In many of Birmingham’s neighborhoods less than 40% of the luxury homes that come to market sell in the first 365 days of being listed. This raises a lot of questions. The first of which is why are there so many more sellers than there are buyers? The answer lies in two social economic events of the past colliding over the past six years.
In 2011, the first Baby Boomers turned 65 and every day since approximately 9,000 Baby Boomers turn 65 and many retire which includes downsizing of their homes or a change in their lifestyle which also brings their home to market. Adding to this sudden increase in housing inventory is the fact the Baby Boomers own 75% of the luxury homes in the United States. In the past, the following generation ( Generation–X) would step up and purchase all these McMansions but something happened in 2007 that caused this not to happen as planned.
In 2007, we had the Sub-Prime-Mortgage Crises and the most people lost the equity in their homes that they had built up over the past decade. This left many Generation X’ers, if not underwater, with not enough equity to upgrade their housing. As a result, recent luxury home sales history data tells us that a neighborhood might have 20 homes for sale in the $750,000 to $1,000,000 price range but over the past six years the sales of homes in this price range were 10 homes per year, thus it’s most likely that half of the current homes on the market won’t sell.
The data is available and you need to know how your home compares to the competition in your neighborhood. Your agent needs to visit the other 19 homes and know if you’re in the top 10, and if not what you need to do to get in the top 5, because additional homes will be coming onto the market over the next 365 days. Selling a luxury home is a lot like selling a luxury automobile; the BMW salesman must know the Mercedes as well as he knows the BMW if he’s going to successfully sell his inventory.
There’re five key factors that come into play when selling a luxury home.
Condition – Buyers don’t want to have to rehab their new home, particularly if they’re moving from out-of-town. They don’t know contractors or want to oversee construction after a move. It’s crucial to have your home up-to-date with quality workmanship.
Awareness – There are far more sellers than buyers in the Birmingham luxury market, so it’s key you make any potential buyers and their agents aware of your home…that means dynamic marketing. A sign in the front yard rarely gets the job done. You must assume your buyer isn’t currently looking for a home, and that means getting your home on their radar. The best way to do this is through photography, video, conventional and social media. Check out my blog on “The Baby Boomer Sell-Off.”
Price – The asking price for your home must be in line with what other homes in your area have sold for. The best way to determine that is to compare your per square foot asking price with recently-sold comparable homes. Then you can add in for features and amenities that may make your home more appealing than the competition, but you must know your competition. That means that you and or your agent needs to preview every home that you're competing with for the limited number of buyers.
Location – Buyers want to match their new home with their lifestyle – including work, place of worship and even doctors. If your home is in one of the most desirable communities in Birmingham, offering very safe, family-friendly living you need to make this part of your sales pitch.
Salesmanship - You hire a Realtor to help you sell your home, they need to be a salesman, they need to be at every showing. The buyer and buyer’s agent enter you home with no knowledge of your home, they are required to find the features and benefits of your home relative to the other five or six homes they're looking that day. This might have worked in a "Sellers’ Market", but today there are more sellers than buyers and your home will have to be sold.
The next step is to hire an agent to sell your home. Notice I said sell your home not list your home, there’s a significant difference. It’s going to take more than a sign in the front yard and a MLS listing, those days are gone in most neighborhoods.
Here’s how it works:
You list your home, it goes into the multiple listings, a sign is placed in your front yard, your agent is notified that a potential buyer wants to tour your home, the potential buyer and their agent arrive at your home, your agent escorts them through your home and sells the features and benefits of your home.
What I’ve found in 90% of these scenarios that I’ve been involved in is your agent is nowhere to be found and my potential buyer and I roam around the home as if we’re on treasure hunt. Behind every door is a new surprise or disappointment. If this is how your agent conducts showings in your luxury home get a new agent, and if your agent doesn’t feel comfortable acting as a salesman, get a new agent. Remember today the potential buyers have many choices and if your agent is not selling your home what are they doing to earn that $50,000 commission that you’re going to be paying?
I don’t want to just list homes; I market and sell homes. You have an excellent product that needs dynamic marketing to sell. I spend my money marketing my client’s homes if we determine I can help them. I don’t put a lock box on their door and invite in unfamiliar agents, expecting them to sell my client home; I’ll conduct all showings.
This is my business plan in a nutshell: market only luxury homes, take on only high-quality listings and capture both seller and buyer representation, yielding larger commissions.
Do us both a favor, look at my website. Then, if you’re interested in listing, marketing and selling your luxury home in Birmingham with me, give me a call at (205) 919-6006, and we’ll talk strategy.
Invite Kerry to speak to your group about the changing Luxury Home Market in Birmingham. BestofUS.firstname.lastname@example.org 205 919 6006
Kerry Grinkmeyer is a real estate agent in Birmingham, AL specializing in the marketing and sales of luxury homes. Kerry's a retired financial advisor, he sold his firm, one of the largest in the Ameriprise Financial Advisor system in 2005 to his son, daughter and nephew. Now he's building one of the largest boutique real estate agencies that he'll eventually sell to his grandchildren. He the author of the children’s book The Christmas Web- A Family Christmas Tradition. Kerry competes in the Senior Olympics in to 50M, 100M and 200M dash as well as the 5k and 10k time trial cycling events.
Kerry offers you his financial background, knowledge of the community, love of business and family and energy to assist you in one of the most important financial decisions you'll make in your lifetime.
205 919 6006