Luxury signifies different things to different individuals, but typically, it refers to a state of great wealth, ease, and comfort. Although the idiom, "you get what you pay for," may ring true in many instances, it is not universally applicable to the Cobble Hill, Brooklyn Heights, or Dumbo real estate markets. In fact, you may be surprised to learn that a high price tag is not always associated with a high-quality luxury home. Many sellers get misled by voracious real estate brokers who make lofty claims about a home's value in order to secure a listing but ultimately fail to deliver. Other times, it's possible that the current owner got in when the housing market was red hot.
Whether you are looking to buy or sell a luxury home in the New York area, it is imperative that you inform yourself of the property's actual market value. Keep reading below to learn how.
Factors to consider for luxury home valuation
Regarding high price tags and luxury homes, remember to keep in mind that correlation does not imply causation. There are many reasons behind inflated home prices, such as the property's location or the market's present status at any given time. Therefore, you'll want to conduct thorough research before making your real estate purchase.
Sellers desiring top dollar for their luxury homes should also heed this advice to keep their expectations realistic. Consider these factors before setting or accepting a price on that luxury home:
1. Location of the home
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You've heard it time and time again, but it bears repeating: "location, location, location!" The value of a piece of luxury real estate rises or falls based on the strength of its geographical position. For example, let's say you're in the market to purchase a luxurious home in a trendy part of town. The home is likely to increase in value faster than a similar home in an already established neighborhood. When assessing the quality of your high-end listing, remember to consider the community, transit options, and schools, as all these aspects will influence the property's current and future value.
2. Age of the property
It's common sense that brand-new, high-end residences tend to be in better shape than their older counterparts. But age makes no guarantees. As a result, the age of a house is not always a reliable indicator of its condition. Thus, we move on to the next important consideration when determining the worth of a luxury home: the state of repair.
3. Size of the house
Property size is another critical factor when determining a luxury home's true market value. For the most part, larger houses are typically more expensive due to their increased square footage, higher heating and cooling costs, and general upkeep requirements. A larger house also has a better chance of having more rooms and amenities, both of which can increase the home's value and attractiveness to potential purchasers. However, a sprawling estate with structural problems will be far less valuable than a smaller-sized house, which leads to the next factor one must consider when valuing a luxury home: condition.
4. Condition of the house
In addition to location, size, and age, the real value of a luxury home depends on its condition. Therefore, the state of the house itself and the land it sits on are of the utmost importance. Although selling best practices suggest that current luxury homeowners have a thorough home inspection performed and any problems addressed before listing their house for sale, not all homeowners follow this standard procedure.
Potential purchasers are on their own to verify the luxury property's condition. Some things to keep an eye out for include:
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Whether or not the home is adequately insulated
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The state of the roof, foundation, windows, floors, and appliances
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How much maintenance the property requires
5. Amenities
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High-end residences almost always have impressive curb appeal and unique amenities. The value of a luxury home increases exponentially when it boasts features such as a tennis court, a private pool, a high-tech security system, and a personal spa, compared to a house with just a nice view. Here are some of the fixtures and fittings to take into account when assessing a luxury home's genuine market value:
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Is the house move-in ready?
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Which direction does the house face?
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Does it feature breathtaking views?
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Is there enough privacy?
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Does it boast a home gym, a wine cellar, or picturesque gardens?
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Is it environmentally friendly, offering features like solar panels or a charging station for electric cars?
6. Current market conditions
When determining its value, you need to consider more than the luxury home's facilities and features. Always ensure you are getting a sound deal by asking a reliable luxury real estate professional to run a CMA (Comparative Market Analysis) for the property in question. A comparative market analysis will examine recent sales data and local market trends so you can see what people are willing to pay for similar high-end real estate in the area. It will also be beneficial to keep this data in mind during the negotiation phase of a purchase.
7. Return on investment (ROI)
If you're planning to buy a luxury home as an investment, you should calculate how much income it will yield each year. Of course, if the home in question is already generating revenue, all the better. Current and historical financial statements can estimate how much money the luxury home could bring in for you, should you choose to make the purchase.
Other considerations
When determining a luxury home's actual worth, it's also essential to consider the following elements:
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Is there a level of artistry and craftsmanship you can feel throughout every room of the house?
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Do the home's amenities create a sense of ease, comfort, and convenience?
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Is the overall aesthetic of the surrounding neighborhood up to par?
Take your luxury real estate search to the next level
Team Wilding Woods is dedicated to providing our clients with first-rate service as one of New York's top luxury real estate agencies. You can trust that following the advice in this article is the best way to obtain the fairest and most accurate deal possible on your next luxury home, whether you are buying or selling.
What’s more, our home valuation service is a fast and convenient way to find out what that luxury property is truly worth. We’ll collect data on the home in question and send a home valuation directly to your inbox!
Contact Team Wilding Woods today to be well on your way to the Cobble Hill, Brooklyn Heights, or Dumbo luxury home of your dreams.
*Header photo courtesy of Team Wilding Woods
*Header photo courtesy of Team Wilding Woods
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