Money Talks

Luxury clients’ financing situations will vary from what new luxury agents may be used to seeing with other clients. They may encounter buyers coming from a state where attorneys are not required for completing a real estate transaction, or where an earnest money payment of 5 or 10 percent is out of the ordinary. They may find themselves dealing with an all-cash buyer or an international buyer who does not have the typical documentation.

Most banks set $3 million as their maximum loan amount, according to John Mathy, managing director at PrivateBank Mortgage Banking. The borrower needs to meet the same requirements as homebuyers at lower price points, meaning they need good credit, job stability and assets in reserve.

“Typically, larger loan amounts on higher-end homes require multiple appraisals, so having comparables is important,” Mathy said. “Lenders typically do not like setting the market with the subject property.”

Financing also carries pitfalls for international buyers. Those international buyers who want to finance have options, but they may have to make larger down payments and go through the approval process.

Occasionally, there are situations that can’t be overcome. Ames notes that there have been times when a buyer from out of town has been so surprised by the price of homes here that they gave up.

“Sometimes they come and they think Chicago’s a great value and they get sticker shock, depending on where they are coming from, she said. “I’ve had transferees from places like Atlanta who saw how much housing costs and decided not to move. There’s nothing you can do. You show them their options, and if they’re giving up a house on a half-acre and all they can get here is a two-bedroom condo, they might not want to do it.”

Financing is a big piece of the puzzle, so luxury agents must leverage their relationships with capable lenders and sell themselves as someone who can make the financing process a smooth one, no matter what their financial situation is.

Next: Reaching Buyers