Today’s luxury homebuyer is as discerning as ever. Closing those mega deals takes a lot of hard work, work that many in the industry just aren’t willing to tackle. But for those who do excel in Chicago’s luxury market, the rewards can be monumental in terms of both income and personal satisfaction.
By K.K. Snyder
Things have changed in the luxury market to be sure, including the definition of a luxury home itself. For the most part, properties priced at 1 million and up are considered luxury properties, a price line that varies widely depending on location, of course. But it isn’t price alone that determines whether a property is considered luxury, says Jennifer Ames, sales associate with Coldwell Banker.
“Defining a luxury home in today’s market is about buyer expectations,” says Ames, a 14-year veteran of the industry. “A luxury home is a property where buyers could move in, have [the home] fully finished at a level they’d be excited about. It’s not just defined by ‘x’ amount of dollars. It’s not about size or cost; luxury is about amenities. It’s really an expression of the passion of the people who live there.”
Luxury can also be defined purely by location in areas such as River North and The Gold Coast. Or buildings that are in high demand with a brand name or a big buzz, like Trump International Hotel & Tower and Chicago Spire. In fact, some in the industry say that the size of luxury homes has actually decreased. Eric Dick, sales manager/advertising for Maher Partners, attributes this to the fact that more people are moving into the city from the East Coast, where they are typically used to living in smaller spaces. “A luxury home can be 1,000 square feet or less, even 800,” Dick says. “Luxury is based less on size and more on the design of the home and finish level.”
What goes into creating a luxury home can be defined, however, by dollars, big dollars. Elevators, wine cellars, media rooms, custom lighting, flat screens in nearly every room and furniture-grade custom cabinetry — most of these items are expected by today’s luxury homebuyer. Additionally, kitchen standards include multiple commercial kitchen appliances such as two or even three dishwashers, built-in cappuccino and espresso makers, Sub-Zero refrigerators, double ovens and separate freezers, all from top-of-the-line manufacturers including Wolf, Viking, Thermador, Five Star and Bosch.
“Wolf is the pinnacle of the luxury appliance brands,” says Zachary Gasiorowski, marketing coordinator for The Westye Group, which offers consumers an educational showroom to explore Wolf products hands-on without any sales pressure. Wolf’s Sub-Zero refrigerators offer homeowners food preservation capabilities rather than just keeping food cold. Wolf ovens utilize catalytic converter technology to allow multiple types of food to be baked at once without mixing taste or smell, says Gasiorowski.
“People really want high-quality, high-performance appliances,” he adds, noting that the energy efficiency Wolf offers is also a plus for buyers with a green conscience. “Of course our products obviously cost a lot of money, but you’re going to get outstanding performance.”
Likewise, luxury homebuyers expect the finest finishes, including exotic woods, marble and granite, custom woodwork, wide plank flooring, custom solid 8- or 9-foot doors and high-end hardware such as pewter and satin nickel. There is a lot going on with tile and stone in today’s luxury home, as well as new metallics and incredible porcelains.
Exterior finishes are every bit as important as interior, with more combinations of mixed materials such as brick, stone, stucco, iron and woods requested by the luxury homebuyer, says Joseph Provencher, owner of Provencher Custom Homes, a Naperville-based builder of custom high-end homes.
Amenities aren’t relegated to the interior of these homes either, as outdoor living space continues to gain in luxury as well, from complete kitchens and dining areas to grand outdoor fireplaces and rooftop swimming pools in cities like Chicago where dirt and green space is at a premium.
“There is an increased desire for nice, livable outdoor space,” says Ames. “Even though you’re in the city you still want to your kids to play in the yard or be able to barbecue outside. Buyers push for bigger, nicer outdoor space. High-rises without private outdoor space can be harder to sell.”
Representing luxury homes takes a special knack and know-how in terms of how to market them and to whom you should market them. Often it’s the face-to-face opportunities that come with playing host to a variety of events designed to draw potential buyers — wine tastings, parties, entertaining clients one-on-one, big Realtor and broker open houses and other opportunities to highlight a property or your expertise in the luxury home market that can spark interest and help build relationships with clients.
Most luxury homes take a great deal of time to market just by virtue of their price. Unlike lower-end properties in which a lockbox allows other agents to show the home, listing a luxury home takes a major commitment. The listing agent must learn the house and everything about it and be present at each and every showing to provide information, even if another agent is showing it. Another major difference in the luxury home market is that appointments must be made to show the home, something demanded by both the seller and the buyer.
For Realtor Margie Brooks of Baird & Warner Highland Park, the game is all the same whether she’s working with renters or luxury home clients.
“I treat all my buyers the same, whether I’m dealing with a really high-end buyer or not; I’m known for that. I don’t want to say high-end people are more demanding. It’s all the same to me. I enjoy what I’m doing whether they’re spending $500 or $3 million. You have to pay attention especially in this market,” says Brooks.
Like many of her peers, Brooks has recognized a shift in the demographic of today’s luxury homebuyer. “They’re really younger,” says Brooks. “I see that more now than ever. There are a lot of buyers in their 30s interested in the lake or a $3 million or $4 million house. People in their 50s and 60s just aren’t spending that kind of money. They’re going the other way; they’re downsizing.”
Provencher agrees. “[Luxury homebuyers] have enough wherewithal to get what they want and while they are concerned about economic factors and conditions, the most important thing is getting what they want at a quality level they can be proud of. They want to drive up to and walk into a substantial home of significance.”
Provencher, whose company builds high-end custom homes from $1.5 million and up, with square footage ranging from mid-5,000 to upwards of 10,000, says even in today’s market, the lower priced luxury homes are a harder sell.
“From our perspective, the lower price points are harder for us to work with because the inventory bell curve is so high … we are not holding many properties, however, and are focusing our efforts only on customer pre-solds running in the $2 million and up range.”
Though some believe size is coming down in new luxury homes, there are many luxury homebuyers who still request homes in the range of 7,000 to 11,000 square feet, all designed and constructed with attention to detail, something that goes above and beyond the norm. Buyers routinely request grander rooms, custom fireplaces, master bedrooms with large walk-in dressing rooms, huge master baths, touch pad sensors to control the home’s extensive electronic features through the computer, radiant heat even in garages and lower levels, four to six separate heating and cooling zones and high-tech security systems with cameras.
“A lot of buyers demand more networking systems in their homes today,” says Dick. “While they’ve had sound systems in the past, they are now integrating for iPod docking and multiple uses for sound and Internet. It’s like the whole world is going to one system and clients are being more discerning as far as technology.”
Chris Feurer, president of Feurer Companies, a development and sales business developing about 1,000 units per year and listing about 3,200, says a big request today is for Smart Home features that enable homeowners to control heating and air conditioning, lighting, security and communication systems by computer.
“No one even knew what a Smart Home was a couple years ago. Now, if a home doesn’t have it, it’s out,” says Feurer, adding that high-end appliance and cabinet packages are also expectations among today’s luxury homebuyers.
“And the level of expectation for hard material has gone through the roof,” Feurer says, noting that while $5 a square foot for tile used to be acceptable, today’s luxury home often finishes with tile closer to $40 a square foot.
Realtors in the luxury market typically look at each property individually and develop a custom marketing plan for that specific property. Marketing efforts are often concentrated first among peers, like other agents in the luxury home market. Efforts then spread to direct marketing to mailing lists, quality brochures and Internet marketing as well as advertising in magazines published specifically for the luxury home market.
Breaking into the luxury market can be tough. One suggestion, says Provencher, is to team up with a builder that can structure money-making design/build ideas so that agents aren’t limited to existing properties, but instead become intimately familiar with the design, construction and finishing of new custom luxury homes. Reaching those luxury buyers is always a challenge, he says.
“We are constantly reinventing,” says Provencher. “We are working with one of our top architects on a seminar series about the design/build process and what a customer can and should expect … we find this knowledge lacking in the buying community at large and aim to start pushing some more knowledge out there. We even have a version planned for Realtors.” He also adds that his company is creating a new program that structures incentives for the Realtor bringing new build clients to them.
“This has been a very unpredictable market,” points out Provencher. “People are looking for properties that exhibit something special and unique. In this market with so much inventory buyers are taking time to see a lot of properties. And why not?” C.A.
Baird & Warner Highland Park
The Westye Group
Provencher Custom Homes