From the category archives:

National Luxury News

Just Further Proof that Some Can’t Afford the Luxury Lifestyle

In a recent article from the Washington Post about Luxury foreclosures, it is mentions how many expensive homes are falling into foreclosure across the nation. The main character of the article tells his story of buying million dollar homes, then flipping them for profit. He now has about a dozen homes being foreclosed on.

One thing he might have thought about was not speculating on real estate. He mentions reading Donald Trump and wanting to make money in real estate, but he goes about it the wrong way. He misses the number one rule when it comes to creating wealth in real estate, which is to hold for the long term. Instead, he tries to live the luxury lifestyle on the fast track and like most speculators, gets burned.

It just goes to show you that there is a difference in talking the luxury path, and walking the luxury path.

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Even Celebrities Face Foreclosure

The foreclosure phenomenon is effecting everyone, even the wealthy. There are numerous homes around the Twin Cities that would normally be selling for one million, but are now in foreclosure and selling for hundreds of thousands less. Some people wanted the affluent lifestyle, and now can no longer afford it, but others have fallen on hard times and are at a loss with what to do.

The latest victim to foreclosure is the funny man himself, Ed McMahon. Eighteen months ago he broke his neck and has not been able to work as he normally would. It is reported he is behind $644,000 and is in talks with Countrywide to remedy the situation. Sadly, with Countrywide being one of the lenders who takes the longest to respond to foreclosure properties, all I can say is good luck on that one. He has been trying to sell his Beverly Hills home for the last two years, which is currently priced at $6.25 Million.

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Cashing in on the Extreme

Every now and then I check out the Extreme Makeover Home show where people are blessed with home repairs, and sometimes complete rebuilds, due to life situations they cannot handle. It’s hard to not look at the completed homes through the eyes of a real estate agent. Most of the time the homes are double or triple the size of the old home, and I have to wonder, who is going to pay the taxes on these homes once the county assessor gets wind of the increased square footage, and reassesses the property taxes. The home owners have not increased their incomes, so it must come as a shock when the tax bill arrives.

Imagine sitting in your new home, thinking finally that everything is going to be ok. You have a chance at making everything work out. Then you go through your mail, reading the most recent bills. Not only has your energy bill gone up two fold, but now your taxes have gone from $600 per year to $3000. Maybe this new home isn’t so great after all. Amazingly, I am surprised that no one thought of these catches when they let these homes be built.

Well, it looks like a few of these Extreme Homes are going on the market. One couple is down sizing since some of the kids have moved out, and a few others cannot afford the higher taxes. Check out the two homes that are currently on the market, one in Atlanta, the other in Idaho. I wish them all the best with a successful sale of their homes. Too bad they could not stay in them longer then three years.

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Luxury Market Holding Strong Despite Market Down Turn

Sellers price homes above $100 million in wake of last year’s record sales

Owners of the ultimate luxury properties are betting that the über-rich are still shopping for luxury homes, despite the real estate market doldrums according to Laurie Moore-Moore, Founder and CEO of The Institute for Luxury Home Marketing. “The fact that the newest list of the most expensive properties for sale in the US features six homes priced at $100 million or more is an indication that home prices at the top of the US market have definitely broken through the $100 million level, despite the general slowdown in the housing market,” said Moore-Moore. “Last year’s $103 million dollar sale of a Long Island estate and the subsequent sale of a Colorado ranch for $175 million established that the $100 million level is no longer a hurdle. Sellers have responded by pricing aggressively at the very top of the market.”

The most expensive home currently on the US market carries a $165 million price tag. This legendary estate on 6.25 acres just blocks from the center of Beverly Hills (CA), tops the list of the 1000 most expensive homes currently on the market, according to the just-released Unique Homes magazine’s special issue, Ultimate Homes, 2008. The residence was formerly owned by William Randolph Hearst. John F. and Jacqueline Kennedy honeymooned at the home. The least expensive price on the Top 1000 homes list is $11.2 million.

Among members of The Institute for Luxury Home Marketing on the list, Shari Chase (Chase International, Lake Tahoe, NV) has one of the six most expensive listing at $100 million dollars. Overall, Institute members listed numerous properties featured in the magazine.

“The number of Institute members on the Unique Homes “Ultimate Homes” list is indicative of the superior marketing skills these individuals possess in the luxury arena,” said Moore-Moore. “Agents chosen to list these multi-million dollar homes must have a proven track record of success, as well as the tools, market knowledge, and luxury agent contacts necessary to market these homes to potential buyers.”

California has the most properties on the Top 1000 list with 246 listings, followed by New York with 195 properties. Florida dropped from second place last year to third with 188 properties. Overall, thirty nine states had properties that made the list. The total dollar value of all the properties on the list is more than $19.2 billion, a gain over last year’s total of $19.1 billion.

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Instead of Renting….

In December I wrote about Julio Iglesias tearing down his mansion after it didn’t sell for three years. Instead of renting, he decided to just buy another home in the same neighborhood, to keep close to the new home he is building on the lot. At a cost of $7 Million, I have to wonder if he plans on keeping this home after completion, or selling it. I bet the homeowner he bought from never though Mr. Iglesias would come knocking. Then again, a sign of a good real estate agent is to see opportunity and network with neighbors when a home comes onto the market.

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Burning Down the House

Apparently in Seattle, if you want to protest the McMansions going in near you, the best solution is to contact the Earth Liberation Front and have them torch the buildings for you.

The homes were part of a “controversial” housing development. Controversial because some neighbors didn’t want the thing to happen. It doesn’t matter that the homes were built using some “green” techniques, and thus reducing their carbon imprint. No, these people just don’t like big homes. Now, I understand that some people hate luxury homes and the space they take up, but radical environmentalists like this group, are just plain dumb in my opinion.

The damage they caused is estimated around $7 Million. The builders of the homes obviously carry insurance. So guess what, the insurance company will pay the claim, but then have to raise premiums on all its customers to cover the expense. We all know that nothing is free, and that the cost to do business is passed on to the consumer. So what the “saviors” of the environment have really done is hurt everyone else. The development is already approved and moving forward. The builders are going to rebuild, rather than abandon the project. Burning down the homes has done nothing except:

  • waste all the natural building materials used in the home
  • release gases into the atmosphere thus adding to air pollution
  • wasted the water needed to put out the fire
  • increased the amount of natural resources needed to rebuild the homes

I think these “environmentalists” are contradicting themselves here. What do you think?

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No Soup for You

Even luxury homes get low-ball offers, and owners have no problem turning them down.

Case in point, Columbia law school professor Hans Smit. He has his Manhattan mansion for sale at a price of $30 Million . The Real Estate Journal reports that he supposedly had an offer come in at $20 Million. Of course, he turned it down.

Low ball offers are nothing new in the luxury field. Many times, people that can barely afford the lifestyle, try to buy the lifestyle through below market value offers. Sometimes they find a seller willing to take their price, but most of the time, affluent home owners say no.

Some think, “Hey, what’s a couple hundred thousand off list price to the seller”…”they’ve got enough”…”it won’t hurt their pocket book”. However, what many forget to see is that the wealthy became wealthy by making sound business decisions, and usually not letting emotions get in the way.

Of course, there are some luxury home owners that do get emotional, and let a perfectly good offer slip through their fingers. It’s hard, as a real estate agent, to see this happen. You can council someone till “the cows come home”, but if they don’t listen, then all you can do is throw your hands up in the air and give in.

When ever a listing of mine has an offer come in, I prepare my clients for the possibility of a low offer. I tell them to not be offended. Any offer is a good offer, in my opinion. All you have to do is counter back at a higher price. Sometimes, buyers really want the home, but are just fishing to see if they get lucky. Remember, the secret of any real estate negotiation is to not get emotional!

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How the Luxury Market is Fairing Much Better than Everyone Else

A few weeks ago an article was published by Newsweek regarding how the luxury market typically doesn’t follow the same housing trends as everything else. This is no news to those of us that specialize in high-end homes. The luxury market, as historical statistics show, is regarded as “recession proof”.

Will the current fizz seen in our local Minneapolis-St. Paul market hit luxury homes? Well, if you read my monthly market statistics regarding Lake Minnetonka real estate, then you should know that homes priced between $1-2 Million sell like hotcakes. It is only when you reach $3 Million and above that the selection of homes for sale thin out, and thus the number of buyers who can afford that price bracket. It will take all of 2008 to see how the luxury home market handles the decline, and I will keep you updated as the months go by.

In the meantime, enjoy the following article.

What Housing Crisis?
Why the mortgage mess hasn’t hit the luxury market, yet

By David Koeppel Newsweek Web Exclusive

There isn’t much positive news in the housing sector. Largely as a result of the subprime mortgage mess, the number of homes that slipped into foreclosure proceedings in 2007 jumped 70 percent from the previous year, according to RealtyTrac. The National Association of Home Builders this week announced that new-home sales dropped 29 percent in 2007, the industry’s biggest drop in four decades. In addition to those troubling stats, there are the ever-increasing costs of energy and recession worries to be concerned with.

So why are ultrahigh-end home prices still rising, with some prices reaching up to an astronomical $175 million? It’s a simple matter of supply and demand, say brokers from hot markets like Manhattan, the Hamptons, Palm Beach and both ends of California. While there’s a national glut of McMansions in the $500,000 and up range, there’s a shortage of trophy properties on the market and an increasing number of wealthy foreign buyers from Asia and Europe looking to capitalize on the weak U.S. dollar.

Continue Reading…

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Old Luxury Historic Estate Goes on the Market

It appears that the late Leona Helmsley’s mansion is going up for sale in Greenwich, CT at a price tag of $125 Million.

Built in 1918 by Daniel Grey Reid, a New York financier, the home was a gift for his daughter, Rhea, and her husband, Henry J. Topping, son of the president of Republic Steel. Originally the estate rested on 208 acres, but currently there are only 40 acres left. The historic home has over 20,000 square feet with a reported 10 bedrooms. Dunnellen Hall was named by Rhea for her mother, Ella Dunn. If you would like to learn more about the estate history, visit an article written about the upcoming sale.

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Luxury Real Estate Trends for 2008, Part 2

2008,Looking Forward: Key Market Trends for Luxury Housing

Continuing from Part 1:

3. “Stealth Wealth” and a desire for privacy will be important motivators.

The have-yachts will want to separate themselves from the have-nots. Yet those who have wealth may choose to not flaunt it. The growing disparity of wealth will cause some wealthy to move more “under the radar.” At the same time, the wealthy are reacting to mass affluence by looking for properties and locations that offer greater exclusivity and privacy. Remote locales served by private jet, boat, or helicopter will have new appeal. So will properties which offer unique experiences from olive groves that let you create your own personal brand of olive oil to sporting clubs providing unusual sports.

Key points: Recognize the need for discretion when working with the wealthy. They seldom want you talking about their transaction details. Expect locales that are both exclusive and “protected” to be in demand. Understand that the search is on for properties that offer interesting experiences. Assess your listings and the properties you show with these things in mind.

4. Environmental issues will rise to the forefront.

The desire to have a positive impact on the environment is growing. The wealthy are responding positively to self-sustaining property developments and other “green” property options. This is part of a bigger trend—using wealth for good.

Key points: Encourage your builders to “go green” when possible. Highlight environmentally correct features of the properties you list or show.

5. The wealthy are increasingly citizens of the world—luxury real estate will become even more international.

Wealthy buyers from abroad will continue to view U.S. real estate as a bargain and will look to purchase in U.S. locales which offer attractive lifestyles and good economic fundamentals. The falling dollar will continue to make U.S. residential real estate an attractive purchase. At the same time, more wealthy Americans will look abroad for second homes or retirement properties. The desire for tax havens will drive some purchases at the über level.

Key points: If you are in a major market, there is growing opportunity in the international segment—both in marketing your listings to international buyers and in helping your American clientele buy overseas. Begin to network internationally, get involved in international organizations such as The International Real Estate Federation (FIABCI) consider earning the Certified International Property Specialist designation (CIPS), go on trade missions, network with other agents who work the international market and learn what’s working for them, and check out the many resources NAR offers in the international arena.
© 2008 The Institute for Luxury Home Marketing, posted with permission from the Institute of Luxury Home Marketing

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