Behind the price of luxury homes

The prices of luxury properties on the resale market are reaching dizzying heights. Far from being set lightly, they are the result of an exhaustive study of recent transactions in the same sector. Properties offered at a similar price may therefore have nothing in common. Explanations of experts on this crucial question.

Danielle Bonneau
The Press

Homes at 9.8 million

Joseph Montanaro, Re/Max Action real estate broker

How do you set the prices?

We always look at what are called “comparables”, that is to say similar properties that have sold previously and that have the same criteria, explains Joseph Montanaro. It is certain that the higher one goes in luxury, the less there are comparables. Sellers don’t always have the same idea of ​​what their property is worth, because they look at the prices of houses that are on the market, that have not yet been sold. But we base ourselves on the sales that have been made. Before the pandemic, we went back up to a year. Now we go back three to six months, because the market is constantly changing.

How do you proceed?

We always look district by district. But even in neighborhoods, there are certain streets or certain sectors that are more preferred. If we can compare with a property in the same street, it sure helps a lot.

Which criteria have a greater impact?

Three factors are particularly important. Location is paramount. Then we consider the area of ​​the land and the house. And then, if there have been renovations or if the house is completely renovated.

Is there a reason these two properties are being offered at 9.8 million?

We wanted to stay below the 10 million mark, because the higher the price, the fewer buyers. But it’s always case by case. Every home is different, every seller is different, and expectations are different.

Homes at 5.9 million

Liza Kaufman, founding partner of Sotheby’s International Realty Quebec

Is it important to establish the right price?

I believe that in the market for luxury homes, it is particularly important to set the fairest price possible from the start, says Liza Kaufman, founding partner of Sotheby’s International Realty Quebec. There is no ready-made formula.

How do you proceed?

We do a first analysis of the market, which gives us an average price. But most of the time the houses have very special qualities, and sellers have invested large sums to bring them to a very particular level. It is our job to demonstrate to potential buyers that the asking price is justified. And to do this, we highlight what distinguishes each property. Each of the elements that contribute to its specificity has an impact on its value. The list is often very long.

Which criteria have a big impact?

We examine the property backwards. We consider the value of the land, what a house on that land would cost if it were brought up to the same level as the house in question, then we add what complements it, such as a swimming pool, a garage that can house several cars, the view , etc. The people we do business with are business savvy and don’t throw their money away. You have to establish what makes each property exceptional.

Homes at 2.7 million

Susan Lloyd and Géraldine Libraty, real estate brokers at Sotheby’s International Realty Québec

How do you set the prices?

You have to consider the neighborhood and not just the house, explains Susan Lloyd. I look at the price of what has sold in the sector in the last six months, then I make comparisons. Does this house have more land, is it on the edge of a stream, etc.? ? Each element is important. The sellers are given a price range and most of the time choose the high end. We then see the reaction of the market.

When is the asking price subject to change?

We have to adjust to supply and demand, says Géraldine Libraty. The market has fallen in recent months. This led us, for example, to slightly lower the price of the house dating from the XVIII^e century, in Hudson, completely renovated. The property is now under 3 million, which was the original price.

Would it be wrong to compare these two properties, yet offered at the same price?

Their only common point is that they are at the edge of the water, warns M^me Library. There are many criteria to take into account. They are two completely different houses and two properties that stand out in their own way. They are not in the same neighborhood. Nor are they likely to appeal to the same buyers.