Many people dream of living in a huge, luxury and beautiful home, but when it comes to buying one, there’s more than just a high price and unique architecture. Purchasing a high-end property is a completely different process than buying a middle-class home. If this is your first luxury home purchase, you’ll quickly find out that the details are often what matter. Here are several tips to keep in mind if you plan to buy a luxury home.
Learn where to search
Unlike properties in the lower price ranges, luxury homes often go unlisted to protect the seller’s privacy. That’s why you should be looking among your realtor’s personal connections. The Internet, which is normally a great place to search for any kind of real estate, now won’t provide you with sufficient information. Find a qualified and experienced real estate agent, who is specialized in the luxury market and has inside information about the listings before they hit the open market.
The real estate agent will not only find properties for sale, but as an expert, he or she will be able to determine the market value of the high-end property. Typically, the price of a home is relatively easy to evaluate by comparing it to similar properties in the area. The difficulty with luxury homes comes from the fact that often, there are no similar properties in the area. Moreover, since luxury estates are more or less unique, they can’t be compared to anything at all.
You will also need an expert to carefully inspect the property, as it will have special amenities such as pools, fountains, ponds, exterior fireplace, landscape lighting, automatic screen and awing systems, professional surveillance and security systems, golf courses, private beaches, and many others.
One of the most common misconceptions is that wealthy buyers of luxury properties always pay cash. According to a Coldwell Banker Study from more than a decade ago, only 31 percent of buyers pay cash for their high-end homes. We can assume that after the 2008 financial crisis, the percentage of cash buyers is even lower now. So, it’s normal to use a loan for the purchase, but there are few things you should know. The loan approval process will take longer – 45 to 60 days to secure it, and you will be required to provide a lot of detailed documentation.
Understanding the market
There will always be market for luxury properties, but some local markets are experiencing significant growth. Considering the fact that the world is still recovering from the financial crisis, it may sound illogical, but luxury markets are heating up. One reason for this is of course the rule of supply and demand and in general, the supply of high-priced properties is limited. This only can be driving the market, but there are additional factors, too – the international buyers, who typically purchase higher-priced homes, and the strong job market in certain cities and regions.
For instance, the prices of luxury properties have gone up over the past two years across the world, according to Knight Frank’s Prime Global Cities Index. It tracks luxury real estate in 30 metropolitan markets, of which the hottest right now is Jakarta, which reported a price increase of almost 38% at the end of 2013 compared to the previous year. The index also finds a 17% price increase in Dubai as of the fourth quarter of 2013, as well as a 17.5% increase for Dublin and 17.1% for Beijing.
If you’ve made your decision to buy a luxury property right now, Dubai may be one of the best locations for you. Prices of luxury properties have decreased during the past two years and you can get a good value for you money.
My brother is looking into buying a luxury home for his family and I wanted to look into it too. It really helped when you talked about how the real estate agent you choose should be able to look at the market and help you find the best price for the house you want. I can see that taking the time to make a list of features you want your home to have would help your agent perform a personalized search and get you the best results.
Thank you for all the tips on how to buy a luxury home. My husband and I really want to buy a luxury home, but we don’t know what we need to do. I really like how you mentioned that the internet won’t provide us with enough information about properties. We will have to make sure we hire a good agent to help us find a home.
Hi Deb, you can search on on the internet for an agent specializing in the desired residential area.