Upscale home, mid-priced location: The best place on the block can be a tough sell
Built on the eastern slope of Garret Mountain, the four-bedroom, 5,300-square-foot town house has giant windows that frame sweeping views of New Jersey and the New York City skyline. It has an elevator, marble floors, multiple decks and an indoor pool and garden.
It's also got an asking price – just under $1 million – that is way out of line with the typical home price of around $300,000 in Clifton, N.J.
"The average person looking in Clifton is not looking for a house like this," said the listing agent, Kaitlyn Barbagallo of Weichert Realtors in Clifton. "It's a really unique home to the area."
While Barbagallo is sure she'll find a buyer for the house, real estate agents say that selling a high-end property in a middle-price town can be a challenge. Many well-off buyers aren't interested in living in a middle-of-the-road town.
"Affluent people might want to live near stores, schools, clubs or other amenities that cater to them, which might be harder to find in a mid-priced town," said Jed Kolko, chief economist for the real estate website Trulia.
In fact, the conventional wisdom in real estate is to buy the least expensive home on the nicest street. The theory being that you can upgrade or expand a house, but you can't do much to change a neighborhood.
To get around these objections, agents say sellers should rely on a number of strategies, including making sure the property is in the best possible shape; showing buyers they can get a good deal by compromising on the neighborhood; and marketing to a wider audience.
Barbagallo, the agent on the Clifton home, said she is marketing outside the area. She expects the ultimate buyer will be someone who sees the value in this house.
"They're getting so much more for their money," she said, than they would in some high-end towns nearby.
Linda Stamker, an agent with Prominent Properties Sotheby's International Realty in Fort Lee, N.J., recently sold a newly built home in Bergenfield, N.J., for $880,000, in a neighborhood where most homes sell in the $400,000s and $500,000s.
She says some potential buyers were reluctant to spend so much on a home that was surrounded by older, more modest properties.
"People tend to be a little nervous about being the nicest house on the street," she said. "You have to show them that the house has value itself because of its size and how well it's designed."
In this case, builders had put up several other new, high-end homes nearby, and the buyers decided that the neighborhood was gradually being redeveloped and would become more upscale over time. That made them more comfortable about the purchase.
Pricing is a big factor in these sales. Sellers sometimes have to cut prices dramatically on upper-end properties to make up for the location. Stamker's listing, for example, started at $1.2 million.
"We did bring the price down," Stamker said. "On a different street, it would have sold for more. You're not just selling a house; you're selling the street and the neighborhood."
Coldwell Banker agents Ron Aiosa and Bill Boswell just sold a 6,000-square-foot historic home in Pequannock, N.J., for $995,000, down from the original listing price, with another agent, of $1.4 million in 2011. Aiosa and Boswell listed it at $1.2 million.
"You don't get a lot of home seekers at that price" in that neighborhood, Aiosa said.
Aiosa and Boswell highlighted the gated property's privacy, formal rose garden, fountains, cupola and Greek Revival facade, as well as its history as the former home of the Ackerson and Clark families, which were prominent in the yarn business.
"This home had a story," which helped to sell it, Aiosa said.
Sometimes the location turns out to be an asset.
Nabil Tadros, an agent with Liberty 100 in Waldwick, N.J., sold a newly built, six-bedroom home in Saddle Brook, N.J., for $775,000, more than twice the average price in that town. The home is in a neighborhood of Cape Cods, but Tadros says the buyers did not mind because they already lived in town and wanted to stay. They were drawn by the home's size and high-quality finishes, he said.
Similarly, Maria Rini, a Re/Max agent in Oradell, N.J., says that she has sold higher-priced homes in two mid-priced towns to buyers who already lived in, and loved, the towns.
"They're not leaving town, but they wanted a bigger, better house," she said.
But she had another high-end listing that she couldn't sell – at least not at the price the seller wanted. The seller, a builder, had created the luxurious place for himself, but buyers didn't bite. "We gave it our best shot," Rini said.
Many of these high-end homes were built during the housing boom, replacing more modest properties that were torn down. In some cases, Rini said, the builders got ahead of themselves and created properties that were just too expensive for the neighborhood.
"In the market downturn, we had investors get caught," she said. "They were contractors who turned into speculators, and they overinvested in a property. When the market turned, they got stuck with the house."
Rini said sellers of these properties need to use every gadget in the real estate toolbox.
"You really want to see them staged the very, very best they can be; you want to make sure all maintenance issues are taken care of," she said. "You make it clear to the sellers that you have a unique property, so we have to present it in the best light to attract a buyer. You've got a much smaller buyer pool."
Schools also can be an issue, because many affluent families prefer the highly regarded school systems in pricier ZIP codes.
But agents say well-off buyers don't always care much about the local public schools because they can usually afford private schools.
Appraisals also can be a stumbling block. Appraisers estimate a home's value so lenders can be sure that they're not lending more than the home is worth, and the appraisals typically rely heavily on sales of similar homes nearby. That could make it tough to justify the price of a house that's a fish out of water among modest homes.
"The location is still a huge factor, and banks are conservative, as they should be in this new climate," Rini said.
Joshua Baris, an agent with Prominent Properties Sotheby's International Realty in Tenafly, N.J., said he was concerned about appraisals when he listed a $2.5 million home in Edgewater, N.J., where he says the average sale price in 2013 was $640,000. "I needed a cash buyer because I was concerned with the property appraising at such a high price," he said. He targeted the Asian market, with a website in Chinese, and the home was bought by a cash buyer from China.
He also created a custom website for another pricey property, this one in Cliffside Park, N.J. Because he thought the New York City skyline view was more compelling than the house itself, he called the website ViewsofNYC.com.
A builder paid $2.6 million for the property, with plans to replace the house.
And he used another unusual tactic with a lake community property in Bloomingdale, N.J., last year. He was able to get it featured in a regular CBS television news segment on high-end properties, which helped sell the property for $970,000 – more than triple the average price in town.
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