Even though the process is the same, buying high end real estate is different. There are a handful of additional requirements and items needed not only by the seller, but by your real estate agent as well. Overlooking or omitting just one item will prompt a seller to dismiss your offer and leave you disappointed.
All real estate transactions are important, but when dealing with high end real estate you have more to lose if something goes wrong. If you don’t know what you are walking into it is easy getting stuck with a property you don’t really want or lose out on the home of your dreams. Here are four important tips for buying high end luxury real estate.
Research agent/brokerage. All real estate agents and brokerages are not the same. An excellent residential broker may not be adept at handling high end properties. For starters, there are many sellers who want to keep their identity confidential and forgo listing the property on the MLS, or other traditional outlets. If your agent isn’t plugged into this market they won’t have access to certain properties. It is important to talk to as many real estate agents as possible until you are comfortable you have the right fit. Ask them what their experience is with high end real estate and if they have a track record. Negotiating these types of deals takes a certain demeanor and personality that not every real estate agent has. Make sure you work with someone you are confident can get the job done.
Increased down payment/cash. You can’t just walk up to a high-end property with a traditional prequalification letter and schedule a showing. The seller, and listing agent, won’t want their time wasted with a potential buyer who isn’t fully vetted. If you do use a traditional lender you should be prepared to put down at least 20%. Even with this, it may not be enough. There is a premium on cash offers to avoid any trouble with financing or appraisal issues. On some properties all cash offers are the only thing the seller will consider. If you have cash, make sure you have an updated proof of funds letter with all the cash to close liquid. This can often be what separates your offer from the competition.
Don’t sacrifice diligence. Even though you may really want the property never sacrifice diligence. If a seller gives you an unrealistic timeframe or demands that you eliminate the inspection there is simply too much risk to continue. Unless you plan on knocking down the property and starting from scratch an inspection is absolutely necessary. You don’t have to use it to negotiate, but you need to know if there are any deficiencies with the property. If not, you leave yourself vulnerable down the road if something unexpected pops up.
Value/appreciation. Buying anything on projected value is always a dicey proposition. You never know where the market is headed, even just a few months down the road. While future value shouldn’t be at the top of your list it is something that must be considered. Talk to your real estate agent about the market and where it has been trending. Selling a high-end property during a dip in the market can leave you out hundreds of thousands of dollars, or more. Also, make note if your property is a unique property. This will reduce your future buyer pool and make selling for top dollar difficult.
Buying high end real estate takes a unique approach and the right real estate agent. They need to see the little things that you may easily overlook. There is too much at stake to go into the process with someone you don’t fully trust.