Luxury Homes: How to Tell If You’re Getting a Fair Price

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:

Buying a luxury home isn’t as straightforward a process as one might think. This market has a lot more variables when it comes to each property, making it difficult to establish an exact market value on a home. That being the case, buyers may wonder if they’re getting a fair price on a luxury piece of property. If you’re in the expensive real estate market, here are some steps to take to ensure that the price for your home is fair.

Compare
It should be said that comparing two luxury homes isn’t the same as comparing other types of real estate. When you buy a “normal” home, your REALTOR® will look at similar homes in the area, keeping in mind the number of bedrooms, bathrooms, etc. Luxury homes aren’t built with that in mind. When you compare these types of homes, you may want to look at features like great views (if it’s a penthouse, for example), privacy, sports features, etc. This gives you an idea of what’s on the market.

Know What You’re Looking For
Once you’ve looked at a couple of properties and have had a chance to compare them, you should be able to develop a “must-have” list. Think about your financing options as well. All of these will become a factor once you’re ready to buy.

Hire an Expert
Like any other profession, the real estate market has professionals that specialize in high-end homes in certain areas. These REALTORS® know what properties in the area are going for and how to find good deals.

Additionally, real estate professionals can tell you what types of transportation amenities are in the area. This is especially important if you’re moving into an area that’s very different from your current location. Hiring someone who knows how the flow of a geographic area works will be better able to steer you toward a good location.

Timing and Motivation
Once you’ve done the first three steps, you’ll finally want to start narrowing down the properties you’re looking at. It’s at this time that you’ll be able to make an offer on a home and, more importantly, hopefully, get it at a fair price.

Luxury homebuyers should consider the timing of their purchase. They may be able to get a better deal on a home in the winter than in the summer. The same can be said for homes that go up for sale at the end of the year. These homeowners may want to get rid of the property by year’s end for tax purposes.

Additionally, you may also be able to secure a luxury home at a reasonable price if the seller is motivated to sell—but be warned. Homes priced to sell go fast, in sometimes as little as two weeks. If you find a luxury home at an excellent price, be sure to ask your real estate professional to make an offer on it.

Buying luxury real estate at a good and fair price is a process. You should start by doing some research and by hiring a real estate professional who specializes in the luxury market. From there, compare the different homes on the market. Finally, once it comes time to buy the home, look for a motivated seller. This factor, combined with all of the previous work you’ve done, will help ensure that you’ve gotten the best price for your new place.

For the latest real estate news and trends, bookmark RISMedia.com.

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Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:

One Canadian couple is making a splash transforming shipping containers into backyard swimming pools. (We always knew those shipping containers were universal!)

Paul and Denise Rathnam launched Modpools earlier this year and the idea has taken off, with orders mostly coming from the hottest locales in North America, particularly California, Nevada, Texas and Florida.

“The traditional pool is a symbol of excess and waste. This is a little more modern, more modest. We’re repurposing something rather than recycling. This pool can be resold, and you can take it with you if you move,” Paul Rathnam told Vancouver Sun.

It’s an interesting concept, for sure, and the design, once installed, looks pretty slick. It’s as if your backyard was always destined to house a shipping container.

The standard size Modpool is eight feet wide by 20 feet long, and just over five feet deep. It also comes with a clear, acrylic window on one side, which is actually a pretty spiffy design element. Customers can opt to add another acrylic window on the other side for a see-through look if they want one.

In Canada, after delivery, a Modpool will cost you $35,000 plus tax, which could be a cheaper alternative for families planning on installing an in-ground swimming hole.

Would you buy a Modpool for your home? Tell us what you think!

Nick Caruso is RISMedia’s senior editor. Email him your real estate news ideas at nick@rismedia.com.

For the latest real estate news and trends, bookmark RISMedia.com.

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Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:

Everyone wants a magic and immediate path to wealth. The bad news? The path doesn’t exist. Wealth is attainable through more conventional means. If you come to understand the real estate industry and if you deepen your own firsthand experience as you buy and sell investment properties, you’ll be on the road to success.

Along the road, there are six core principles that will make or break each real estate investment deal. They are the most important concepts you will learn. I call them the Big Six. With each successive deal I negotiated, I grew to recognize the common elements. The Big Six are part of a sequenced step-by-step formula that enables you to identify and purchase the right income property at the right price.

The elements of the Big Six Formula that will guide you into the basics of buying income properties are the following:

Location
Location is the single most important component of any real estate deal. It is crucial in determining your investment success. Look for properties that are situated in an “A” location. Such locations include the socioeconomic levels of the people who live or work in a particular neighborhood, its proximity to shopping centers, public transportation, crime levels, the nearness of prestigious universities and medical facilities, traffic congestion, zoning restrictions, the quality of schools, fire and police protection, and even the reputation of the local government and its officials.

Building Quality and Design Efficiency
Design efficiency interfaces with building quality. When you find an investment property you’d like to buy, you will need to scrutinize both elements. Look for properties that far exceed minimum construction requirements and that have useful and innovative design elements. This will not only make the property attractive to tenants but will add value to the property in the future. Design features on apartment complexes that stand the test of time include walk-in closets, large kitchens with windows, and his-and-her bathrooms. In an office building, a common area factor of 15 percent is desirable as well as a ratio of four parking spaces for every 1,000 square feet of rentable space.

Tenant Profile
Tenants can represent either an asset or a liability in an investment. When you invest, your mission is to make sure your tenant profile is the former and not the latter. Just as you want a well-constructed and well-designed property, you’ll want stable tenants who are a good match for your property and have appropriate lease agreements. Find out how much rent is generated and whether it is at market rate or under market. You want to focus on finding an income property that offers the opportunity to increase rental income and, by doing so, multiply the value of the property so that you can resell it at a substantial profit.

Upside
This fourth element refers to the cash flow growth possibilities offered by a particular property along with the likelihood that the property will increase in value. A property may cost $1,500,000 to construct, but if it brings in only the income of a $900,000 property, then it is worth only $900,000.  The key to increasing value lies in buying a solid Class B property in an “A” location where the rents are under the market, the leases are short term, and there are no options to renew the leases.

Financing
In the musical Cabaret, there is a song with the lyrics “Money makes the world go around.” It could just as easily be used to describe real estate’s role in the economic landscape. The free flow of money and access to credit is what adds vibrancy to property investment. Before you get started, you’ll need to get a number of finance-related items in order. The first thing you should do before applying for a mortgage loan is to review your credit reports and your credit scores. Also, learn the terms, understand the components of a mortgage and how they interact, and be open to the full range of financing options available. Banks and other financial institutions make money from mortgages. They are willing to negotiate. Be creative—you may be surprised at the terms you’re able to obtain from a bank or insurance companies, especially in today’s low interest rate environment.

Price
The successful evaluation of a property’s price has to do with how much information you can gather about a seller and the property than it does about the price tag on the real estate deal. You must look at the value of the property, which is not the same thing as its price. The crucial concern is not just how much the property costs, but what kind of income it can generate for you. A property may be architecturally perfect and engineeringly sound, but if you’re locked into long-term, under-market lease rates, the value will be eroded.

If you master these principles, wealth will be within reach. However, it’s not enough to just understand and utilize the Big Six. You must execute them in order. That’s because they all fit together snugly to form your customized real estate formula.

Author Kenneth D. Rosen, CCIM, is a real estate investor and the president of Kendar Realty, Inc.

Investing in Income Properties, The Big Six Formula for Achieving Wealth in Real Estate, Second Edition is currently available at InvestingInIncomeProperties.com in both hard back and digital versions. It is also available on Amazon and at Barnes and Noble.

This article is intended for informational purposes only and should not be construed as professional advice. The opinions expressed in this article are those of the author and do not necessarily reflect the position of RISMedia.

For the latest real estate news and trends, bookmark RISMedia.com.

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For the first time, real estate professionals can call out specific solar energy features of their listings.

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