Marketing the Million-Dollar Home

Affluent homebuyers make up a small, yet influential piece of the private real-estate market. In their search for luxury, they can be finicky and demanding. As builders concept homes for this crowd, they are challenged to create fashion statements that showcase the latest and greatest in architectural design, technology, and luxury amenities. For realtors, supply and demand makes for tricky terrain in the re-sell market for luxury homes.

“The bottom line is there are a fewer number of buyers to look at the homes in this price range, a larger number of competing properties, and that can lead to an extended marketing time,” explains John Everett, a realtor with Edina Realty Home Services. “There’s therefore less margin for error. If you misjudge the market, there’s fewer chances to get it right the first time around, and you may not get these buyers back.”

In 2006, however, homes priced in the millions enjoyed a bit of immunity in an otherwise stale housing market. In fact, 2006 sales of luxury homes in the United States were up 11 percent over 2005, according to the Institute for Luxury Home Marketing. Locally, million-dollar homes are moving fast. The average market time for properties priced at $1 million and up in the Edina area was less than three months in 2006, says Ann Shaeffer, a realtor at Sky Sotheby’s International Realty.

Bringing Together Buyers and Sellers
Surprisingly, the “For Sale” yard sign remains an effective means to court prospective buyers for high-end homes. “You’d be amazed,” Everett says, “at how many upper-bracket homes sell, off a whim, to people who were just driving through the neighborhood and weren’t even looking [to buy], but they saw that sign.”

To cast the widest net, the Internet has emerged as the most fertile approach to reach potential buyers. The National Association of Realtors estimates that up to 80 percent of buyers begin their search online.

“Of course, buyers are not always going to be local,” Schaeffer says. “We have to create marketing plans that extend to national exposure of the property, and the luxury market is moving more toward this online presence.”

This commitment to the Internet brings with it the challenge to dazzle remote shoppers with effective images and the online tools that people have come to expect. “The quality of photography is very important,” Everett says. “Imagery is the new buzzword—imagery that provides emotional value that makes the houses pop through high-quality online pictures or tools like 360-degree virtual tours that take you through the house.”

Upgrades That Come Standard
The latest and greatest is always an option for upper-bracket homebuyers, so  builders make sure their model homes show off state-of-the-art security systems, tiered home theaters, large kitchens with professional-grade appliances, elaborately landscaped yards, and other amenities.

“The million-dollar home is really a fashion statement and it reflects the buyers,” says David Frosch of Kootenia Homes in Woodbury. “It is just as important as the clothes they buy and the car they drive. It is a statement of who they are, and we must cater to that."

One of the most requested structural items in luxury homes, according to David Bieker, president of Denali Custom Homes of Deephaven, is an indoor sports court. A court can be up to sixteen-feet high and constructed under the garage. “When building model homes above $2 million, we try to always include a sport court and a theater room to satisfy the needs of prospective buyers,” Bieker says.

Also in vogue, “building green” to conserve energy. “There are many things that go on behind the walls of houses that can cushion heating costs,” Bieker says. These include high-efficient furnaces, radiant floor heating, geothermal heating systems, and top-quality foam insulation.

To support a million-dollar home’s sophisticated gadgetry, wiring is a paramount concern. “It’s important to hire a knowledgeable subcontractor for low-voltage items and to pre-wire for everything and every location conceivable that a person may want integrated systems, such as phone and data lines, docking stations for iPods, networking, and cable or satellite TV,” Bieker says.

Staging To Sell
The relatively recent emergence of professional home staging has become a wild-card option for sellers and realtors to dazzle would-be buyers of both new and existing homes. The stager creates, in essence, set pieces throughout a house—furniture, drapes, artwork, even bath towels laid over the tub or “family photos” displayed in a bookshelf—that are designed to provide visual context for potential buyers, helping them imagine the possibilities of the home.

“It’s hard in most cases for a buyer to visualize a vacant listing,” says stager Cindy Montgomery, general manager of Showhomes in Minnetonka. “Being without furnishings is a deal killer or a low-ball waiting to happen. In this market we have to create ‘buyer impact.’ If you haven’t appealed to them visually, you could loose them in the first few minutes after they’ve entered the property.”

John Everett at Edina Realty says stagers are coming into their own as essential pieces in the marketing package. “You have sellers out there doing significant price adjustments because their properties are sitting on the market, when they can hire a stager for a fraction of that and have them come in and get their home to show better. It’s working like a charm.”

Staging is of crucial importance in today’s market, says Montgomery, who is full of anecdotes of high-end homes that sat on the market for a year or longer, before professional staging moved them off within a couple weeks, or a day.

“Most people don’t realize that the cost of staging is less expensive than the first mark-down in price,” she says. “In each case, a house is transformed into a home.”