, Montagu had taken his Rolls Royce out for drives along with Eleanor and his good friend, who was the managing director for the fine automobile company. So it was Eleanor Thornton who became the inspiration and model for the Rolls Royce hood ornament and logo we still see today, called the “Spirit of Ecstasy.”

Thus, Rolls Royce has become the icon for luxury, not just because if the performance of its cars but because of the unwavering passion, dedication, and timelessness the brand conveys, telling a story about the person driving it that goes far past bravado over a price tag.

Luxury brands always convey a legacy, and that is true for luxury homes as well. But how can we tell if a house holds those same spirited qualities as Rolls Royce, aside from just sharing a sizable price tag and some fancy amenities?

In part one of this blog, we covered the first four ways we can define authentic luxury when buying a home, and here are the next six:

5. Natural light

Homes that can be truly considered luxury are built by accomplished architects that consider every detail – including the dispersion of natural light. There is a big difference between standing in your kitchen in the morning while you sip your first cup of coffee and the soft glow of morning light gently bathes your kitchen, compared to being sun-blinded in a kitchen that’s ten degrees warmer than the rest of the house by 730 am. A home correctly equipped to accept natural light at certain angles and times of day not only looks bigger, but more open, inviting, and is proven to be perceived as more “homey” and boost the mood of the owner. But that’s a more intricate science that it may seem, with varying seasons and the need for shelter from direct sun in hot summer months. The discussion of natural light also brings us to windows in high-end homes, which should always be of the highest quality double-paned low UV glass, which protects against weather, noise, lowers energy bills and maintains safety.

6. Reputation

This may sound like something subjective and inconsequential, but a community, builder, architect, or even whole city that enjoys a sterling reputation will always be desirable, and therefore hold its value. When investing in a luxury or high-end home, it’s equally important to do your due diligence on the architect and the builder as well as survey the actual home. But don’t stop there, as news stories, crime rates, school systems, nearby housing subdivision, and planned commercial projects all factor in to your neighborhood’s reputation.

7. Ceiling height

One thing to check for when you’re touring luxury homes is the ceiling height. In fact, a survey of high-priced homes across the country reveals that ceilings in luxury homes are almost never standard height, and there is a correlation between high ceilings the higher the home’s intrinsic value. It’s interesting to note that this virtue extends only up to about 14 foot high ceilings, after which the price tag sees only diminishing returns.

8. Layout

Distinguished dwellings are always functional AND aesthetically pleasing, and the layout of a home’s floor plan is a huge testament to that. Long gone are the days of calling McMansions “luxury” just because they occupied gaudy amounts of square footage. But true architectural refinement allows you to always FEEL like you’re in a bigger space, specifically designed for its intended purpose but within the flow of the entire blueprint. Some areas like dine-in kitchens and great room living spaces will be purposely open and unobstructed, while offices, dens, master suites, media rooms, and guest rooms are typically segregated and feel cozy, yet still spacious.  

9. Amenities that matter

An immense built-in fish tank, faux balconies with ornate ironwork, and a hexagonal shaped swimming pool with a three-story water slide? Those bells and whistles may seem enticing if you just hit the lottery, but true connoisseurs of the finer things in life are able to discern which amenities really matters in a home. Research shows that luxury homes should focus on fully functional fitness rooms, a distinguished office, fireplaces, innovative and practical use of storage, indoor/outdoor living areas, spa-like master bathrooms (those never go out of vogue!) and green and smart tech.

10. Land

Speaking of McMansions, homes that aspire to be luxury often check the box on square footage but fall comically short on land. Gardens, outdoor living areas, sports amenities like basketball and tennis courts, horse stables and pens, and even acreage reserved for wildlife, streams, lakes and ponds, and unbridled nature are often hallmarks of luxury estates. Even if you live in an area where acreage is at a premium (like many parts of California!), higher-quality homes separate themselves from the pack with relatively ample land.

Defining luxury; what you should look for in a high-end home

“Give me the luxuries of life and I will willingly do without the necessities.” – Iconic architect Frank Lloyd Wright

These days, the word “luxury” is everywhere. The promise of high-end goods, services, and experiences is no longer reserved for the most affluent of Americans, but now available to just about everyone. We can easily buy luxury brands at the clothing store, drive luxury automobiles like Mercedes Benz and BMW – or similar facsimiles at fractional prices - and even buy a home that is described as ‘luxury.’

In fact, the L word designation is everywhere in advertising, as a recent survey approximated that the word ‘luxury’ comes up in 34% of real estate listing descriptions, up to 42% of appliance and furnishing ads, and 26% of clothing marketing. Googling a query like “How to write real estate descriptions that sell” will yield list after list including the words “luxury”, “distinguished,” “quality”, “exclusive”, etc.

So if we cast aside the watered-down marketing version of ‘luxury,’ what does it really mean? What should it represent?

The Oxford Dictionary defines ‘luxury’ as:

A state of great comfort or elegance, especially when involving great expense;

An inessential, desirable item which is expensive or difficult to obtain;

[In Singular] A pleasure obtained only rarely

When it comes to high-end and top-of-the-market homes, what makes a home ‘luxury?”  Is it merely having an abnormally steep price tag? Cavernous square footage? Fancy amenities that you don’t find in typical homes? All of those things may factor into luxury homes, but the certainly don’t define them – not in an age when high-end materials like vanity sinks and chandeliers are mass produced and offered at rock-bottom discounts at places like Home Depot and Ikea.

Too often, builders and home sellers take advantage of the public’s thirst for status and a superstar lifestyle, purposely including certain features that we associate with luxury, but are little more than a façade or marketing gimmick.

Likewise, adding expensive and frivolous features and fixtures to a mid or even up-market home doesn’t automatically propel it to the rarified air of luxury. Custom swimming pools, wine cellars and electronic self-closing blinds are great, but they are still no substitute for class.

But before we start defining luxury as a certain je ne sais quoi as the French say - that certain indefinable something - there are tangible elements we can pinpoint that most luxury homes enjoy.

1. Neighborhood:

The Locationx3 adage is a real estate cliché, but it’s also never been more true. You just KNOW when you’re in a luxury neighborhood – and so does everyone else. Over the last housing boom of the early 2000s, too many people bought into the dream of living in a luxury home and community by purchasing new(er) construction that had all of the bells and whistles. But research shows that established and mature homes and neighborhoods are actually of a higher building quality and retain their values better, as they have more long-time owners and a well-established exclusivity.

2. Uniqueness

It’s very rare that luxury homes are homogenous with the rest of the homes in the neighborhood. They have unique characteristics, architecture, and design that set them apart and are hard – or impossible- to replicate. Beware of McMansions and “semi-custom” homes that builders slap up and then adorn with fancy facing and certain high-end amenities just to justify a higher price tag, but are basically still cookie cutter. When you are looking into any luxury home, it’s important to research the builder, ask around about their reputation, other projects they’ve completed, and make sure there is a unique “story” to the architect, the home, or the community that sets it apart.

3. The little things

If God is in the details, then take a close look at the small details in a home; if unequivocal quality extends to small touches like the millwork, doors, hardware, cabinets, fixtures, appliances, tile, grout lines, etc. then you know you’re surrounded by luxury. Our eye always gravitates towards signature show pieces like grand chef’s kitchens and dazzling room-size showers, but in a luxury home, the quality of construction and use of top-end materials and amenities won’t be compromised at all down to the smallest detail, even those people rarely see or use.

4. Views

No matter where you are, most truly luxury homes have some sort of great view to set your eyes upon. Whether it be ocean and coastline, hills and valleys, a beautiful garden, park, or fountain, luxury homes that just stare out at the home across the street are almost unheard of. For this reason, authentically luxury homes are usually at higher elevations than their surroundings, or right on the waterfront.

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Tune in for part two of this blog with the rest of the top 10 things to look for in a luxury home.

The Luxury Report; High-end real estate by the numbers

When it comes to the housing market, real estate prices, sales activity, and market trends vary greatly depending on the neighborhood you’re in. But there is another segment of the market that is usually a completely different animal than typical residential home sales: luxury homes sales.

Here is a synopsis of the current state of luxury home sales in the U.S., and also in the Greater Sacramento region.

This data is based on a survey of 22,922 luxury homes that are currently on the market in the U.S. These luxury homes are all listed for at least $500,000 in the top 10 zip codes in 31 major metropolitan housing markets around the U.S.

To put these numbers in perspective, the median list price in Sacramento is now $269,900, with an average price per square foot of $186 and

$1,519,677

Median listing price for all luxury homes.

$393

Current median price per square foot for all luxury homes for sale.

176

Average days on market for all current luxury home inventory.

33%

Percentage of listed properties that have had at least one price reduction.

12%

Percentage of properties that were relisted, effectively resetting their DOM (Days o Market)

4%

Proportion of luxury homes that were flipped – or fixed up and relisted.

1,627

Average number of luxury homes that sell each week

2,190

Average new listings per week hitting the luxury market.

3,845

Median square footage of all luxury homes for sale

0.50 – 1.0

Property size in acres of median luxury home for sale

28

Age of average luxury home for sale

8%

Percent of luxury homebuyers with household incomes of $200,000 or more

9%

Percent of all buyers who purchased luxury homes worth $500,000 or more

10%

Percent of buyers who purchased home with 3,501 or more square feet

28

Market Action Index rating for the luxury housing market. Any rating below 30 means it is a buyer’s market, but at 28, it is still relatively balanced

$915,865

Median price for all luxury homes in Sacramento, El Dorado, Placer counties and Lake Tahoe. (The Greater Sacramento region.)

2,844

Median square footage for all luxury homes in the Greater Sacramento region.

316

Number of luxury homes for sale in the Greater Sacramento region.

23

New luxury listings per week in the Greater Sacramento region.

25

Luxury homes sold weekly in the Greater Sacramento region.

195

Average days on market for all luxury listings in the Greater Sacramento region.

The 15 principles of selling a luxury home.

Selling a luxury home is a finely nuanced endeavor, requiring expert representation that is knowledgeable, experienced, well networked, and holds impeccable professional standards. So it’s crucial you work with the right real estate broker who specializes in selling homes in your area and has plenty of experience and a great reputation in the luxury market. Here are some proven principles to help you make the best decisions when selling your luxury home:

1. Pricing your luxury listing correctly.

Selling a luxury home presents certain inherent challenges because you have a much smaller pool of buyers who are interested and qualified. There are also far fewer true comparables because luxury homes are custom and unique properties. Of course you deserve to get top dollar for your home, but it’s important to adhere to the data and market research and price it correctly, with minor pricing adjustments with time if necessary.

2. Your Realtor should know the area intimately.

Remember that a luxury buyer takes immense pride in their home, and sees it as a statement about who they are and their lifestyle. So knowing (and selling) nearby amenities like country clubs, golf courses, business parks, town centers, arts and cultural events, bike trails, lakes, boat clubs, etc. all goes a long way in persuading the high-end buyer.

A potential buyer will also want to make a good investment, so they’ll expect detailed neighborhood data like demographics, trends on home values, crime reports, information on school systems, and planned developments in the area.

3. And know the home exclusively.

Luxury buyers consider their home the biggest investment in their lives so they want to know every detail about the property they’re buying. That includes information about any high end brands like wine fridges, artwork, chandeliers, or custom features like outdoor living spaces, Green or tech amenities. It also helps to have architectural blue prints from when the home was built, maintenance records, and a bio on the builder and designer.

4. Consider moving out during the listing process.

Research shows that high-end homes attract more buyers and sell faster if they are vacant during the sales process. While this may not be convenient, it could result in a far greater return on investment with a higher sales price. But this is a personal decision that’s completely up to the homeowner.

5. Professional staging is essential.

It’s essential to have your luxury home professionally staged before listing, which will allow it to be de-cluttered, de-personalized, and make display adjustments like neutral wall colors, furniture that maximizes space, and art work and decorations that makes your home shine.

6. Teaming with a good lender can help.

In the past, most luxury homebuyers paid cash when they purchased. But these days, there’s an increasing trend of buyers utilizing a mortgage loan for high-end purchases. Your Realtor should have a qualified mortgage broker who can provide information on loan options and specialize in jumbo loans to aid and encourage the buyer’s financial decision.

7. Decisions about showing and availability.

If the home is not being lived in during the sale, it’s much easier for other agents and buyers to see. But even if you’re living there, there are some important decisions to make: do you put on a lockbox so agents can come and go freely? Do you set up showings only by appointment so your Realtor can monitor who is coming and going? Or do you keep the listing information even more discreet for security and privacy concerns? A good luxury Realtor can advise you on all your options and help you come to the best decision.

8. Understand liability.

Safety is always a concern when listing a home, as is theft, privacy, and the liability of having people come onto your property. A great luxury broker will understand the risks and help protect you.

9. Consult with your trusted financial advisors.

It’s essential to consult with your financial team before, during, and after your home sale. That includes your financial planner, insurance broker, and especially your tax planner.

10. Networking.

Many luxury homes aren’t sold to strangers via the MLS, but through the local community and other people who are in the same economic grouping. So your Realtor should reach out to local businesses, like arts centers, galleries, wineries, etc., as well as promote your home through their extensive contacts in the luxury market. Even knowing how to get in touch with international buyers and relocation services for local businesses can help sell a listing.

11. Ongoing maintenance and cleaning.

It’s not enough to stage your home and let it be; you’ll want to hire a regular cleaning crew and do extensive yard maintenance so your home and grounds look pristine for any potential buyer.

12. Professional real estate photographs and virtual tours.

People who buy luxury homes are very discerning and expect the highest quality presentation to catch their eye. So make sure your Realtor can recommend the best real estate photographer who specializes in luxury homes.

You also may want to think about a professional videographer to record a virtual tour of your home, which are extremely effective in attracting luxury buyers. They can even work with your professional photographer and often use drones for stunning aerial shots.

13. Multi channel marketing, including technology.

The truth is that a luxury listing should be aggressively marketed through traditional channels: like networking with other luxury real estate agents, the MLS, print advertisement, press, community interaction, and also through the most cutting edge new technology.

These days, 95% of your potential market for high-end buyers are active and engaged on social media, and 90% of luxury buyers start their search for homes extensively via the internet or their mobile devices. So a luxury listing should have a strong social media presence, be featured on the Realtor’s web site and blog.

14. Consider community events for PR.

Open houses for luxury homes are a bit of a different animal than for a more humble home, because you won’t get (nor do you want) drive-by traffic and interested buyers shopping around. So you may want to consider working with your Realtor to opening up the house to community events instead, like wine tastings in coordination with your favorite local winery, allowing it to be used to host charity dinners or fundraisers, art gallery showings, or other events that will bring in plenty of distinguished people.

15. Patience is a virtue!

Selling a luxury home often takes more time and patience than a normal track home in the average price range because there are far fewer buyers and it’s harder to match them to a custom home. So patience and clear, business-first thinking is critical, as is great communication with your sales team.

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The Alfano Group Real Estate Agency is the premier real estate concierge for high-end and luxury home buyers and sellers in the Sacramento, Placer County area. Please contact us if you'd like any more information or an analysis of your home's value.