Luxury still sells

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August 7, 2008

Anonymous The Joplin Globe Thu Aug 07, 2008, 11:38 PM CDT

By Melissa Dunson

mdunson@joplinglobe.com

Even in a sluggish real-estate market, houses change hands, sales are made, contracts are signed and moving trucks line up for the big move. But about once a month, a local Realtor makes a one-in-a-million sale.

“I think if someone actually knew how many million-dollar houses there are in the Joplin area, they would be blown away,” said Donny Allen, president of the Ozark Gateway Association of Realtors.

With one of the lowest costs of living in the country, the Joplin area still has 38 homes for sale currently listed at $500,000 or more — the real-estate definition of a “luxury home” — according to the Multiple List Service. It’s a posh subclass that remains mostly unseen by the rest of Joplin’s residents, but it can mean big opportunity and big stress for the area real-estate agents and builders who operate in that niche market.

Allen is trying to sell a house in the Grand Falls subdivision near Redings Mill for just less than $1 million. That price tag is unusual, considering that Ozark Gateway reports $109,906 was the average price for the 188 houses that sold in the area in June. Even nationally, a $1 million house is the exception. The National Association of Realtors reported that the average sale price for an existing home in June was $256,600.

‘They have the cash’

Doris Carlin, a Keller Williams Realtor specializing in luxury homes, said no homes listed at $1 million or more have sold in the past 30 days, but the average rate is about one a month for the Joplin area.

The economy seems to have little to do with it, Allen said.

“These houses exist here, and there’s a market for them,” he said. “You hear the national media talking about how bad the housing market is, but it doesn’t matter to them as much because they have a motor home that costs as much as the house. They have the cash.”

Allen said most of the clients who buy million-dollar homes aren’t concerned about the mortgage scandal or interest rates, because they’re paying in cash. If a buyer decided to take out a mortgage on a $1 million house and put 20 percent down, Allen said, the payments would be about $7,500 a month, and the buyer would have to make at least $300,000 a year to qualify.

“At that point, it’s about the amenities and the quality of life,” he said. “I don’t think the sluggish economy is going to make that much of a difference to them.”

All of the million-dollar homes in the Joplin area were custom-built for particular clients in the beginning, said Charlie Kuehn, owner of Four State Homes in Joplin, the builder of three million-dollar homes in Joplin just in the past year.

“Nobody in this area is building million-dollar spec houses,” Kuehn said. “But there are some in Springfield and Kansas City.”

With clients requesting such custom amenities as exercise pools in the basement and 11 bathrooms, Kuehn said nothing surprises him anymore. He said there are homes in Joplin that cost $15 million to build, have 18,000 square feet and took five years to complete.

“We do a lot of swimming pools, and it’s not uncommon to spend $100,000 on landscaping,” Kuehn said. “And we do a lot of full kitchens in basements. If you can afford one, two is even better. I’ve seen hallways that look like bowling alleys.”

But all those special features can make selling an expensive home more complicated once the original owner is ready to move on.

Making the sale

A small group of buyers in the Joplin area can afford these million-dollar homes, so Carlin said connecting the house with the buyer is a targeted marketing effort. Realtors don’t hold open houses for these homes, and they don’t list them in the newspaper. Instead, Carlin said she sends private invitations to after-hours cocktail events to individuals who she knows can afford a home of that caliber — regardless of whether the people are looking to buy.

These potential buyers are doctors, lawyers, land developers and business owners.

“Most of them are just normal people who have just been successful in business and worked very hard for their money,” Kuehn said.

And most of them are very private, Allen said. In both buying and selling million-dollar houses, he said, these clients are willing to pay for confidentiality and discretion.

“You’d think with all this stuff, they’d want to show it off, but most of them don’t,” he said. “They are very private people in this price range.”

In an attempt to sell these customized million-dollar homes, Carlin said, Joplin Realtors often look outside the area for buyers, taking advantage of Web sites that specialize in luxury homes and magazines that target those who can afford them.

Carlin said 38 homes listed at $500,000 or more may not seem like a large number, but with that kind of an inventory of luxury homes from which to choose, sellers will have to be competitive, both in product and price.

“In this niche market, the buyer has to be able to walk in and not have to do anything to (the house),” she said. “And people in this price range are financially savvy. If it’s not priced right, they know it, and they are not going to buy an overpriced piece of property regardless of where they moved from or how much they sold their other house for.”

Allen said staging a million-dollar house also goes a long way to selling in this buyer’s market.

“We’re not talking about putting out a couple of towels and a couple of plates,” he said. “You really need to appeal to the hot buttons of what that person is looking for.”

Allen said buyers in this bracket expect features like granite countertops, marble floors and extra garages, as well as lots of square footage, so Realtors have to take the time to understand what makes a house truly unique and play up those aspects.

“It’s pretty much the same thing we normally do, just amped up a bit,” he said.

What you get for the money

According to Sotheby’s International Realty, an online collection of luxury homes, a $1 million check in Cape Girardeau will buy a 5,500-square-foot, historic mansion on a winding private lane with four bedrooms, four bathrooms, and three garages and fireplaces. Meanwhile, $1 million in Carmel, Calif., buys a 1,500-square-foot bungalow with three bedrooms, two bathrooms and a deck.

Even in Joplin, how far $1 million goes depends on what specialties a client wants, said Charlie Kuehn, owner of Four State Homes.

“It’s all customer-driven,” Kuehn said. “I’ve built some houses that were $600 a square foot. And at that, it doesn’t take long to spend $1 million.”