From this week’s Business of Life

By: Laura Bianchi April 21, 2008

When the owner of a $1.3-million house in Old Town insisted on a pre-approval letter for every potential buyer who wanted a showing, Mario Greco cringed.

“I can understand if it’s a $15-million property, but at a million-three, it cuts off legitimate traffic. I had potential buyers who didn’t want to go through the rigmarole,” says Mr. Greco, an agent with Rubloff Residential Properties on North Halsted Street.

Partly because of that, he says, the house took nearly four years to unload.

Owners of million-dollar-plus properties make just as many mistakes when they sell their homes as their less affluent neighbors — with even more costly results, say Chicago-area brokers.

Most agree that given the current plunge in the market, the biggest error is pricing the property too high.

“Prices are retracting, and sellers aren’t believing it yet. They stand firm,” says Leslie Senne, agent with Property Consultants, 2200 N. Damen Ave. “Re-educating them is a big challenge for all of us.”

Another misstep: expecting to recoup the cost of very high-end amenities and décor.

Lynn Purcell, a broker with Baird & Warner in St. Charles, recalls a St. Charles homeowner who opted for $20,000 in wrought-iron spindle railings throughout her house. When she put her house up for sale, “the appraiser gave them nothing” for the upgrade in terms of value, a big disappointment to the owner.

In another case, Ms. Purcell showed a $1.5-million house in St. Charles with a “killer” lower level: top-grade bathroom faucets, tile and custom vanity; a huge cherry bar with top-of-the-line appliances; media room with built-in entertainment cabinetry, and deluxe carpeting everywhere.

The owners had spent at least $65,000, but the selling price did not cover the costs. “Carpet is carpet” in the appraiser’s eyes, she says. “The upgrades help you sell it, but you don’t necessarily regain the cost.”

Kim Jones, an agent with Baird & Warner’s North Michigan Avenue office, sees the same thing on the Gold Coast.

“I just sold a town home for people who had spent $90,000 on inlaid doors and more on intricate marble work,” she says. “Twenty years later, it’s very dated,” but the owners couldn’t understand why they couldn’t recoup that money.

Avant-garde decorating can repel high-end buyers, says Connie Atterbury, a Koenig & Strey agent on the Gold Coast.

“Their designers go over the top, and it limits the number of people who will even consider buying,” she said. “I was showing a place recently where the bedroom was purple, the drawing room orange. It’s better to neutralize.”

“Helicopter” owners are another turn-off, Ms. Jones says, making buyers feel rushed, inhibiting questions, expressing concerns or investigating closets and cabinets.

“They want to stay during the showings to make sure the home isn’t damaged, or that the client isn’t taking pictures of the Renoirs on the wall,” she says. “But if they hover, it is hard for me to sell it.”

Seen on the street: The multimillion-dollar mistake of not tidying up the grounds around high-priced Near North Side homes. Photos by John R. Boehm

Poorly maintained properties are another issue, even for multimillion-dollar homes, says Thad Wong, co-founder and CEO of @properties Inc. in the Fulton Market district.

Some owners are so smitten with their house that “they allow it to be shown without being perfect,” he says. “In today’s market, there is no room for error or sloppiness; buyers are demanding ‘perfect’ in high-end properties.”

Ms. Atterbury says some homeowners become accustomed to living with imperfections and start to overlook them, and some agents are overly timid about pointing out needed improvements. “They have a responsibility to make the seller aware, but they don’t want to hurt the homeowner’s feelings.”

Ms. Atterbury says even 8,000-square-foot homes need to be staged, or buffed up and neutralized so they appeal to a broad range of buyers. An interior designer is brought in to rearrange furniture, hang art and recommend spruce-ups like painting, landscaping, caulking or deep cleaning.

Million-dollar-plus sellers think, ” ‘At this level, (buyers are) going to paint it anyway, they’re going to replace the carpeting; I don’t need to,’ ” says Ms. Atterbury. “But you’ll get a better price if you do.”

Perhaps most startling, some sellers strip out top-quality light fixtures and hardware in their home and replace them with inferior versions, Ms. Atterbury says.

“They assume the new buyer will come in with their own decorator and redo it,” so they might as well keep the items for their new property. But a stripped property, needless to say, doesn’t show well.

“You either sense high quality and value, or you don’t,” she says. “It cheapens the property in the eyes of the buyer.”

©2008 by Crain Communications Inc.