Chicago Real Estate Guide

Luxury Homes Equal Tough Sell in Chicago

• July 29, 2011

by Erin Calandriello

Penthouse on 200 E. Delaware

Janelle Gordon understands what it takes to sell luxury homes in Chicago. Her current listings include a Streeterville penthouse priced at $2.1 million and a mansion in the Southport Corridor listed for $2.5 million. As a real estate agent with Koenig & Strey, she says selling the priciest residences in the city these days is no easy feat.

“Even the rich are trying to be more conservative, and the property really has to sing to them in order for them to buy it,” she told UrbanTurf. “They’re being more judicious in their decisions. They’re thinking would I rather travel the world, make upgrades to what’s already a terrific place or buy a third home?”

If interest rates rise, it is going to be even more difficult to sell these pricey pads, Gordon admitted. But people are still buying; they’re just being more conventional with their money.

Gordon said a chunk of her take-home pay depends on these sales, so she has to network with potential clients, whether that means socializing at an East Bank Club spinning class or attending a Union League Club function. But it doesn’t end there. A number of the properties that she gets are dated, so the home needs to be staged — that is less clutter, more space and more modern furniture. And convincing the client that this needs to be done, while sometimes difficult, is crucial in marketing the property.

Sometimes, though, it doesn’t matter how you stage a house, Gordon said, because the property in-and-of-itself is only suited for a specific age group. For example, if it is a large home with a lot of stairs, the upkeep and manageability of the house may be too overwhelming for an older couple.

Regardless of the steps that she has taken and a buyer’s tastes, that sliver of high-end clientele has not only shrunk as a result of the housing crisis, but this group is being far more careful when it comes to buying.

“Buyers are scrutinizing properties a lot more than they used to because of the economy,” she explained, pointing out that high-end consumers are often stubborn about their expectations, so selling a luxury home can take months, even years.

But hope is slowly rising.

According to a report from Northwestern’s Medill School of Journalism earlier this year, in downtown’s wealthiest sections, the number of condos that sold for more than $2 million climbed from 41 to 88 between 2009 and 2010. The average listing price jumped to $3.2 million in 2010, a three percent increase from the previous year and the selling price increased to $3.1 million, almost an 11 percent jump from 2009.

Despite the report’s findings, Gordon said high-end sellers are still taking a hit price-wise.

“I have clients who have invested a lot of money into their home and they tell me that it is worth $3 million, and I have to tell them that it was worth $3 million when the economy was good, but not anymore.”

She explained that this reality check is the most difficult part of selling luxury homes during the housing downturn. Often, she needs to bring in an appraiser to further demonstrate the current value of the home to her clients.

“Only when my client hears it from an unbiased third party do they realize that I’m only the middle man delivering the bad news,” Gordon explained.

But to people at this level, she said, the financial loss from selling their home at a loss is minimal relative to the average Chicagoan selling their home these days, particularly if they bought during the boom.

This article originally published at http://chicago.urbanturf.com/articles/article/luxury_homes_equal_tough_sell_in_chicago/3887