Great post Jennifer!  I FEEL YOU!  Here is one of my high-end homes...have any Hawaii Buyers?  I would love to work with you. http://www.Hulupala.com

Cheers-

Mike

Jennifer, solve this problem by having your seller pay for a fee appraisal. It's money well spent on the high end homes and the appraiser finds the comps for you. Leave a copy of it on the counter of the property (tied down) and let everyone see it who comes through the home. If the appraiser worked hard for his/her pay and comes up with a value of the home of $1,100,000 then you list it for $1,100,000.  Best $400 the seller will spend.

I have shopped for luxury homes myself in Minneapolis (Minnehaha Creek area and Edina) and never saw this used once by the listing agent -- just old comps on the table. But we do it in San Diego all the time.  It helps take the mystery out of writing offers.  And if you end up lowering the price off the appraised value, then there is the positive argument for "built in equity" according to the appraisal.

By the way, we are now using comps for homes here based on listed price properties. And if we use a sold property, even high end, it really can't have closed more than a couple, three months earlier.  Using listing prices for comps? I have never seen this in my 15 year history.  Our market is suffering across the board.

Jennifer, I can certainly say I have NO high end experience. In fact, in 14 years in business and hundreds of homes sold my highest deal EVER was $375,000!!!! That was actually one of the highest sales in my market area. Sad but true. I'm a "big fish" in a very low end small pond. I'm good because I have to sell a lot of properties to make a decent income. At least it keeps me busy:) Maybe I need to move.

Jennifer - interesting about the comp situation.  I'm sure most borrowers in this price range have financing but appraisal requirements/guidelines usually call for actual sales of like properties which must be within the past 6-12 months and in the same general area.  Jumbo loans are a different animal but just wanted to give you a lenders P.O.V.!

Good luck.

Mike - that is a very pretty home. I have never been to Hawaii, and probably never should go because I might just never want to leave. :)

Kim - just goes to show you that the rules do change and that anything is possible.

Nathan - if there are no comps in the last year, do you just not approve the loan? In cases like this, an appraiser will go back a year to find comps, before they will go outside the area. Now this applies more to homes over a million, because it is usually possible to find comps for homes priced below a million.

Recently I represented a seller on a waterfront property. To figure out what the home was worth, we had an appraisal completed. The most recent comparables were from 2005, and he used those because that was the only thing available.

BB - I am sure there are plenty of high-end homes in Florida. If you are good at what you do, why change? If it ain't broke, don't fix it.

Don't you find when you list a luxury home it is much easier to get an appraisal? I do and I highly recommend it.

Love the title of your post by the way.

Endea - LOL, yes, it is, but agents that don't do luxury don't understand that. I thought the title was to the point, glad you like it.

Jennifer - the "rules" now in Florida are comps that are within 90 days, no older. But yes, things are different for luxury homes. Sometimes appraisers have to go to another state for comps ... sometimes they have to go back a few years and then make adjustments based on changes in the market. It's critical to have an experienced capable appraiser that's willing to put in the extra time to do the appraisal and then provide the lender with good explanations of the comps he's chosen, the adjustments he's made, and the reasons why.

we have the same issue rigth now with our new custom home. while it's not a million dollar home, it should be worth ~$440,000. the comparables the appraiser picked are 10-30+ year old houses, several look like prefabs/cheap 2x4 woodframe vs. our ICF custom home. None of the comps are above $250,000 and our new house is supposedly worth only $220,000 - for which you could barely buy the land it's on...apparently we need to do the work that the appraisers get paid to do to rectify the situation now...We don't have the right to request an appraisor who is trained in assess houses build with modern materials vs. typical wood frame....and people wonder why the real estate market is in trouble....