Posts Tagged ‘Alain Pinel’

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Luxury Insider: Facebook vs. Greece

By Alain Pinel | May 23rd, 2012 0 Comments

Do you believe in Santa Claus? I do. I did not when I was a kid, but now I do. I have to. I am so sick and tired of the dull-to-bleak-to-depressing news about the economy that I am now looking to Santa for help. He might as well do something for the adults for a change. Kids cannot have everything. Not in my house anyway.

Today, Santa looks a bit like Mark Zuckerberg. Forget about the beard and the red stuff. Don’t personally know the guy –although he lives a few minutes away-, but I like what he can do for the grown-ups. He can make us believe that people can still make the difference, no matter how badly our political leaders can mess up our affairs. He can bring back the invigorating will of success, the excitement of creating and winning. We used to call that the American spirit.

I know that the stock has been heckled a bit since Day 1, “morning after” syndrome I guess. So what? This IPO thing is still giant and should be celebrated as such, rather than described by some blasé and hard to please commentators as a dud. Everything is relative, to say the least. Are we losing our common sense? As we say in my old country: “Let’s not be more royalist than the king!”

If I were to write a serious book today, I would title it “Facebook vs. Greece”. That’s the 2012 version of “Ambition vs. Complacency”, or “Standing up vs. Laying down”, or “Making money for others vs. Burning other people’s money”. I don’t know what’s going to happen to Greece (or I am afraid to tell) but I was trained to always propose a solution whenever confronted with a problem. Here is my recommendation and my silent prayer to Santa Zuckerberg: “Mark, listen to me, buy Greece, make it a resort for the employees or something like that, today the price is good, you don’t have to say I am the one who told you.”

I have been preparing for the big IPO. I am now waiting for the Facebook lottery winners to buy some nice homes over the next few months. A Realtor friend of mine, someone who is nearly always right when he agrees with me, tried to temper my enthusiasm (should I say my expectations?), suggesting that many new techie millionaires were the subdued type and might not buy a bunch of pricey homes when they finally clear their cash. Well, I’m not sure I buy that.

When a guy wakes up with, say, $50M in his back pocket, I don’t care how subdued he is, he buys real estate. He might put half, that is $25M aside to create another Facebook, but I guarantee that he will put much of the left over on a nice pad with a roof on top….$25M can still buy a decent home in the US!

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Luxury Insider: Luxury Property Buyers Are (and should be) Hard To Please

By Alain Pinel | May 17th, 2012 0 Comments

Can’t wait for May 18th, a.k.a. “Facebook Day”! Two more days to speculate on how much the IPO is going to raise and what will be the valuation of the company, both Guinness Book of Records instant new entries. Of course my main interest lies somewhere else: what are the top employees, the “lottery winners”, going to do with their millions? To tell you the truth, I already know the answer, and so do you.  We have been there before.  The new millionaires will buy million dollar homes. Simple as that. You and I would do the same, right?

The second question, even more interesting to me, goes as follows: who are they going to trust with their home search and the negotiation? What brokerage firms? What agents? Why?

Last year, Luxury Portfolio, our partner for international marketing, released a White Paper on the subject, titled a mouth full: “How Today’s Highly Affluent U.S. Consumer Selects Luxury Real Estate Associates and Brokerages”.  Reading it is always an education as 5 years of recession changed consumers’ mindsets, motivations, expectations and market sensibilities. Today’s luxury buyers and sellers know the difference between acts and empty promises, between the brokers who can deliver and those who wish they could, although they are not sharing the scoop with their clients.

Because, as the study suggests, high net worth individuals are savvy and used to conducting their own research online on domestic and international markets, agents must be able to serve as a resource by having both a global perspective and an even greater store of research and information at their fingertips. Few do. Few can. That goes especially for service, which is predicated on the brokerage’ and the agent’s ability to market globally high-end properties in high-end ways.

The wealthy, today, want to feel that they have made an instant profit the day they close on a purchase. And they know what they are talking about. The access to internet research has empowered them to access information which previously resided only with the professionals. The luxury market is not to be confused with all other price segments. Six out of ten consumers say that an agent who specializes in high-end real estate is important to them. They want their agent to be affiliated with a strong organization and network. Intero, through Luxury Portfolio International’s website, helps its agents meet this criterion as about 85% of the property listings from all over the globe are priced over $1M.

According to the White Paper, internet presence, high visibility print and reporting tools are key. 71% of the affluent consumers say that it is critical for their listings to appear in Google search results. 48% wish to see placements in Unique Homes and 47% in the Wall Street Journal. 38% say representation in the DuPont Registry is important. Consumers are also interested in receiving customized and personalized reports showing where their property is being marketed.

The bottom line, according to the White Paper? Good reporting on all marketing tools and services is critical. We should note in that respect that Luxury Portfolio International is the only luxury real estate program that gives agents the ability to report on comprehensive listing metrics, from inquiries and views down to which city, state, country a visitor came from and even what language or currency they use. It is as good as Luxury Marketing gets.

Happy hunting!

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The Luxury Insider: East Meets West

By Alain Pinel | May 9th, 2012 0 Comments

The Chinese are coming!…Or should I say a lot more are coming, and contrary to those who came over to the US in the 19th century, the new wave of Chinese immigrants are coming with lots of money and are eager to spend it. They are changing the real estate landscape and setting new real estate values in many states and regions.

The first Chinese immigrants, laborers for the most part, arrived in the mid 1800’s, “escaping” from the poor Southern provinces of the old country to look for job opportunities on our West Coast.  Life, for a while, was hardly better than the one they left behind. The attractive mirage that the Gold Rush represented absorbed most of them. From mining for gold, they eventually gravitated to railroad labor. They became low wage workers for a booming industry busy with the construction of the Transcontinental Railroad.

According to Wikipedia, the Chinese accounted for over a tenth of the population of California in 1880. Today, the percentage is down to roughly 3.5% (about 1,300,000), but we are not talking about the same curriculum. Today’s Chinese Americans represent a huge economic power and their appetite for real estate will not be satisfied anytime soon. They want a lot and can afford the best.

This is especially true in California’s Silicon Valley, home of the brightest and most ambitious new Chinese Americans. Many of them, young top guns in the fields of engineering & sciences, came in the mid 1980’s, screened with a fine comb by their government which paid dearly for their scholarships in leading universities. One of them was Minhua Jin, now a star real estate agent for Intero Real Estate in Cupertino. She routinely works with Chinese American clients.

Minhua explained to me that unlike most of the “typical” buyers and sellers, the Chinese buy but they very rarely sell, if ever.  They keep what they buy and, as long as they can, they buy more of the same. There are plenty of reasons for that:

  • New laws were enacted in Mainland China a few years ago limiting to 4 the number of residential units any person could buy. Now that money is flowing over there, there is only so much art or items of value people can put their hands on to protect their wealth and build equity.
  • In the main country, they cannot buy the land on which the real estate is built. It belongs to the government, which is leasing the pad for 70 years. Considering that there is no clue as to what may happen when that lease expires, a lot of homeowners and investors are obviously unsecured about their investment in China.
  • Government policies are changing often, further complicating the process, the pertinence of the investment and therefore reducing the appetite for local real estate.
  • Education is a very big deal in China these days, especially business & technology rather than just academics that they do well at home. Whenever possible, well to do families send their kids to the best schools in the US or Europe. Some go back; some stay.
  • Overall, the Chinese are not rich people. Perhaps only 1% of the population can dream of ever buying a home (or many) in the US…But you know what? 1% of 1.4Billion people is a lot of people, a lot of qualified and determined buyers!
  • Chinese real estate in key cities multiplied about twenty times in value over the last 15 years or so; those who bought made enough money to buy anything, anywhere, whether in San Francisco, or New York, or Paris, or London.
  • The Chinese currency is going up while the dollar is going the other way. Buying a multi-million dollar home here is getting to be very affordable.
  • The Chinese, as an old & dear tradition, believe in real estate. They aspire to own their home. You might call it the “Chinese Dream”.

It is clear that the impact of Chinese Americans and Mainland Chinese on US real estate is rapidly changing the rules of the game. It can only accelerate with a growing number of buyers and their growing purchase power. Chinese Americans are part of the new technologies, part of the new wealth. In the Silicon Valley, for example, 1 out of 5 high tech start ups are led by people from Chinese descent, according to a study done by Annalee Saxenian, a UC Berkeley professor.

Knowing how to work with the Chinese is no longer an interesting option for real estate agents, from one coast to the next. It is simply a mathematical necessity.

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The Luxury Insider: Do You Really Need a Realtor?

By Alain Pinel | May 2nd, 2012 0 Comments

Every so often, when I feel like a sponge for professional knowledge or when I want to justify the hefty dues I have to pay to NAR -the National Association of Realtors-, I read the “Economists’ Outlook” blog. The other day, one caught my eye. The title and the content were not particularly new or earthshaking but I still read the piece twice. I guess I liked it. You’ll know why when I unveil the title. Here it is: “Home Buyers Use of an Agent in Transaction Has Risen For Past Decade”.  Music to my ears.

As a Realtor, I like being liked. There is nothing like recognition for a job well done. Sure it is self serving but it’s nice to see that home sellers are more aware today than ever before of the value of trusting a Realtor with the sale or the purchase of a home.  You see, even a guy like me needs a pro. I have been around the block a few times, I bought and sold many homes for my own account and personal use, but when my money is concerned, I need an objective expert opinion and someone who can negotiate on my behalf. I need a Realtor.

Buying or selling a home is highly emotional. You don’t want to be emotional and confused when you sign a listing or a purchase contract. It’s your money that we are talking about. It is your home.  It’s where you and your family lived or will soon live. Buying or selling is also a very difficult task, judging by the number of attorneys who specialize in the discipline and make a good living at it.  In the high end, using a pro is not an option: there is too much at stake, too much to win or to lose.  Playing Russian roulette is not a game to play in a real estate transaction.

According to the NAR “2011 Profile of Home Buyers and Sellers”, a record 89% of recent buyers purchased their home through a real estate agent or broker. On one hand, I am pleased to learn that the percentage is moving up; on the other, I honestly wonder who on earth are the 11% of buyers who did not get the message!… Promise me you will never do that again!

In 2001, just a few years back, “only” 69% of the buyers bought through a Realtor.  I guess those who did not learned their lesson quickly because, as we mentioned above, the percentage has gone up ever since, with the strange exception of 2009 when it dropped a few notches to 77% after 81% the year before.  My take on this anomaly is that after a couple of lousy years when properties did not move and values went the other way, some home sellers blamed their agent and decided to go “For sale by owner.”  That lasted only as long as a New England winter (about 6 months…).

Actually, the NAR study suggests that only 4% of the 2011 buyers bought directly from the previous owners (It was 15% in 2001). The other 7% missing bought from a builder or a builder’s agent.  When you look at the trend over the 10 year stretch of time, jumping from 69% to a record of 89%, you’ve got to feel good if you are a Realtor.  At that tempo, if we are not careful, we may get well over 100% in another 10 years!…

It is particularly comforting to note that many crystal ball readers, years ago, were predicting that Realtors would phase out as more and more knowledge about the business, about the inventory of homes, about values, about financing, about contracts…was dispensed online for the Public to read, learn and use. Obviously it did not happen that way; quite the opposite in fact. At a time when buyers and sellers know as much as they do, the more they know, the more they know ….. what they don’t know. That’s why Realtors are more relevant and essential than ever. Thank you.

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The Luxury Insider: Want a Piece of the City of Lights?

By Alain Pinel | April 25th, 2012 0 Comments

Last week, I wrote about the power of the “Leading Real Estate Companies of the World” network and their “Luxury Portfolio” high end division. They are our partners in the marketing and sale of upscale homes and estates all over the globe. Our counterpart in France is a firm by the name of FEAU,” Daniel Feau Conseil Immobilier” to be exact. They are to luxury Parisian real estate what Cartier is in the jewelry business. It can be said that they have their stamp on the most desirable and expensive apartments and mansions in and around Paris and they are the place to go for the fortunate few who want to buy them.

A few days ago, Charles-Marie Jottras, their President whom I have known for several years, sent me a study they just completed of the captivating high end market in Paris and the Western suburbs. I thought you would enjoy reading some of the findings. Perhaps you are looking to buy in Paris, or perhaps you just want to do some free “window shopping “…. Or maybe you are curious to know who the people who buy those multi-million dollars condos in the City of Lights are. Well, whatever your motive may be, enjoy!

The first thing that jumps at you at first glance is that the Paris market traits, as far as the buying demand, are pretty similar to what we are observing in other European capitals, like London, or in our own large metropolitan city centers, like New York, Miami, Los Angeles or the San Francisco Bay Area, to name a few.  There are two kinds of buyers: the domestic buyers and the foreign buyers. They are not targeting the same real estate…Question of means. The foreign buyers now represent the lion’s share of the qualified demand, and the higher the price, the bigger the share. And you know what? At the very top of the price scale, it looks like we are competing for the same exact buyers!

Basically, the domestic demand in Paris is confined to a relatively small range, between roughly $1.5M and $3.5M, the entry level to what could be considered the high end in the region. Above $3.5, the large majority of the French buyers are out of the picture. Enter the foreigners…  They are having a blast buying the crown jewels, right and left, up to $100M, or whatever.  Who is counting?  They buy beauty, they buy financial security (kind of), they buy in full ownership (which is not necessarily the case where they come from), they buy glamour and fame.

FEAU went as far as determining who, among the foreigners, was buying what and in what price range in Paris. Take a look at the findings of their study based on recent months and compare with your own big city market. I know that Paris, at this point, is ahead of the pack, but this will give us the flavor of things to come in our most desirable and very pricey US markets.

  • European buyers (euro zone) represent, together, 13% of the foreign buyers in Paris. Just like the French locals, they are in the $1.5M to about $5M max and prefer the historic districts.
  • The British (they are European too you might say, although they don’t admit to it) represent 10% of the buyers. They are shopping for the same goods mentioned above and in the same price range.
  • The Swiss count for 15% of the sales (which was a big surprise to me) and they buy up to about $13M. Their economy is doing alright. They have quite a bit of the world’s money; maybe some of yours.
  • Africans have an 8% share of the Paris luxury stock and buy also up to about $13M.
  • The Middle East buyers represent 12% of the total. They start their shopping at roughly $10M and go up to $100 or so. Whatever it takes.
  • We, Americans, together with our Canadian friends, account for 10% of the Paris buyers according to the study. We have more modest means. Our range is $2.5M to $6M, mostly in historic districts. Nostalgia.
  • Brazil and the rest of South America is good for 4%. They spend up to $6M but want the money districts.
  • The Russians absorb 20% of what’s offered and they want the best of the best, up to about $25M.
  • Finally, the growing numbers of Chinese buyers represent today 8% of all buyers in the City of Lights. They too want the cream of the cream, at least what they can buy up to $13M.

That’s it. What do you want to buy? What’s your budget?

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The Luxury Insider: The Truth About International Marketing of Luxury Homes

By Alain Pinel | April 18th, 2012 0 Comments

I am in a very good mood this morning, just reflecting on the facts & figures that I saw on a giant screen while attending the “Leading Companies of the World Conference” in Orlando a couple of weeks ago. ”LeadingRE,” as it is known in the professional circles, is Intero’s bridge to qualified high end buyers all over the globe. It is our partner in the ever important mission to successfully market luxury homes in 2012 and the years to come. Intero and LeadingRE, that’s a pretty formidable combination!

A few blogs back, I wrote about the need to open the marketing window to all states and all continents to optimize our chances of reaching out to all prospective high end buyers. At a time when the percentage of out-of-area, and especially foreign buyers, represents a huge and growing share of the demand for unique properties, global exposure is hardly an option. Doing without it may end up costing a seller over 50% of the likely buyers, possibly the highest bidders and probably cash buyers. It could also be the difference between selling and not selling.

To be honest, I am amazed that some sellers of pricey homes still defy the odds when they choose to list their property with a small brokerage with little or no access to the right buyers, here and there and everywhere. Who can afford to take that chance?

With this said, let me give you a better sense of the power of Leading RE and its upscale division: The Luxury Portfolio. First, their mission: give listing exposure to the largest sphere of international buyers & sellers. The way they do it is quite simple: associate and network with the finest, most reputable and powerful group of brokers in the industry, anywhere.

The results are spectacular. Judge for yourselves; In 2011, Luxury Portfolio won, again, the leading market share of all global high end residential properties, with 11,594 such properties. Behind us, we want to give credit to the usual competitors: Sotheby’s (10,072 properties), Christie’s (7,498) and Coldwell Banker Previews (4,671). Of course the list of brokers goes on with a host of other brands but I will save some ink since they hardly register on this radar.

Perhaps even more important to our sellers is the fact that Luxury Portfolio is the purveyor of the most relevant segment of upscale properties, which is what it’s all about. Look at these numbers:

• 84% of The Luxury Portfolio homes are listed above $1Million. This is to be compared to…
• 57% only of such properties (over $1M) for Coldwell Banker Previews
• 41% only of such properties for Sotheby’s.

Just a few more bullets to add to the above show of power and effectiveness:

• The Luxury Portfolio has a total inventory of….$40Billion
• The average price of a home is….$2,535,000. That’s a lot considering that in many countries you can buy better than a hand full of luxury homes with a check of this size.
• Luxury Portfolio has listings in 27 countries and 45 US states.
• We market to buyers all over the world. The advertising program reached over 47million targeted luxury consumers. Visitors came from 22 different countries.

As I said in a previous blog: real estate firms may be created equal but they sure don’t evolve the same way and at the same speed. Given the choice, it is obviously safer and more meaningful to trust your listing with a company that can deliver on the promises.

PS. Quick heads up to our franchisees and friends out there in the US and abroad: if you have reliable info/data about the high end real estate market in your major city, region, state or country, please forward. We want to be as relevant as possible in terms of the topics we choose to write about and the accuracy of the information that you want to read in order to list, buy or sell exceptional real estate. I cannot promise we will use your info, but we certainly thank you in advance for whatever precious input you may provide.

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The Luxury Insider: Alert: Sellers Wanted!

By Alain Pinel | April 11th, 2012 1 Comment

If you own a high end home in Silicon Valley and you are considering selling your property at some point in the near future, I have a question for you: what exactly are you waiting for?

Please understand. My question is totally earnest: no tricks, no ulterior motive. I would love to know what is actually causing you to delay putting your property on the market. I am sure you have a good reason; I am just curious as to what the reason is.

You see, I am a little puzzled because, from my point of observation, it seems like the right time to sell. If you are in the San Francisco Peninsula, the South Bay and much of the East Bay, the market is buzzing, particularly in the million dollar range. You list a property one day and there is a good chance that it will be gone in a matter of days if the price is within shooting range. There is also a good chance that a few would-be buyers will fight over it since there is so little inventory available to be sold.

The MLS stats reflect the fact that new sales are outnumbering active listings about 2 to 1. Looking at the number of multiple offers on homes priced between $1M and $2M, you would have to conclude that you have 3 buyers for each home. I am not surprised that buyers are coming out of the woodwork in masses after years of economic slowdown. This is clearly shown in a recent NAR study which points to the fact that in 2011, “typical sellers” sold their home after 9 years, while between 2001 and 2006, the sellers’ tenure in a home was only 6 years. That can only further exacerbate the pent up demand phenomenon.

So, no surprise there. What does surprise me is the fact that so few sellers are taking advantage of the opportunity this above reality is offering them on a silver plate. Hence my original question: if you are thinking about selling, why not now?

Let me list a few reasons, pertinent or not, to try to guess what yours might be, and then I will give you my take:
• Prices are just starting to go up; I don’t want to rush selling if it ends up costing me plenty in potential appreciation over the next few months…..
AP: OK, I hear you, you may not lose much by waiting, unless of course you are buying up, in which case your argument is working against you: the more expensive property you are looking to buy will logically appreciate more & faster than the one you need to sell.
• When Facebook’s IPO strikes in May, a crowd of jackpot winners will pay a lot more for my home….
AP: Perhaps but I hate gambling on future bonanza since much of the fuzz about forthcoming IPO’s has been in the news for months and the real estate values correction has already been integrated in today’s prices. There is not one single listing on the market which does not reflect this anticipation.
• I read that next year the market might be even stronger….
AP: We’ll see. Nobody knows. To be honest with you, I too thought a few months ago that 2013 would be a dandy. I still kind of feel that way but I don’t know anymore whether it is because I successfully convinced myself or because I have objective tangible indicators proving the point. The fact is the economy is so manipulated by politics these days that you just cannot smell the market more than 6 months at a time.
• Mortgage money may get even cheaper….
AP: I don’t buy that one. It would be more reasonable to assume that if the rates move this year, it will be in the other direction.
• I would love to sell but It’s awfully tough to find the right home to buy and then to move quickly before another bidder snaps it!…
AP: I know, and that’s the whole point of what I am saying. We need a lot more listings to choose from to satisfy the demand. Is it likely to happen? Well, a lot more new properties are going to hit the market in April & May but…a lot more buyers will be in line to get them. No change really. The market is what it is. Persistence leads to winning.

Conclusion (strictly from my perspective): if you wish to sell and buy something else, do it. You may not find and buy the perfect home in the perfect location and at the perfect price, but you know what? Nobody does, irrespective of the market. Love is rarely at first sight.

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The Luxury Insider: The Best of the Best are Doing Well…..

By Alain Pinel | April 4th, 2012 0 Comments

The results are in for the most successful real estate agents in 2011. The Wall Street Journal and REAL Trends just published the summary they compiled of the best professionals in the US. If you think that last year was a miserable year in the residential real estate business, you are right…If you think that it was bad for all Realtors, you are mistaken. Judging by the astronomical numbers they put on the books (not to mention their checking account), the top guns did OK.

There is something like 1,000,000 Realtors in the country. Big business. Believe it or not, the roster shrank 25% since the high mark of 2007, the year when the slide began. Somehow, the best agents adjust, adapt, survive and often thrive in the worst years. They did it again in 2011.

Consider this: Last year, according to the study, the top 250 agents managed to sell an aggregate of over $15 billion. Numero Uno in 2011, the king of the place, sold an astonishing $279,841,487! A top gun from New York. He is good! Agent #250 on this select list sold a comfortable $35 million +. In between the two, we note that 5 agents sold over $200M, 28 sold over $100M and 129 sold in excess of $50M. Who said it was a bad year? Grant me the pleasure to note also that 5 Intero top guns made the list of the best of the best (only commercial in the text…).

As usual, the vast majority of the winners are high end specialists, listing and selling multi-million dollar luxury homes to the few citizens of the world who can afford them. It is no surprise then that they work in the priciest areas in the country, on the West Coast and the East Coast.

Two states alone account for 60% of the top 250 agents in the country, the usual suspects you might say: California and New York. 150 of the 250 work there for a living. California ranks number 1 as a state with 99 super heroes, distributed almost equally between Southern California (51) and Northern California (48), home of the hot Silicon Valley. New York follows with 51 of the best pros in the business.

With 2012 shaping up to be a vintage year in the residential industry, particularly at the top end of the market, I can guarantee that the numbers are going to go through the roof. I also would bet that, with the exception of a handful, the winners this year will be the same agents who claimed top honors last year. That’s how it goes in the real estate business: the best are getting better. Places are expensive at the top. Newcomers can earn their ticket to the top but they will have to associate with the top firms and work their tails off. What’s new?

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Luxury Insider: Open House in the High End?

By Alain Pinel | March 28th, 2012 0 Comments

I often hear from both home sellers and real estate agents that it is neither appropriate nor recommended to hold an open house for the public if the subject property is a multi-million dollar luxury home. In fact I heard the comment so much over the years that I almost got to the point of believing it! Well, I still don’t, generally speaking.

Before I dig deep into the arguments which may be used to validate one side or the other, let me state clearly that I understand the difference between an estate-quality property and a more standard home. I made a good living understanding and leveraging such difference. The marketing strategy and scope are indeed altogether different because we are not dealing with the same buyers, in terms of means and needs. That’s why Intero has a “Prestigio” Division, by the way.

However, if we agree to keep things simple, we will probably agree that, irrespective of means and needs, buyers, in all price ranges, are…buyers. They share the same emotions and desires. The same thing can be said of sellers. Principals, on either side, always appreciate when we make their objective easily achievable.

If they wish to sell, their chances of winning largely depend on the number of prospective buyers who get to see the house. If they wish to buy, their chances of finding the right home largely depend on the opportunities they have to access and visit any given property. That is of course the value of the open house option.  It is easy: buyers can look at various homes, with or without the family, whenever they have a little time and when they are in the mood.

Of course Realtors are best to guide buyers through the maze of options and explain the pros & cons of each location and property. Still, sometimes it is fine to stroll around town, relaxed, and do home shopping as we do window shopping in a mall. My wife loves to do both!

So what’s wrong, if anything, about an open house in the high end?

Here is a list of the legitimate arguments being presented by the critics or the skeptics, followed by the counter-arguments, whether legitimate or not:

  • “It makes no sense to have an open house in my price range” – Maybe it does not but we should not disqualify the option. The open house could very well be attended by…wealthy people too.
  • “My house is way too large to be held open” – If it is too big for one agent, it might not be for two agents. If pertinent, we can plan for three agents to be present.
  • “I would rather have my agent welcome visitors and show them the house” – Sure, and this is exactly what is likely to happen, but this preference should not necessarily eliminate the open house option.
  • “I don’t want undesirable people to see my house” – This one is a little tougher since we cannot judge people on a quick look. A wealthy friend of mine was prevented one day from  entering The Ritz (where he had a room for the week) in Paris because he wore jeans! .. He canceled his reservation…  Of course, on the seller’s advice and his consent, we can demand name, contact info and even proof of identity to visitors whenever needed.
  • “I have too many valuables” – When a house is for sale, whether open or not over the weekend, there are elementary precautions to take to reduce or avoid altogether the risk of a visitor stealing pricey objects.  Anything small and of great value, such as jewelry or art should not be offered to the eyes, they should be under lock or in a different place.

The open house option adds a new dimension to the marketing of a property. Many homes, regardless of price, sell on open house or as a direct result of an open house. This option needs to be discussed with the agent on a case by case basis and never arbitrarily be discarded. Good luck.

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The Luxury Insider: Pricing Tactics…Or the Art of Juggling with a Grenade

By Alain Pinel | March 21st, 2012 0 Comments

One of the oldest and still challenging question both home sellers and their listing agents dread the most (aside from the commission issue…) is “What price should we put on the listing to produce the best price in the end?” You all have been there before, right? Most of you did fine; many did not and wished they had used a very different approach, if only they had known; if only they were given another chance.

The choices have always been and will always be the same:

  • Overprice
  • Underprice
  • Price at what is perceived to be “market value”

The problem with this question is that there is no magic recipe that works every time. It depends on the market, it depends on the property and it depends on the marketing. Let’s look at the three options and briefly analyze the pros & cons of each one.

  1. Overpricing: Hard to define what is an overpriced listing. As far as I am concerned, an overpriced listing is one that does not sell!  In other words, a property is not “overpriced” if a buyer buys it, even if we thought it was when we put the For Sale sign in the front lawn. The supply & demand dance can do strange things in a good market. Want an example? Look at what happened in the Silicon Valley over the last 3 months: very little inventory, huge pent up demand, cheap mortgage money, reassuring economic news, more stable job market, rich IPO’s on the horizon, etc. Results: in the mid range of the market, around $1M+, selling prices probably jumped 5 to 10%. It means that if a home was listed in January 5/7% over what we considered to be a “reasonable” price, it could have sold at full price in March. Now, before you get too carried away, let’s use a little wisdom that only experience can provide. In the real estate business, the past is not necessarily a good guide to predict the future. It is not because prices have jumped yesterday that we can count on the same thing tomorrow. What we can say, looking backwards, is that if a house in that region has been on the market more than a month and did not sell yet, chances are it is indeed overpriced. Overpricing, in any market, is a dangerous idea. In my book, it is a terrible idea and entirely counter productive. If and when the property sells, after repeated price drops, it almost always ends up selling for less than otherwise it would have, had the price been more realistic from the start. If the market is hot but the house does not move quickly, it will soon grow old and collect dust, as Realtors will always prefer showing new listings rather than those which have been aging on the shelves. So much for overpricing. Your choice.
  2. Underpricing: Talk about dangerous games!… You must have a strong heart to deal with this option. It can work to the sellers’ benefit, occasionally. It can hurt just as well. In the hot market we have been enjoying for a little while in the Silicon Valley and many other markets throughout  the US, underpricing is getting to be as popular (and risky) as bungee jumping. The idea is to tease anxious buyers with a price 5 to 10% lower than what we perceive to be the market price and manufacture a bidding war which will result in multiple offers and ultimately a sales price well over the asking and over what we thought the house would normally sell for. Some agents make a good living (for the time being) advising their clients to take a chance with such tactic. They may even draw some pride and good PR from the fact that their listings routinely sell at a higher price. That, of course, is a bit deceptive since it is a deliberate strategy designed to accomplish exactly that. Keep in mind that underpricing does not guarantee a higher price. It could go the other way. You might get stuck with a low price and no good offer. You could also have an appraisal problem, depending on the financing, because of the resulting inflated price. Do I favor this option? No. I just don’t like to play games. Your choice.
  3. Pricing at “market”: If you, as a home seller or as an agent, think you know at what price a buyer and a seller are likely to come to terms, in any market, because you have a bunch of reliable comps (recent local sales of similar properties, active listings…), I suggest you use that option rather than play with a grenade. You may put a tiny cushion on top of the price to allow for possible negotiation. If the price is too high, you will soon know and you will trim the excess fat right away. If the price is too low, well, you may benefit from an unintended buyers’ frenzy. If the price is right, you will likely obtain a quick & easy sale. A win-win. I like that scenario and I bet you do too. We all sleep better when we do it this way. Again, your choice.
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