Rose Cottage Ltd

I was reading an article online a day or two ago and I suddenly wondered what it is that makes a real estate property “luxury” versus “non-luxury.”

This is one of the few valuations regarding real estate when “location” is not the prime factor.

According to Wikipedia:

Luxury real estate is often defined as real property that has an appraised value of over $1 million in the United States, yet this varies greatly depending on the location. The classification also takes into account the presence of surrounding homes, amenities, views, waterfronts, absence of crime-rate, industrialization or unwanted commercialization, customizations of the home, and historical or architectural significance.

You can quickly see where location can become a problem when trying to define luxury real estate. One million dollars US might buy a very posh property in rural Kentucky or New Mexico – where the same dollars would not get you much in Manhattan or London. So what ARE the contributing factors?

++ Style and Size
Chances are your potential luxury property is larger than other homes in close proximity or, all homes in the area are larger than the average of those in the state or local market. Your cost per square foot is no doubt higher to much higher than average market homes. This is one of the first calculations I look at when doing property research. How much was spent per square foot to build the home? The land the property sits on is also a significant factor. Is it a small or large parcel? Acreage may be important in some areas when location with less of a footprint is acceptable elsewhere.

++ National/International Audience
I don’t think you’ll see any “doublewides” advertised via Christie’s Great Estates! You’ll also notice that Christie’s is a “International” real estate portal. Many luxury buyers have successful international businesses or travel extensively. They have money to spend and may decide that purchasing a home overseas is more cost-effective than constant hotel stays. Even in the US, many of the luxury real estate market purchasers are East and West Coast business executives and corporations. Owning a million-dollar condo in New York, and a multimillion dollar spread in Southern California would not be unusual.

++ Unique Legal and Finance Issues
Each country of the world has its own real estate laws and requirements. In some countries you must pay cash for your purchase. If you are wealthy enough, a blind trust may be used for real estate purchases. Imagine you are a international celebrity… I doubt you’ll just call a local realtor and start touring properties on your own! Many exclusive home buyers will have a full-time buyer agent on staff who does ALL property negotiations for them. Multi-country real estate, legal, and financial professionals may be involved in the purchase.

So if you aren’t doing research today on YOUR piece of luxury real estate, console yourself by remembering all the things you won’t have to worry about and remember, it never costs you to have a look!

A REAL “bear hug”!