Ask anyone what makes purchasing multi million dollar estates different from buying any other house, and invariably he or she will reply, "money." Greater sums raise the stakes and the stress level. Add to that a limited inventory of luxury homes in any one market, buyers and sellers with fewer incentives to compromise, intense competition for upscale property and multiple offers in hot markets. Clearly, high-end buyers need to know what they want, what features are important, and the fair market value of the homes in question.
Who is Involved:
The most notable difference between a transaction for a home that is less than $1 million and one that is above $10 million, other than the price, is the number of people involved. In transactions involving multi million dollar estates, there is a team approach, with the real estate agent working for a business manager in addition to the client and his or her attorney.
Another factor to consider with the high-end purchases is that a majority of buyers of multi million dollar estates do not use conventional financing. While cash transactions can speed up the transaction, they can also result in a shorter period of time for completing conditions of the purchase and sale agreement. This could be a problem, since a home inspection for an estate home with multiple buildings, mechanical systems, kitchens and baths can take days or even more than a week to complete.
Potential Snags:
Luxury buyers also frequently purchase larger pieces of land, which bring an additional set of potential problems. Often an easement, whether it is deeded or grandfathered, doesn't come to the buyer's attention until it is discovered during a title search. Easements are only one of many land issues that can slow a closing. But, if a buyer knows about an easement ahead of time, it is less likely to become a deal breaker. The best insurance for a smooth closing is having an agent who is knowledgeable about land issues and the type of property being purchased.
Purchases that are being mortgaged will be subject to an appraisal. For multi million dollar estates, good agents, particularly those working with a buyer under a buyer agency agreement, will recommend an independent appraisal. In addition to a limited number of sold properties with comparable price tags for appraisal purposes, the other common concern related to appraisals of homes priced above $1 million dollars is the appraiser's lack of experience with luxury properties. An appraiser who works in this price range will understand what is and isn't comparable, just as they are better prepared to value features and finishes in the subject property.
Interesting Tidbits:
In a 2003 study made by The Institute for Luxury Homes Marketing and Unique Homes magazine polling 4000 affluent households, a general profile of a luxury homeowner was produced.
The study also showed:
New construction categorized 26% of the homes while 18% were "custom built for me" and "historic property" described 8% of the homes.
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