Have you been dreaming about a luxury home? Whether you’re drawn to a relaxing beach house or a sprawling estate in the country, it’s easy to get swept up by the beauty and amenities of potential new homes.
But even with a sizable budget, you want to make sure your money is well spent. It’s also important to understand how the buying process differs for high-end properties so you can make informed decisions.
Let’s talk about the most important things to consider when buying a luxury home.
The Buying Process
If this is the first time you’ve been in the market for a luxury home, you should expect that it will take a bit longer. There are a few factors that slow down the home buying timeline. First, this is a major investment, so you’ll need more time to evaluate the benefits and drawbacks of each property. Second, high-end properties don’t always have open houses, so you’ll need to schedule an appointment for any viewings. Third, depending on the home’s sales price, the owners may want some reassurance that you can afford the home before you see it. And fourth, if you decide to make an offer, there are more stringent checks in place to confirm your financial stability.
If you’re purchasing the home in cash, the sellers may ask for a bank statement and reference to ensure you have the funds available. For a mortgage, lenders will require at least 20 percent down due to the size of the loan. They’ll also conduct an extensive review of your debts, assets, and credit report. Having a prequalification or preapproval is critical, so you know there won’t be any snags on closing day.
Regardless of how you pay, one of the best tips for buying a luxury home is to engage a qualified financial advisor who can take a holistic view of your finances, including other considerations like college savings and retirement.
Taxes and Fees
Like any home purchase, it’s important to consider the total costs before making an offer. Since property taxes are calculated based on the value of the property, they can be sizable for a high-end home. However, the rates can be drastically different depending on where you live. Tax rates should be at the top of your list of things to consider when buying a luxury home. If you live in New Jersey, keep in mind that the state imposes a luxury home tax (or “mansion tax”) – one percent for every real estate purchase over one million dollars.
Maintenance and Care
As you may expect, luxury home care and maintenance is more expensive due to the size of your property and its amenities. It’s easy to underestimate these costs when the home is perfectly staged. Think about what you’ll need to spend on regular upkeep. Does the property have a pool, smart home features, extensive landscaping? If you plan to stay in the home for many years, what would it cost to upgrade the kitchen or bath if it goes out of style or shows wear and tear?
Knowing the Resale Value
When you’re making a big investment like this, it’s smart to consider the resale value before you buy. Think about whether the unique features that appeal to you might reduce your pool of buyers. For example, you might love the sharp modern lines of your home’s facade, but it may not be as popular as a traditional home style. You should also consider the property location. Will the luxury home value decrease if more developments are built nearby? Is the neighborhood safe, and likely to stay that way?
Is Buying a Luxury Home Worth It?
That’s a question that only you can answer. But when you understand the buying process, create a realistic budget, get professional advice along the way, and take your time to find the perfect home, you’ll be more likely to say yes!
If you’ve been exploring BHHS Fox & Roach’s luxury home listings, we encourage you to contact our real estate team. We have unparalleled experience in the luxury market and look forward to expertly guiding you through all the considerations above.