What to consider when selling luxury real estate
Ever wondered what it takes to sell a home worth millions? Alina Hardcastle takes a look at what affluent homeowners should consider when offloading their lavish abodes.
Last week, a super luxury Clifton Villa went under the hammer for R90 million, breaking the residential auction price by more than R30 million. This is according to Joff Van Reenen, director and lead auctioneers for the street Auction Company that in the same auctioned off 31 lots of property, with a total value of more than R500 million.
Although this may be viewed as a smashing win, Adrian Goslett, regional director and CEO of RE/McX of South Africa, wasn’t awestruck by the deal. He informs us that the property was originally listed at R150 million and had been on the market for several months. “While the auctioneers have said it is a record auction sale for them, the hammer fell for R60m less than original asking price. That’s only 56% of the seller’s original expectation.”
Correct market value
Goslett highlights that the best way to sell property is by listing it at the correct market value from the start. He explains that overpriccing a home will drive buyers away, which will result in the property sitting on the market for longer than it should. “Buyers are not willing to pay more than what they perceive to be fair market value for a property. If the estate is not marketed within the correct price bracket, it is likely to lose buyer interest before they have even seen it.”
Get an expert’s help
In order to arrive at an accurate figure, Goslett suggests getting assistance from a reputable expert. He explains that it’s extremely difficult for a seller to determine the correct price by themselves and that they can sometimes exaggerate the price due to emotional attachment to the home.
“An experienced estate agent will be able to provide the seller with figures regarding the prices at which homes in the area have been sold, the amount of time they spent on the market and whether there was a difference between the original asking price and the achieved price at sale.”
While the perception may be that the big sales are to international buyers, both Basil Moraitis, Pam Golding Properties area manager for the Atlantic Seaboard, and Lauren Clark, Pam Golding Constantia specialist, say that there are still many local buyers willing to invest in South Africa. “There is no doubt that most of our buyer activity is local,” says Moraitis. “However, in peak seasons we do experience spikes in international buyer activity.” Clark says that when the Rand weakens significantly, as occurred earlier this year, there is a heightened interest from foreign buyers.
In order to tap into the international market, Lew Geffen, Chairman of Lew Geffen Sotheby’s international realty, suggest sellers do their homework and list their property with a reputable, established real estate company with global affiliations and similar market reach. Goslett adds that brand recognition is also of great importance.
To auction or not
Although home auctions appear popular among the ultra-wealthy, Dr Andrew Golding, CEO of the Pam Golding Property group, expresses that there is not particular type of property that is necessarily suitable for auction sales but rather, there are circumstances where the seller, in conjunction with the estate agent, may consider an auction of their property as a possibility. He says that auctions in the past have generally incorporated distressed property situations (sales in execution and deceased estates and properties in possession), regardless of value.
Mike Greeff, CEO of Greeff Christie’s International Real Estate, says: “A sale by tender (essentially a private auction) is an effective sales mechanism in that it helps sellers make a definite sale by a certain deadline without losing value in the process.”
He adds that the process produces offers which reflect current market value defined by a variety of interested investors. “A tender creates potential for a premium price through buyer competition and their bids are the ultimate expression of perceived value,” says Greeff. “The finite time frame for a tender process adds to the urgency and prompts serious investors to act.”
What appeals to potential buyers?
For those who are considering putting their property on the market, Clark says that buyers at this level are looking for a home that ticks all the boxes, and that the property has to have some sort of “wow” factor. This could be the latest finishes, spectacular views as well as privacy.
Moraitis adds that buyers are also drawn to the uniqueness of the property, as well as the promise of indulgent accommodation for the whole family and friends.