The ultra-high-end real estate market is sizzling in spite of a weak general housing market, meaning if you're in the market for a trophy home, now's a good time to sell.
But buying a home with a price tag of more than $3 million can prove to be a bit trickier than navigating the run-of-the-mill real estate market. There are pre-approval letters, specialized luxury brokers, and the ordeal of proving you're a legitimate buyer.
We spoke with Chris and Arlene Gonnella with Gonnella Realty, a Wall Street Journal top 100 real estate firm, to gain some insight into the best ways to begin the process of purchasing a luxury home:
1. Do your research.
Check out the market online to get an idea of what you do and do not want. Gonnella Realty gets the majority of their business through the Internet.
2. Get a qualified broker.
Find the broker who is doing the most sales in luxury real estate in your desired location. Then, let him find houses for you and show you the best value in town.
3. Get a pre-approval record.
"Everyone should have a pre-approval letter," Arlene said. A letter from the bank doesn't ensure you'll be approved for a mortgage, but it puts the seller's mind at ease if he take his home off the market to go under contract with you.
4. Be ready to divulge details about yourself.
The Gonnellas said they ask a few appropriate questions about what someone does for a living, and other assets they have that would help qualify them to purchase a luxury home. Some sellers require a letter from an accountant and a bank statement to show that a potential buyer is qualified to purchase their home and as a proof of down payment.
5. Take a mortgage.
Interest rates are still very good, Chris Gonnella said. Paying cash would be an inefficient way to use your money.
As the process moves along and the current owners accept a bid on the house, the appraisal process can be tricky. Appraising luxury homes can be difficult because in general there aren't too many in a particular area with the same types of amenities being sold at the same price point.
So if you're looking to dabble into luxury real estate, be ready to divulge family secrets and show what you're really worth.
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