18 Tips for Luxury Real Estate Buyers

 

If you read many surveys of what luxury real estate buyers are looking for, which I do, you quickly recognize regional differences. You also notice that many luxury real estate buyers also chase some trends and some

silly things that might look great but just don’t matter. Do you really need a Zen park or an outdoor shower in an urban home? Probably not. And because these things are superficial and trendy, they will not add value to the property.

Generally in the Greater Seattle area a Luxury Home is defined as valued at $1 million or above. Defining a luxury home is not about size. Many condos and townhouses can be considered luxury property. Better determining factors are often location, property entry, architecture, décor, ceiling height, amenities, entertainment capability, grounds and other details that help a home stand out from the ordinary.

The next step is ultra-luxury. These homes are often considered smarter with these features: temperature controlled wine cellars, motion detectors, variable speed air conditioning, car lifts and home automation systems. Systems that control black out shades and window glass that can go from clear to opaque with the switch of a button. Security systems such as gates and fully fenced: people want to know that when they are home they are safe. 

So, what really matters in luxury real estate? What makes a home worth waiting for, worth paying more for, and worth searching for? Here are my 18 tips for luxury real estate buyers.

1. Location. Some Realtors will claim that location is actually the first, second and third consideration when buying luxury real estate. Location is about proximity to key local amenities, like parks, water, restaurants, shopping, and entertainment venues. Location is also about privacy and a place within a neighborhood of other luxury homes. Finally, location is also about the lifestyle you want: urban, suburban, rural.

2. Quality.  The quality of the structure should be the most important factor, but it is sometimes overlooked by buyers. If you are buying a luxury home, quality matters as much as it does in any

other home purchase, and probably more. You definitely want a home that is solidly built on a stable foundation, with quality materials and workmanship.

3. Work with a Realtor. Always work with a qualified, full time, experienced professional Realtor when buying luxury real estate. In particular, engage the assistance of an experienced Luxury Real Estate Realtor. We have the experience and the knowledge to value luxury properties accurately and we know how to identify the amenities and qualities of a home that matter as opposed to fads.

4. Unobstructed View. In the Seattle metro area, the desired views are typically of Puget Sound, Lake

Washington, or other bodies of water; of the Seattle skyline; of a park; or of Mount Rainier. It is not always possible to find a luxury home that offers an unobstructed view. The question is whether you are willing to accept a partial view. If the view is important to you, ask your Realtor about the likelihood of future construction blocking the view. Know the zoning laws.

5. Light. Natural light is important in every home. One of the amenities most buyers look for in luxury real estate is a design that allows light to enter the home. Abundant natural light is good for your physical and emotional health. It also improves the resale value of the home.

6. Architecture. Look for a design that is both livable and beautiful. Also, think about how the property will age over the next few decades. Good bones, uncommon architectural elements, high-quality materials, and fit with the landscape are hallmarks of good design.

7. Livable layout. Choose a floor plan that makes sense for your lifestyle. If you do a lot of entertaining, look for a floor plan that flows well. If the layout has a number of oddities that don’t make sense, it might not be a good choice.

8. Energy efficient windows. A home’s windows allow sunlight in, but they can also let in noise and outdoor weather. Look for double- or triple-pane windows with good insulation and a good warranty.

9. Decide whether you will pay cash or finance your purchase. Cash purchases are very popular today, but you might prefer to take advantage of low interest rates and keep your cash for other investments. If you are self-employed, you may decide that it is easier to pay cash than to work through the stricter mortgage loan process.

10. Have your financing in order early in the process. There are a number of sellers of luxury real estate that want to show property only to qualified buyers. Further, as is the case for any buyer, having the financing in place determines what you can spend on the property. This reduces the risk of unexpected issues in the transaction.

11. Understand that sales of luxury properties often take longer, up to 45 to 60 days to secure a loan. Understanding the process and the duration of the process of closing a sale avoids frustration and unrealistic expectations.

12. Specialized home inspections. A number of luxury homes require specialized home inspections. It will be important to budget for these and to allow sufficient time to obtain these inspections. Specialized home inspections might include those for a pool or spa, a fountain or pond, an exterior fireplace, outdoor electric or gas, lawn irrigation systems, a central vacuuming system, automatic screen and awning systems, heated floors and driveways, docks, security and surveillance systems, and landscape lighting. It is rarely advisable to skip any inspections when purchasing luxury real estate.

13. Understand the tax consequences of your luxury real estate purchase. You may need to think about tax liabilities and estate planning when you purchase. Always consult your tax accountant, your estate planner, and any other finance experts you talk with regularly. Their guidance will help you decide how to take title to the property. Because tax records are public, you might choose to protect your privacy and provide tax advantages by taking title in a trust.

14. Don’t ignore resale value. It is inevitable that the home will be sold eventually. Every home

purchase is a major investment and luxury homes are no exception. Discuss with your Luxury Realtor the factors that will affect the property’s resale value.

15. Get to know local neighborhoods. Each neighborhood has unique characteristics and character. Learn what you can about each neighborhood with luxury homes. Your Realtor will be able to help you with this task, and may have neighborhood overviews available for you. Your luxury realtor will be able to discuss recent changes and trends among buyers in each neighborhood. He or she will also be able to advise you if some construction is planned that might affect the amenities that are important to you (a view, for example).

16. Prioritize your wants and needs in your luxury home. I always try to make a prioritized list while talking with my clients, but it saves time and possible confusion if you make a prioritized list of the amenities you want and need in your luxury home. Some of the amenities that have been important to my recent clients have included:

Views of water or mountains

Home theater

Home gym

Privacy

Chef’s kitchen

Home office

Entertaining features

Top quality security and safety features

Smart appliances

Top architect or design

Water access/dock

Great decks

Exceptional landscaping

Great backyard

Pool/spa

Large garage

Sports area (tennis or basketball court, for example)

Patio

In-law suite

Second kitchen

                      Guest house

 

17. Look for Value. The fact that you can spend more doesn’t mean you should. Ensuring that you are getting value for your money is always smart.

 

18.Understand the responsibilities of owning waterfront property.  In many neighborhoods there are responsibilities of maintaining the property to a particular standard. Often these responsibilities are overseen by a homeowners association. Be certain that you understand the costs and responsibilities before you buy.

These tips are offered in the hope that they will help you prepare for your luxury real estate search and for the various steps of the transaction when you find the perfect property. These tips arise from my 20+ years helping clients as a professional Realtor. If you are ready to buy luxury real estate in the Seattle metro area, I hope you will give me a call. I would be very pleased to help you find the perfect property. And, remember: I’ll bring the coffee!

Buying a Condo: Pros and Cons

The Pros and Cons of owning and living in a condo should be considered carefully.

By Ken Urman, Realtor

When you make the decision to buy a new home, you will make many choices and decisions. One of the first choices you must make is whether to buy a single-family home or a condominium. Each

option has clear – and less clear – pros and cons. For most people, the differences between living in a single-family home and living in a condominium are significant. When considering buying a condo, evaluating the pros and cons is very important.

Let’s face it: the perfect home for your best friend might not be the perfect home for you. To help you make that choice, here are the most commonly discussed pros and cons of buying a condo.

The Pros of Buying a Condo

Buying a condo is like living in an apartment that you own, right? No annual rent increases, on-site maintenance, and an exterior you don’t need to maintain. Maybe.

1.       Maintenance. Having other people who take care of all maintenance issues is a big benefit of living in a condominium. The knowledge that you don’t have to do maintenance tasks is a huge plus for people with limiting health conditions, people who are very busy with work, those who travel frequently, and first-time homeowners. What is more, you do not have to worry about maintaining the landscaping. Having few, if any, maintenance tasks to perform also means you do not have to invest in all of the equipment necessary to maintain a property.

2.       Amenities. There is no question that condos offer great amenities. You have access to the pool, a fitness center, community activities, and (often) a community clubhouse that is available to you when you want to entertain. Many of these amenities can be a bit too pricey for a number of average homeowners. In addition, these amenities are available to condo owners without obligation to maintain the facilities or plan the activities.

3.       Security. Most condominiums are in buildings with locked entries or in gated communities. Many condos also provide either a doorman or a professional security guard. When you live alone or your physical condition makes you feel “vulnerable,” the added security is important. In addition, there are many people nearby that you could call upon in the event of an emergency.

4.       Affordability. Condominiums typically carry lower price tags than single-family homes. They, thus, offer a solid initial step into owning your own home.

5.       Elevators. Many condos are in buildings with elevators. There is no need to carry groceries up steps. If stairs present a physical challenge for you, life in a condo solves the problem.

6.       Lower Utility Bills. Living in a condo (rather than a single-family home) often incurs lower utility costs because the space is smaller and because many accessibility features and amenities are powered by community utilities.

7.       Urban Living Option. Many people are again choosing urban living. They can walk where they want to go or use public transportation. Good restaurants and great shopping are close.

8.       Predictable monthly maintenance or condo fees. Most homeowners do not have the same level of predictability in their budget.

9.       Lifestyle orientation. Some condo communities are geared to a particular lifestyle. A particular community might be geared to the singles lifestyle or to a retirement lifestyle. This typically means that the community offers activities and amenities desirable to those who have chosen that lifestyle.

These are wonderful arguments for buying a condo. However, like most things, there are some issues associated with condo ownership. It is important to understand the cons, as well as the pros before you buy.

The Cons of Buying a Condo

The very things that make condo living attractive to some people can be unattractive to others. Some of the most frequently mentioned “cons” of condo ownership follow.

1.       Special Assessments. Some condominiums are “underfunded.” This means that they do not have sufficient reserve funds for capital improvements and repairs (new roof, painting, or concrete repairs). When a critical need arises and the reserve is insufficient, condo managers sometimes find it necessary to impose a special assessment upon condo owners. This can be both costly and inconvenient for your budget.

2.       Condo Fees. The security staff, maintenance costs, pool maintenance and fitness center equipment are paid with funds collected from condo owners in monthly condo fees. Depending upon the size of the community, the level of luxury provided, etc., monthly condo fees can range from $100 to $1,000 or more. Not only should you know what the monthly fees are at the time of purchase, you should also know the rate at which fees typically increase from year to year.

3.       Non-resident Owners. A number of condo owners do not live in their condos. Instead they rent their condos. Some condo associations have rules that govern whether you can rent or how many units can be rentals at one time.

4.       You do not control the maintenance and repairs schedule.

5.       You might be compelled to pay for amenities you will never use.

6.       You must abide by community rules.  Some condominium units are noisier than others; some units offer less privacy than you might like. Possible restrictions may be in effect on noise, parking, pets, smoking, window coverings, and other details.

7.       The Homeowners Association. Many single-family home communities also have a homeowners association. These groups represent all condo owners in a community and are authorized to make decisions that affect everyone. Many of these requirements will be innocuous, some may be irritating. If you can accept most things, you are less likely to be bothered by the association or their rules.

8.       Less space in many units. Many condos are somewhat smaller than single-family homes. Without a yard, they also typically offer very limited opportunity to make your surroundings your own.

9.       Condos offer less privacy than single-family homes. Owning your condo does not preclude you being bothered by noise from surrounding units. You may also assume that if you can hear your neighbors, they can also hear you.

There are pros and cons of buying a condo. There are also pros and cons of buying a single-family home. People have different needs, lifestyles, and expectations.  The choice between a single-family home and a condominium home might be one you are prepared to make. 

If you would like to discuss the choice with an objective outsider, please call me. I have helped many potential buyers make this difficult decision. I can also help you place your decision within the context of the current market in our area. 

Number of Million Dollar Homes Tripled

According to a recent study by Trulia, the number of million dollar homes in the Seattle metro area has nearly tripled in the last four years. According to the study (of all homes in the metro area – not

just those for sale at a particular time), In May 2012, 2.6 percent of homes in the Seattle area were valued at $1 million or more. In May 2016, 7.0 percent of Seattle metro homes are valued at one million dollars or more. This means that in just four years, the number of million dollar homes nearly tripled.

This increase in the number of million dollar homes also moved Seattle from 20^th to 14^th in the nation for the largest number of homes valued at $1 million or more. The majority of these million dollar homes are waterfront properties or other homes with views of water. These tend to be focused largely around Lake Washington, Lake Union, and Puget Sound.

Why is this Happening?

Several factors have converged that have driven prices higher.

·       One factoris the number of wealthy Asians who are looking for luxury homes. Their specific needs in these houses have led them to focus on large homes or to add specific rooms and amenities to the homes they purchase. These buyers also clearly want luxury homes.

·       A second factor is that Seattle has become a major tech hub in the U.S. This expansion of the tech industry locally is drawing people to high-paying jobs. Further, many tech workers who find themselves priced out of the San Francisco and Silicon Valley market, are drawn to Seattle by the relative affordability of housing.

·       A third factor is that Seattle has limited opportunities for expansion of housing. There is a limited amount of land available. To accommodate the influx of tech and other workers, the best use of available land is the construction of apartments and condos (in every price range). Although apartments are being built, few of the buildings have made the conversion to condos.

·       A fourth factor confronting Seattle area buyers and home values is the very limited number of available properties on the market. As I have pointed out in my blog posts for the last year, extremely low inventory of available homes drives intense competition for the homes available, often ending in bidding wars. The competition drives home prices higher. Ever increasing prices then becomes a

factor for those who might want to sell, creating fear that they will not be able to find another home before they have depleted their resources.

What does it Mean?

Based on my recent experience with two luxury homes listed within the last month is that demand is just as strong as it is for homes priced at other levels. We should keep in mind that there is no single definition of luxury real estate. Whether we define luxury property on the basis of price, custom build, or amenities above the average home, there is still demand for these million dollar homes. On Mercer Island, a luxury home tends to be defined as a home priced at $1million or more.

One of the homes listed in the last month was on Lakeview Lane on Mercer Island. This home has a contract pending today. The other million-dollar-plus-home, on Avalon Place on Mercer Island is currently generating strong interest. The migration of higher-paid tech professionals coincides with the growth of tech centers and demand for luxury Real Estate.

Other neighborhoods experiencing dramatic growth in million dollar homes include:

•        Broadmoor, a gated community on a Seattle golf course, has the highest concentration of homes valued at $1 million or more (97 percent).
•       The Capitol Hill neighborhood saw the proportion of million dollar homes increase from 11 percent to 24 percent.
•        East Queen Ann and West Queen Anne saw an increase from 12 percent to 30 percent.
•       Belletown saw an increase from 3.6 percent to 8.4 percent.
•       Fremont’s increase was from 0.7 percent to 6.1 percent.

The Bottom Line

The number of million dollar homes in the Seattle metro area has increased significantly during the last four years. We should keep in mind, however, that the median price for a single-family home in the area increased from $425,000 in 2012 to $637,250 today.

Is this reason for alarm? Absolutely not!

Homeowners should be aware that the value of their homes has increased in the last four years. This appreciation in value can be expected to pay off whenever they decide to sell.

Those who want a single-family home will be able to find an affordable option, even if that option is farther from the job hubs.  As construction and use of the regional rapid rail system moves forward, I believe commuting to the economic hubs will be far less onerous than it now seems to some buyers.

I believe that there will be buyers for the million dollar homes in our area. I also believe people will be able to find a home they can afford. 

Remember, for every million dollar home in the area, there are 13 homes that cost less than $1 million.

If you are interested in selling or buying, please call me. I am helping people sell and buy homes in this market every day. 

Seattle Loves Craftsman Homes

By Ken Urman, Realtor

When working with home buyers, I’m frequently asked why Seattle loves Craftsman homes with such devotion. One of my answers – the short one – is that they have excellent bones, they are the

best style to renovate and update, and that they are my favorite style of home because they are always classic and appreciated.

Craftsman homes can be found in almost every neighborhood of the Seattle metro area. Several factors converged in the region to make the style extremely popular. The American Craftsman style was developed beginning in the final years of the 19th Century on the east coast. These homes were designed to fit the lifestyle of working class and middle class families.

 An “explosion” of American Craftsman homes in Seattle began just after the Alaska Yukon Pacific Exposition in 1909, according to Larry Kreisman, program director for Historic Seattle. This coincided with the birth of the street car and the development of “the suburbs.” Transportation out of the city center made it possible for workers to escape the city and own a home.

This “explosion” of American Craftsman homes also coincided with a population explosion in Seattle between 1900 and 1910. The City’s population tripled from slightly more than 80,000 to more than 230,000 people. There were not enough rooming houses and small apartments in the city center to accommodate this growth.

As the popularity of the American Craftsman style home was growing, so was the ability to own one of these homes. At the time, land was cheap in the “suburbs.” More important, something unique was occurring in home construction. To be sure, home builders were constructing homes in this style and selling them to those who wanted them. The new options in home construction made it possible for potential homeowners to invest themselves into their houses by building from designs published in magazines or by purchasing a home kit from the leading catalog stores Sears and Montgomery Ward. These kits were shipped to the west coast and included everything necessary to follow the detailed instructions and build a Craftsman style home. Not only could home owners do much (if not all) of the work themselves, they could also customize and make their homes truly unique.

At this time, on the east coast and in many large cities throughout the nation, high-rise apartment buildings (often tenements) were becoming the norm for city living. The ability to find a job and live cheaply, even in one’s own home was an attractive benefit of moving to Seattle.

American Craftsman homes were part of a critical time in Seattle’s history. Their locations, their style, their uniqueness, made them part of the very fabric of the City – an essential part of its ethos. Over the years since the introduction of Craftsman style homes, some of these homes have disappeared. Others have been maintained and preserved as they were originally built. Others still have been expanded, updated, renovated or even redesigned. Most of these homes have remained as a part of the essence of Seattle living.

When we look at the history, the philosophy of Craftsman design, and the beauty and adaptability of Craftsman style homes, it is no secret why Seattle loves Craftsman homes. It should not be surprising that homes designed for family life that incorporate the work of craftsmen and are both beautiful and utilitarian should be loved and desired by the people of Seattle.

I would be delighted to help you buy or sell a Seattle metro Craftsman home. Call me. And remember, I’ll bring the coffee!

The Seattle Tech Migration

By Ken Urman, Realtor

I have commented frequently during recent months about the number of new jobs bringing people into the Seattle-Bellevue-Lake Washington area. These people are looking for, and buying, homes

and condominiums. They are contributing to the fierce competition for available properties in and near the job centers. Many of the people moving to the Seattle metro area are part of the Seattle tech migration.

There has been a “tech boom” in the Seattle area during the last few years. In fact, Seattle ranks second to the San Francisco Bay area among the nation’s four tech hubs.

Although people have been migrating from California to the Seattle metro for many years, the rate of the migration has increased. The source of the migrants has also narrowed in many cases to the San Francisco Bay area, specifically Silicon Valley.

Why Is the Tech Migration Happening?

As Silicon Valley became the nation’s primary tech hub, the Tech Giants like Google, Facebook, Apple, and others paid higher compensation and offered more perks to get top talent. The talent brought into an already expensive area found housing costs continuing to rise. The result was a cycle of rising compensation driving higher housing costs driving higher compensation.

As some employees grew tired of the ever-increasing housing costs, they moved to more affordable surrounding areas, with longer commute times. Eventually, these prices began to rise, more people were commuting, and commute times grew longer. According to one report, between August 2014 and August 2015, home prices increased 13 percent, rent increased 12 percent, and the average

Silicon Valley commuter spent 67 hours in traffic. Recently, the situation in Silicon Valley became so desperate that some of the large tech companies began supporting the construction of high-density housing, with some even lending their names to the structures.

The average software engineer was paid $132,000 in 2015 in Silicon Valley (according to recruiting company Hired). In 2015 in Silicon Valley, the median home price was $870,000. According to Zillow, the median home price in San Francisco is now $1.2 million.

People soon began to realize that their money would go farther and their quality of life would be better in other cities. Please recall that Google recently opened a facility in Seattle, for example. Based on differences in the cost of living in the various locations, Silicon Valley’s $132,000 when adjusted for local cost of living is $164,000 in Seattle and $195,000 in Austin, TX (another tech hub). The median home value in Seattle ($533,000) is half that of San Francisco. Austin’s median home value ($290,700) is one-fourth of San Francisco’s.

What Does It Mean For Seattle?

The Seattle tech migration has been going strong since 2012. Although Californians have been migrating to Seattle metro in large numbers since 1999, according to the Washington State Department of Licensing, the number of license migrations from California rose from 25,619 in 2012 to 37,624 in 2015.

Already, these migrants have impacted the local housing market, competing for available properties and contributing to the increase in local home values. Although Seattle has not been the top destination for tech workers leaving Silicon Valley, Seattle has already become a major tech hub. Software developer is the second most common job today in the area, with 45,312 workers. The average salary these workers earn is $119,000.

While many homeowners are delighted to see their homes bring high prices in the market and many community leaders are happy about the growth of the local economy, others are concerned that the situation in Silicon Valley will be repeated here. They point out that there is limited opportunity to develop additional housing now.

I believe that with strong leadership and thoughtful planning the Seattle metro area can continue to accommodate growth in the tech sector and provide commuting options that will permit growth in some of the surrounding areas. 

Selling in Seattle’s Spring Housing Market? You Need a Plan . . . and an Experienced Realtor

By Ken Urman, Realtor

Are you planning on buying or selling in Seattle’s Spring Housing Market? If you are, you need a plan  . . . and an experienced Realtor to achieve your goals. The Seattle Metro area, including Bellevue, Mercer Island and the communities surrounding Lake Washington, is already one of the hottest real estate markets in the country. The Spring peak selling season, beginning now, offers both unique opportunities and unique challenges for both buyers and sellers.

The Market

For the last few months, the local housing market has been extremely tight due to record low inventory and very high demand. Limited areas available for new development, strong reluctance on the part of homeowners to list their homes, and increasing demand for available homes have generated bidding wars for single-family homes and driven the prices of both houses and condos to pre-recession highs. Potential sellers have been reluctant to list single-family homes often due to fear they will not be able to purchase another home before their current home sells.  As the current trends continue, we can expect more first-time buyers to enter the competition for available properties.

The job market in the Seattle area has remained strong. This trend is continuing as Expedia and Weyerhaeuser move from their suburban headquarters to Seattle, Amazon opens a new campus in South Lake Union, and both Facebook and Apple open satellite offices in Seattle. The strong job market has driven increases in family incomes during the last five years, a trend that is likely to continue. The current and recent changes will also drive increased demand for homes near the job centers (mostly in Seattle) and for waterfront properties. Already, the median home prices in Seattle have risen 29 percent in Seattle, compared to a mere seven percent in the rest of King County.

Online real estate company Zillow conducted an analysis of the Seattle metro area housing market. They discovered that houses sell 20 days faster if they are listed between May 1 and May 15. They also sell for $2,600 more, on average. Zillow also found that area homes sell faster than the national average during this peak season. Finally, Zillow found that sales increase significantly beginning in March, increase somewhat more in April, and leap in May; June brings a decrease in sales, and July sales drop significantly. Sale prices increase by more than $5,600 from March to May.

Although I expect a number of sellers to decide to list properties this spring, like many market experts, I anticipate continuing low inventories of available homes, intense bidding wars for available homes, and a continuing lack of new housing options. In this market, the two things I believe every buyer or seller needs are a solid plan and an experienced, knowledgeable Realtor.

Home Seller Planning

Sellers also need a plan in intense markets like Seattle. Here are some important guiding insights to help you.

1.    .    Do not be overly aggressive when pricing your house for sale. If you price a home above market value, the home will typically sit on the market too long. When this happens, buyers tend to conclude that there is something wrong with the house.
2.            At the same time, it is not good to underprice the house. There will be potential buyers who conclude there is something wrong with the house. This approach could also make the home seem inappropriate for buyers who are looking for a home in the price range of a market price for your home.
3.           Sometimes, there is an advantage in listing a home further into the peak season, according to Zillow’s chief economist Dr. Svenja Gudell. Your listing might attract the attention of buyers who need to find a home and are willing to pay a premium for the property.
4.           Listen to the advice of your Realtor about when to list your home. He or she will have the intimate knowledge of changing market conditions to guide you in establishing listing price and deciding when to list.
5.       Ensure that your home is clean, freshly painted, and decluttered to make it possible for buyers to appreciate the features of your home. Work with your Realtor to identify and repair things that would make the home unattractive or become distractions for potential buyers.
6.       Resist the temptation to overprice your home. Marking down the price of your home after listing it will send a message that something is wrong with the property. Trust the knowledge and experience of your Realtor.

When selling in Seattle Metro’s spring peak season, you need a trusted Realtor to help you navigate the complexities of a very hot market with low inventory and abundant opportunities for costly mistakes. If you are ready to  sell, call me. I’m ready and willing to help you sell your current home.