When you are dealing with luxury real estate, Pricing happens to be the most crucial aspect of marketing any home be it a 1 Cr home or a 50 Cr mansion. You are not only dealing with multi-crore properties but you are also trying to get eager clients to agree on the pricing. In a lot of case, you are pricing unique and one-of-a-kind homes for which comparisons may be rare and benchmarks cannot be set against other properties that were recently sold. Except for the rarest of case, all your marketing muscle cannot help sell an overpriced property. Also high end buyers are rich because they understand that move saved is money earned and they are not known for throwing around money. Like regular folks, super rich folks also love a good deal whether they be shopping for Bentleys or shopping for an Gucci!
Unique and Different
Most truly magnificent homes and estates that come on the luxury market to be sold are distinctly unique and only in rare circumstances can two luxury homes be compared. Unlike standard apartments, a bungalow or a villa in the same area could have been designed by a different architect and built by a different builder. Although they may feature similar facades such as Greco Roman Architectural elements or a modern cubist design element, the similarities end right there. This aspect adds to the pricing challenge because in a lot of cases you are comparing apples to oranges.
Works of Art
Most high end homes can be compared to rare and beautiful works of art. If you tell sellers that their home is work of art, chances are they will never disagree! So can how can one find a comparable for a MF Hussain painting or a FN Souza work. The same difficulty arises when you try to find a comparison for that 10,000 sq. ft. beachfront custom home. Also you can add to this the fact that sellers often expect a to get a big return on the luxurious custom features that they have installed.
A Bowling alley, lavish home theatre systems, gold plated faucets, custom made commodes and other ostentatious accessories and interior decoration plans may excite the current owner who is a Punjabi Bollywood movie star but they may hold zero to little interest to the understated Tamil IT Czar from Chennai! Although the current owner might think that all his interior decoration whims carry a price tag, the new owner may think that these things carry no value and may even say that he wants a price reduction because there is the added cost of replacing the gold plated faucets with nickel ones!
Other Factors Affecting Pricing
Adding to the challenge of valuation is the fact that sellers may lack the motivation to sell quickly. “We will sell the home when we can get 25 Cr”. Sure we could probably sell it when the stars line up, the planets are in alignment, the tide comes in and there is a full moon! Low motivation makes for high prices.
Pricing is also a challenge when the sellers of the property are second or third generation family members. They would have big plans from the proceeds of the sale. So to start with, they start looking for an offering price that can be evenly divided by the total number of beneficiaries. We can always predict that if there are 4 heirs, they may want 2 Cr each or 4 Cr each and so on. The dreams and desires of the heirs are rarely in tune with the realities of the marketplace.
So for a price that we as real estate agents present to seller and for that price to be accepted by a seller, it must be delivered with a lot of conviction as well as be logical and well-documented.