Buying with your brain or your heart?

Luxury Real Estate Purchasing: Emotional or Rational?

 Samantha DiBianchi | Zillow Blog | June 5, 2013 | link

Ellen's Montecito home

An avid lover of luxury real estate, Ellen DeGeneres recently added this Montecito, CA estate to her growing property collection.

When purchasing luxury real estate, getting the “best deal” doesn’t necessarily play a big role in a buyer’s decision-making process. Does the current most expensive home, listed at $190 million, sound like a steal? Not so much. So why would anyone spend such an extravagant amount on a property that may or may not be worth it?

Well as they say, the price and/or value of something truly comes down to what someone thinks it’s worth — and what they will pay for it. This is most definitely the case when dealing with luxury real estate.

Versace pool

The pool at the late fashion icon Gianni Versace’s Miami estate is lined in 24-karat gold. The estate is currently on the market for $75 million.

Luxury real estate is looked upon as a collectible — not simply just “somewhere to live” but rather a showpiece to add to a buyer’s valuable portfolio of possessions. “Cookie cutter” is disregarded and looked upon with disgust when viewing the priciest of pricey properties; the more extreme the price tag, the more extreme and unique the home is expected to be. From baseball diamonds and hockey rinks to a 2,714-square-foot 12-car auto showroom and a pool lined in 24-karat gold, the possibilities and ideas are endless, and the outrageous and ostentatious are expected when searching for, purchasing and living the luxe life.

How does one think rationally when purchasing such an over-the-top property? Luxury buyers think globally, not locally. It’s not necessarily about what is happening around the neighborhood, but rather what is happening around the world. With the exception of locations with strong government intervention, luxury residential real estate values will likely follow luxury goods, not the general housing market, and remain immune to economic and political trends.

While trophy properties are glamorous, the rich didn’t become so successful without thinking about the long-term investment of their pricey pad. Buyers who live in locations with economic uncertainty readily place bids on properties where stronger economies exist — even if it means buying thousands of miles away.

Marc Jacobs' apartment

In addition to this NYC apartment, fashion designer Marc Jacobs also owns a home in Paris.

Luxury real estate definitely creates its own category within the real estate world. And as recent news has indicated that the rich are getting richer, the extraordinary is quickly becoming passé and the possibilities of what is to come are limitless.


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