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| Best Practices: Real Estate |
Landed Class
Elizabeth Harris
02/01/2007
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Craig Jones, an agent with John R. Wood Realtors in Naples, Fla., knew most
buyers would pass on the $1.7 million home she represented last year before she
even put it on the market. The sellers’ sense of style was, euphemistically
speaking, memorable: dayglow pink and blue wallpaper and fabrics, featuring
parrots and hibiscus. This, combined with many contemporary fixtures in an
architecturally traditional home, seemed to repel buyers. In fact, after three
months on the market without so much as a nibble, the owners were forced to
offer a $40,000 credit to potential buyers. “The sellers did not want to wait
for the one person who had their taste to walk in,” she says.
 The owners of
this highly personalized property learned that at the high end of the
residential real estate market, some homes carry a broader, more timeless appeal
than others, and these are the ones that appreciate more quickly. “If it creates
a custom look that is so taste-specific you cannot get broad appeal, you have
got to do something,” Jones says.
To maximize potential return on an
eight-figure home investment, buyers must walk a fine line: Their properties
should be unique, but not too individualized. They should possess architectural,
aesthetic and other attributes that are memorable, but not so trendy that they
will quickly become dated. Finally, they must have an attractive location and
grounds that afford both privacy and security.
Michelle Mayne, an attorney
and real estate investor, has struck the right balance. Her home in Reno, Nev.,
combines the modern designs of architect David Chavez with ample land for her
horses. Her Vail, Colo., home at Beavercreek has a view that National
Geographic would publish, she says. Meanwhile, the sound of lapping water at her
home on the shores of Lake Tahoe endears it to her. “I’ve never seen any of the
properties I’ve had depreciate,” she adds. Mayne searches out unusual homes in
unusual locations, which, she says, make solid investments. “They’re insulated
from the ebb and flow of the real estate market.”
TOP VIEW
To maximize their profit on a residential real estate investment, buyers must
walk a fine line: Homes should possess architectural, aesthetic and other
attributes that stand out, but that are not so voguish that they will become
quickly outmoded. Interior decorating should not be too highly personalized.
Finally, the houses must have an appealing location and grounds that afford both
privacy and security. |
Large and In Charge
Other investors in this market are not fairing as
well. In 2005, there were 109,113 homes that sold for $1 million or higher—more
than 10 times the number sold in 1999, according to Laurie Moore-Moore,
president of the Institute for Luxury Home Marketing in Dallas. Yet, even this
market niche, which is not as volatile as the market for less costly homes, is
softening. Although the National Association of Realtors does not track sales
specifically in the high-end market, Moore-Moore says that buyers are growing
pickier over architectural design and neighborhoods, with the expectation that
overall prices may remain flat over the near term in some regions.
In this
slackening market, two features can improve the odds of a continuous rate of
appreciation: lot size and location. It is axiomatic that an estate situated on
several hundred rural acres will only become more valuable over time.
Furthermore, homes near dedicated open spaces, such as land preserves, or those
that abut other larger properties also hold a distinct cachet in the market.
However, in more densely developed areas, land values become more relative and
are gauged by the size of the lot in relation to that of nearby parcels. “For
the flats of Beverly Hills, three-quarters of an acre and up is considered big,”
says Joyce Rey, who heads the estates division of Coldwell Banker Previews
International in Los Angeles.
Land means privacy and security, and owners of
luxury homes will pay top dollar for both. Realtor Shari Chase, president and
CEO of Nevada-based Chase International, attributes much of the $100 million
value for one property she represents to its unusually large size. It comprises
210 acres—waterfront on Lake Tahoe as well as a separate small, private lake,
and it borders land owned and managed by the state. “Anyone can go out and buy
bricks and mortar,” Chase says. “The number one thing is really your setting.”
Real estate experts caution, however, that a home with a view of the water will
be more desirable than direct waterfront for home shoppers who wish to avoid any
associated maintenance.
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