Realtors put in the extra effort to sell those million-dollar homes

It is much easier to sell a cubic zirconium than to sell a perfect diamond. There are more potential buyers out there for an inexpensive item than for an expensive one.

The same is true of houses.

It is much easier to sell a home priced at $300,000 than it is to sell one priced at $1.3 million. The pool of possible buyers is just smaller for that higher-priced home.

And in this current real estate market, the pool of buyers for luxury homes is even smaller than it was a year or two ago, thanks to stock market reverses, job losses and an overall economy that has more people worrying about their personal financial health.

So real estate agents who make their living selling these high-end homes are working harder than ever before to find buyers for their listings.

"These days we are shooting for that 'needle in a haystack' buyer," said Michelle DePinto of Coldwell Banker Northwest in Arlington Heights. "We realize that only a small segment of the market is attracted to these lavish homes."

Realtors say that, historically, the market for these homes has been split. About half of the buyers of these homes have been transferees. Of the half made up of local buyers, you have both people who are downsizing from even larger homes, and people who are moving up with jobs they consider to be recession-proof. You also have people in the 35 to 45 age group who are moving out of the city as their families grow and age.

But in today's market, buyers have been hesitant to take the plunge or have had trouble getting the financing.

"I have recently listed some sellers who have been trying to sell their house for 21/2 years," said Cyndy Hass of RE/MAX Suburban in Arlington Heights.

"Let's face it. We are in a 20 percent down (payment) situation for these jumbo loan houses, whereas two or three years ago buyers only needed 5 percent down," Hass said. "And a lot of the buyers haven't been wanting to stretch into a bigger mortgage because they have been worried about their jobs and their 401(k)s."

The statistics tell the tale.

During the first six months of 2008, 29 homes in the $1.3 million to $1.6 million price range closed in DuPage County, according to Multiple Listing Service statistics. During the same six months of 2009, those same statistics show only 19 DuPage County homes in that price range closed - a 34-percent drop, according to Pattie Murray of Koenig and Strey's Glen Ellyn office.

But while the volume of luxury homes finding new owners has fallen, the prices have only fallen 5 to 10 percent, Hass said.

"People selling luxury homes are simply experiencing a much longer turnaround time than lower-priced homes," DePinto said. "Sometimes they are seeing double the time on the market thanks to the economy and the fact that jumbo loans can be hard to get. But the homes are eventually selling and the percentage decline in sales in this segment is about the same as in other price ranges."

The way in which Realtors are facing this monumental marketing challenge is as varied as the Realtors themselves. Hass said that she is returning to the basics - print advertising and open houses.

"I knew that things were starting to turn around one Sunday in March when I arrived at an open house that I had advertised and within the first 15 minutes I had three prospective buyers from the local area who had seen the ad and were seriously interested," Hass said.

So she is investing in a regular schedule of print advertising and she is holding lots of open houses.

"I am finding that a lot of prospective buyers are shopping on the Internet at night from their homes and then they are driving around to open houses on the weekends," she said. "The Internet is the strongest tool we have working for us and because of it I see a lot of resistance from people to going out with a Realtor during the early stages of their search. They would rather look at things online and then go to open houses without committing to a Realtor from the beginning."

Hass said she is also forgoing e-mails to other Realtors and is talking to them on the phone to make them aware of her properties. She believes in the more personal touch.

Hass has a home in Hawthorn Woods listed by its builder for $1,129,900. Sitting on just under one acre of very scenic, former nursery land in Thornfield Meadows, a community of 18 custom homesites, the brick and stone French Country home features four bedrooms, 31/2 baths, two fireplaces, wrought iron interior railings, a full unfinished English basement, three-car garage, large deck, a well-appointed kitchen, custom cabinetry and six-inch wide hickory plank floors. It was completed earlier this year by Barrett Custom Homes.

DePinto and her partner, Maria DelBoccio, have taken a different approach with the $1,750,000 home they currently have listed in the Scarsdale Estates section of Arlington Heights. They held a "lifestyle event" in the house one Sunday in late June, an event DelBoccio described as a "day of luxury."

They enlisted the assistance of local dealers of luxury vehicles, antiques, rugs, art and jewelry to help them showcase the home.

"We realize that it is hard to wrap your heart around an empty house," DelBoccio explained. "So for one day we had luxury vehicles parked in the driveway and we brought in fine rugs, antiques, artwork and vintage jewelry to let prospective buyers see what it might be like to live in the house."

They also set up a tent in the back yard where they served food and had a jazz trio performing. And a soloist sang inside the home to add atmosphere there.

"For the first four hours the event was only open to invited guests whom we invited based on where they currently live and their income level," DePinto said. "The event was aimed at people who can actually afford the house and would really be interested in buying it. We tried to tap into all of their senses and let them see what the house would look like furnished."

The last two hours of the event was open to the public with no invitation required.

"By the end of the day we had several very interested parties," DePinto said.

So they considered the event a success and are hoping to soon sell the 4,400-square-foot brick home built by Homes by James. It features four bedrooms, 41/2 baths, an in-law suite, 10-foot ceilings, both first- and second-floor laundry rooms and a three-car garage.

Koenig and Strey's Murray markets her listings in high-end national publications like Christie's Great Estates, Properties of Distinction, Crane's Chicago Business and The Wall Street Journal, as well as in local publications.

She also buys lists of people in the area with incomes over $300,000 per year and mails a letter and house brochures to them, and networks with local executives.

Her feeling is that even if the person to whom she is mailing is not in the market for a home, they may very well know someone who is.

Murray also holds an evening cocktail party in the listed home for prospective buyers and often offers special incentives to buyers like consultations with a decorator or landscaper or even with someone who could help them stage the home they need to sell. Some sellers will also offer to pay the buyer's first year of real estate taxes or association fees, if there are any.

A home in Glen Ellyn Murray now has listed features 6,200 square feet above grade and an additional 2,300 square feet in the walkout basement. It sits on just under one-half acre that backs up to forest preserve property and is listed for $2,450,000.

The brick English Manor-style home with stone accents features four bedrooms upstairs and one bedroom on the lower level. There are also five full baths and two half baths. The home also features a three-car garage, four fireplaces, radiant heat in the floors of selected rooms, a huge deck off the main level and a patio off the lower level.

"The builder built this home for himself and spared no expense," Murray said.

Owners of high-end homes are listing their homes for a variety of reasons, according to the Realtors - job loss, relocation, downsizing or change of lifestyle. And while many start out firm on their price, most become open to "reasonable negotiations" as their time on the market lengthens, Hass said.

"Even in this price bracket we are seeing the effects of the economy," DelBoccio said. "We are even seeing short sales among these homes and when that happens in a neighborhood, it hurts everyone. And psychologically, the numbers look a lot scarier when they are bigger."

"Among buyers we are sometimes seeing this fire-sale mindset," DePinto added. "It is part of our job as Realtors to do the research to support pricing and offers, and help both buyers and sellers make sense of what is happening in the market.

"It is a great time to buy. Interest rates are at historically low levels and because of the resettling and re-leveling of home values, buyers are getting more bang for their buck," she said.

As for sellers, some are deciding to sell now in case the luxury market worsens in the future, Murray said. Others are moving on to other lifestyles like city living and since they are buying something else, feel that the money they lose on the home they sell is less than the money they save on the new home they are purchasing. Still others, who are hesitant to sell, are buying a new home at the lower prices and are choosing to rent out their current home until the market improves, she said.