Recently when leading a training session on working with Luxury Home Buyers and Sellers, the question arose: What makes one property more valuable than another? I used the analogy of ladies black shoes and actually brought 3 pairs of them to illustrate.
One pair of the shoes was purchased at a discount store for $13, another pair at a local department store and cost about $100 and another at a boutique designer specialty shop where I spent $300. They all serve the utilitarian function of protection from the elements for feet, and they all have a similar look in terms of color and heel height, however there is considerable price variation between them. In terms of housing, all price levels serve the utilitarian function of shelter, and all homes have walls, floors, a roof, windows and doors, basic cooking facilities and restrooms, but it is obvious that the costs of housing varies considerably.
The store where the discount pair of shoes was purchased is known for styles that are knock-offs of designer looks. All man-made materials were used to construct the shoes, and the lack of quality is evident after having worn them but a few times. The customer rummages through the stacks as the store is self service and the selections are usually limited. The atmosphere is typically very bare, and benches and other areas are shared spaces.
The discount shoe store of housing is the tract home builder. The term “tract” comes from the fact that a developer or builder buys a parcel or tract of land, installs necessary infrastructure such as streets and utilities and then builds similar homes on the lots. The scenario allows economies of scale, and often there is more than one builder in a development. The builder(s) usually offer a limited number of floor plans along with different elevations (fronts), and are able to offer limited selections of cabinetry, flooring, and appliances. Usually a basic package is provided and upgrade selections are allowed at a higher cost. The builder is using economies of scale for materials and labor in order to keep the price down for the basic product.
The shoes purchased at the local department store were a designer brand, albeit less expensive grade. The materials were mixed, the uppers were constructed of leather and the sole was man-made. The customer receives service from a salesperson, but that person at peak times is more than likely waiting on several customers at a time. The environment is comfortable and there is more selection. The salesperson is probably being paid on commission so is more likely to offer additional services such as checking the back for other sizes and styles and other stores for availability, if requested.
The department store of housing is the mid-level neighborhoods and builders. The materials are of a higher quality, a level above “builder grade”. The buyer has more selections and can make the home their own with more variations, oftentimes it is referred to as “quasi-custom”. The location is more preferred in some way, for example: proximity to employment, transportation, schools, parks, and other recreational facilities. The builder still may use some economies of scale for materials and labor, but there will still be quite a bit of individualized and specialized attention to the product and client.
The black shoes from the boutique store were constructed entirely of high grade leather and quality materials. The designer emblem is evident and the look chic and fashionable. The product has a classic and timeless nature to it, and will more than likely remain a well-loved fashion staple for many years. Visiting the boutique was a pleasurable experience and the service the highest caliber. The shoes elicit compliments and if unspoken, project the statement that the owner has style and taste.
A true luxury property conveys the sentiments of the shoes from the boutique store. The architecture is unique, yet timeless. The materials are of the highest grade and quality available. From the lead architect all the way down to the craftsman, each practices at the top of their respective fields, this is a true custom home. The landscape design complements the contours of the land and accentuates the best features of the locale. Oftentimes these estate style homes are gated or have additional security and privacy.
The location has attributes that are of classic value, for example in McLean, Virginia homes along the Potomac River claim the highest prices for the market. Other geographic attributes that often lead to increased value: any water view, be it ocean, river, lake, creek; mountain or other scenic properties; unique city views; golf course or similar club neighborhood. Lot size and location of the property in the neighborhood, how unique and desirable it is depends on the locale. Isn’t that why everything in real estate boils down to three simple words: Location, Location, Location. That’s because it is the one feature that cannot be changed in real estate.
How does one know how their particular property compares in the market place, which “black shoe” it is most like? Or how can one be certain of purchasing a luxury property in that particular location? If you are considering acquiring or selling a luxury property, it is in your best interest to consult with an agent that is a member of the Institute of Luxury Home Marketing. Karen Briscoe of The Huckaby Briscoe Group has achieved that distinction and would be delighted to be of assistance. Please visit our website for more information at: http://www.HuckabyBriscoe.com or contact Karen Briscoe at 703-734-0192 or Homes@HBGroup.us.
Rating: 4 out of 5