Luxury Real Estate vs Regular Real Estate in Toronto – 5 Ways it’s Different

The real estate industry isn’t as black and white as it used to be in regards to what qualifies as luxury real estate or not. In the past, there would be a small percentage of elite properties, with the rest falling in the “regular” category even though prices would vary a great deal.

Fast forward to today, and with extremely high house prices in Toronto and the suburbs, it seems as if every 3rd house for sale is marketed as “Luxury Real Estate”. Now while it’s true that most houses in Toronto are way more expensive than they used to be, there’s still a distinction between true Luxury Homes and simply premium homes.

In this article I’ll go over 5 ways the top 1% of luxury homes in the Greater Toronto Area are different, and how shopping for Luxury real estate in Toronto is different.

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1. Listing Agents are Normally Present for Buyer Showings

The first sign that you’ve entered into the luxury real estate market is that the listing agent will most likely attend your home showing, even though you’ve hired your own luxury realtor. For home buyers new to the luxury market, this can be a surprise and maybe a little uncomfortable as it’s hard to have an objective conversation about the pros and cons of a property.

If the listing agent is present when you visit the home, let them lead the tour. They should be knowledgeable about the home and be able to answer many of your questions. Sure, they’re there to assess your suitability for the home, but you can use this to your advantage. Let them talk and listen carefully.

As for being objective about the home you’re looking at, save the important conversation with your realtor for after the guided tour. At this time the listing agent should give you and your agent some space once they’ve gone over the features of the home.  As a practice, I recommend discussing anything to do with price or negation outside the property, to ensure the conversation remains private.

2. Luxury Real Estate is More Emotional

What can I say, except most homes in the luxury segment will be impressive!

However, real estate at this level is more emotional and less essential. Let’s face it, no one needs a 15,000+ square foot mansion, so marketing a luxury home is based on wants, prestige and luxury.

In some cases, prices are based not on comparable sales, but on cost of replacement or the seller’s opinion as to how much the home is worth. While the same underlying fundamentals still apply to valuing luxury homes as they do with regular homes, due to the amount of upgrades there’s a greater need to understand the cost of replacement method as opposed to relying only on the comparison method.

Expect that there will be features and upgrades worth a lot of money. That’s why it’s even more important to get as much detail on what’s included with the home and to also spend more time investigating the property.

Check out this video on 5 Tips Every Home Buyer Needs to Know.

3. The Luxury Real Estate Game in Canada

Have you ever bought a luxury car? Have you noticed that everything is set up to get you to believe there’s little or no room for negotiation, and that people who buy luxury cars don’t worry about the small details like price?

As a luxury home buyer there can be more pressure to “act the part” and not question what in some cases is overpriced. Again, this comes down to knowing the numbers, understanding the comparable sales and what they are selling for. Don’t make the mistake of assuming every home is priced correctly.

4. The Paradox of Choice in the Toronto Luxury Real Estate Market

It can be difficult choosing the right home when all the homes are unique and most are done to a very high quality. From cutting edge floor plans to amenities such as pools, spas and the trendiest décor, differentiating from homes can be challenging.

In order to stay on track and make sure you are getting what you really want in a house, you have to stick to a plan. That means doing work ahead of time to narrow down properties based on what you must have, would like to have and can’t have in a property.

We do this exercise with all of our clients, and it’s included in my buyers booklet. Feel free to download it here.

5. Don’t be Impressed With Things That Aren’t Important to You

Related to the last point, it’s easy to get distracted by all the features and upgrades that come standard in luxury homes. My advice is don’t be swayed by things that don’t matter to you…

The value of real estate still falls in this order: Location, land, square footage and then upgrades. Make sure to account for everything in the proper order of importance in order to make an informed decision on determining home value.

Final Thoughts on Shopping For Luxury Estates in Canada

If you’ve never done it before, shopping for a luxury home can be a fun and eye opening experience. While the price may be higher, remember that the fundamentals of real estate still remain the same. Below are the 2 most important rules to remember when it comes to real estate.

Do your homework, use logic to negotiate and buy the house and emotion to sell it.

If you remember these 2 rules you’ll always do well!

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