Luxury Homes Flourish Despite Drop in Home Sales and Rise in Mortgage Closing Costs
NEW YORK ( MainStreet) Tim Lincecum, starting pitcher for the San Francisco Giants, has thrown two no-hitters in the past 12 months and even earned his first career save. Now the 30-year-old is hoping the luxury real estate market treats him just as well. He's looking for a bit of chump change in the sale of his 11,000-square-foot Paradise Valley home in Arizon for $4 million, which he purchased in 2012.
"Pricing it right is the main concern," said Paul Purcell, managing director at William Raveis New York City. "If it's priced aggressively, it will sell. Pricing is an integral part of marketing."
Lincecum's house has four bedrooms, six bathrooms and sits on 2.5 acres of beautiful desert land.
"Arizona ranks eighth as the least expensive state to close on a mortgage ," said Pollyana da Costa, senior mortgage analyst with Bankrate.com.
Despite lower closing costs, what's good for Lincecum may not be a draw for another buyer. For instance, not everyone is looking for a batting cage in his home or sideline booths where friends and fans can lounge.
"My strategy would be to market it heavily in the brokerage community," said Purcell, who is not among the realtors selling Lincecum's home. "I'd recommend making the property stand out. Let it be exciting, then have the courage to under price it a bit and hope for bidding with a couple of serious, motivated buyers. This tactic tends to get the best results."
Although home sales were down in June nationwide, luxury housing is experiencing an upswing.
"It may seem incongruous that luxury markets are heating up, given that much of the world is still recovering from the 2008 financial crisis but we have found that when luxury buyers find the lifestyle they want, they act," said Kerry Wright, director of real estate sales and marketing with Harbor Shores, a golf and lifestyle community in Southwest Michigan.
Read More: Prefab Homes Now Come Fit for the 1%
For example, sales at Harbor Shores have been up 10% since the beginning of 2014 and have seen no decline.
"Luxury buyers are often undeterred by market conditions that might affect the average buyer, such as financing and jobs," Wright told MainStreet.
Overall, mortgage closing costs increased 6% over the past year and now average $2,539 on a $200,000 loan but a homebuyer getting a $200,000 loan in Arizona pays an average of $2,425 in closing fees, including origination and third-party fees, according to a new Bankrate study.
"That's about 4.5% less than the national average," da Costa told MainStreet.
Closing costs in Texas are the highest in the nation at $3,046. Alaska, New York, Hawaii and Wisconsin round out the top five highest while closing costs in Nevada are the cheapest at $2,265 followed by Tennessee, Missouri, Ohio and Washington, D.C.