Sale prices of luxury homes rose 4.2 percent in the first quarter of 2017 compared to last year, according to Redfin. This is the first-time luxury gains have outpaced the rest of the market since 2014.
The sales surge has caused a decline in the supply of luxury homes. Listings at or above $1 million fell 9.4 percent compared with the same period last year. Redfin’s chief economist, Nela Richardson, said "The housing shortage is now affecting the top of the housing market. Yet despite the strong uptick in prices, the luxury market is not nearly as competitive as the rest of the market. Only 1 in 50 luxury homes sold above list price in the second quarter, compared to more than 1 in 4 homes in the bottom 95 percent."
So, how can luxury home sellers in 2017 guarantee their investment holds its value? For any luxury property, online auction may be the most effective way to achieve the highest sales price. Studies have shown that auctions bring an average of 13 more offers than retail marketing and an average of $33,000 more. By auctioning these properties, a seller can let the interested buyers bid the price up over the sellers estimated market price. Many properties sit with “For Sale” signs, while qualified buyers don’t even know they’re available. According to Redfin, in 2017, the average luxury home sits on the market for 91 days. Negotiations can be complex and urgency can slip away as the process stalls. Online real estate auctions maximize exposure, creating urgency not found in the traditional listing format. This, in turn, shortens the amount of days luxury homes sit on the market. Tom Ferry, NY Times bestselling author and real estate coach, stated, “No matter what you think the next 10 years will bring, I hope you are counting on the auction platform being involved”
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