RISMEDIA, February 26, 2011—Recent increases in significant sales for the high-end real estate market underscore the need for brokers and agents in this segment to think outside the box when it comes to providing financial options that can help close a sale. Here, Philip White, President and Chief Operating Officer at Sotheby’s International Realty Affiliates LLC discusses how real estate professionals can take advantage of the unique value the high-end real estate market holds.
Buyers are recognizing the unique value that high-end real estate presents as part of a long-term strategy for building wealth. Often, potential buyers move from the sidelines into action based on the different ways that a deal can be structured financially.
Below are some tips for making that happen. As a standard practice, all tax-related questions should be referred to a tax advisor.
Financial Structure: For large pieces of real estate, subdividing the property into separate parcels can allow a buyer to structure the financing more creatively.
In some cases, the seller can take back a first mortgage on the undeveloped parcels instead of a second, which is more common. This provides greater protection for the seller, making this concept more enticing for a buyer. The buyer can then sell those adjacent parcels and pay down the overall debt on the property.
Incentives: Sometimes closing a transaction can require unique financial incentives. For example, a property exchange allows a buyer to transfer a current real estate holding as part of the purchase price and defer the capital gains tax under certain conditions.
In 2010, Peaks Real Estate Sotheby’s International Realty in Telluride, Colorado, sold Bootjack Ranch for approximately $46.5 million, a price point that at the time was the highest known for a residential sale within the United States in the previous 12 months. By incorporating this type of exchange, the broker handling the sale overcame the buyer’s objection that he had another property to sell.
Tax Benefits: Buyers with a high income should be aware of the tax benefits available to them through conservation easements. Transferring the development rights of a tract of land to a nonprofit easement group provides the buyer with a way to take certain tax deductions based on the appraised value of the donation.
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The trailer that served as the sales office for Madeira was only open for 10 days in January 2004.
Marco Island’s real estate market was booming.
It was the best of times.
Jim Prange, successfully selling real estate on Marco Island for 30 years with Premier Sotheby’s, waited in line to place offers on desired units for several of his clients.
He reports that all 500 impeccably printed half-inch-thick brochures were gone by noon on the first day.
People lined up for hours to see the scale model with eight floor plans. The prices ranged between $1.2 million and $6.5 million.
Madeira is the grand finale of Marco’s 40-year condo building boom, and it deserves a standing ovation.
During that short 10 days, 237 reservation agreements were accepted for 89 of the 101 apartments available for sale.
Resume
The people reserving a unit indicated their choice of four possible apartments they would like, only one of which would be awarded, if they were shortlisted, wrote a check for $50,000 and attached a resume of whom they were and why they should be selected as a resident.
The executives at MassMutual Financial Group, developer of Madeira and the parent company of the Marco Island Marriott Hotel and Spa next door, huddled and made the choices among the potential candidates.
Many were Marco Islanders. Some were picked based on geography – Chicagoans, New Yorkers and international destinations.
Some were picked because of their interesting backgrounds. The company looked for buyers that would enhance the aura and lifestyle promised.
They kept 10 units for sale at a later date and kept two for executives involved.
A sanctuary
And no wonder people wanted to own in Madeira.
Here are some of the reasons listed in the brochure:
“Idyllic Island – Centuries ago, Madeira, a small island off the coast of Portugal, set the standard for detailed architecture amidst miles of wide open beaches. Today, Madeira on Marco Island recreates that feat with luxury beachfront living for only a fortunate few. One of the northernmost islands of the renowned Ten Thousand islands, Marco Island is an 11-square-mile sanctuary intertwined with the sun’s warming rays and nurturing Gulf waters. Very simply, Marco Island represents the epitome of island living with its rich Florida history and culture.”
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Premier Sotheby’s International Realty is pleased to announce that Michelle Burke-Phillips has joined as Managing Broker for the firm’s Gallery office in the Northern Trust Building in Naples.
Ms. Burke-Phillips brings more than 30 years of real estate management experience to Premier Sotheby’s International Realty.
“We are delighted to have someone of Michelle’s caliber and expertise on our team,” said Judy Green, President and CEO of Premier Sotheby’s International Realty. “Her leadership skills and shared vision for excellence will provide our agents with the resources and support to achieve even greater results.”
Ms. Burke-Phillips is a veteran of the Southwest Florida real estate market and a licensed real estate broker for more than 20 years. In Naples, she served as Managing Broker for the Coldwell Banker Residential Real Estate. Additionally, she has held the role of Vice President for the Sarasota Sotheby’s International Realty affiliate; Executive Vice President of Sales and Marketing for Lee Wetherington Homes; and Vice President of Residential Sales for Michael Saunders & Company.
“I am thrilled to back with the Sotheby’s brand and to be a part of the Premier Sotheby’s International Realty’s growth in the Naples area. Sotheby’s global reach and recognition combined with Premier’s respected reputation and performance make the combination of services irresistible to our affluent clientele.”
Ms. Burke-Phillips served as director on NAR and SAR’s Board of Directors as well as the Sarasota County Arts Council and the Sarasota Film Festival Boards of Directors.
About Premier Sotheby’s International Realty
Premier Sotheby’s International Realty is a division of The Lutgert Companies founded in 1984 by Chairman Scott F. Lutgert. The firm has offices strategically located between Bonita Springs and Marco Island with headquarters in Naples, FL. The Lutgert Companies also owns Lutgert Title, Lutgert Insurance, Premier Commercial, and Signature Sotheby’s International Realty, with three offices in the Sarasota region.
About Sotheby’s International Realty Affiliates, Inc.
Founded in 1976 to provide independent brokerages with a powerful marketing and referral program for luxury listings, the Sotheby’s International Realty network was designed to connect the finest independent real estate companies to the most prestigious clientele in the world. In February 2004, Realogy Corporation, a global provider of real estate and relocation services, entered into a long-term strategic alliance with Sotheby’s, the operator of the auction house. The agreement provided for the licensing of the Sotheby’s International Realty name and the development of a full franchise system by Realogy’s subsidiary, Sotheby’s International Realty Affiliates LLC. Affiliations in the system are granted only to brokerages and individuals meeting strict qualifications. Sotheby’s International Realty Affiliates LLC supports its affiliates with a host of operational, marketing, recruiting, educational and business development resources. Franchise affiliates also benefit from an association with the venerable Sotheby’s auction house, established in 1744. For more information, visit www.sothebysrealty.com.
