Why Do Luxury Homes Sit on the Market — and How Long Should It Really Take?

Lightly edited for clarity — filler words, false starts, and brief asides removed, including two passages trimmed for client privacy and timeliness; the substance of the conversation is unchanged.

Jerod Lee: Thanks for joining us — today we're continuing our luxury listing series. We're in episode five of six. This episode, we're chatting about why luxury homes sit on the market, what to do about it, things to consider, how to adjust, what buyer behaviors look like, the potential stigma around sitting on the market, and why presentation and marketing are so important. We're covering a lot of ground today, and we're doing it with Chase Hodgson from CrossCountry Mortgage. As always, we appreciate you coming on to talk residential real estate — and these luxury topics are becoming more and more of a conversation. For those that don't know, here in the Treasure Valley we haven't historically had a lot of luxury product — different types of luxury homes — so the inventory has been super low, and the definition of that inventory has changed over time. You've seen that growth from both the lending side and the appraisal side — Treasure Valley, Sun Valley, those areas.

Chase Hodgson: Yep — and McCall. To some degree we've always had luxury in some of the vacation spots, like McCall and Sun Valley, but even the definition and the level of those have changed over time. The biggest jump has been here in the valley, hands down. I think we talked about this in the first episode — when we hit that massive recession in '08, there were double digits of homes valued at a million dollars on the market when it hit, and a year before that we didn't have any. We saw that massive jump, the crash set us back for a while, and now we've caught up — you're seeing some incredible homes being built here in the valley now. It's pretty fun to watch.

Jerod: Not only the types of product, but the styles and the niches.

Chase: And the communities — some of these upper-end communities they're building are just wow. Cool to watch.

Jerod: We've had the luxury ranch and acreage properties for a long time. Now we're seeing a lot of amenity-type communities — tennis, pickleball, golf, what have you — and high-caliber luxury too. Not just "Idaho luxury," but very high-end.

Chase: Very high-end — imported everything. And we're seeing designers and engineers from out of state, more nationally known in the space, doing work here now. It's fun to watch. Definitely a big change.

Jerod: I think I saw Tamarack's golf course got some award — a national one, which kind of shocked me. Impressive.

Chase: I'd love to see what that does to the valley. Although — I lost my favorite fishing hole because of an article in a magazine years back. Can't go back. Too populated. Brutal trade-offs.

Jerod: Well, let's chat a little about why luxury homes stay on the market. The buyer pool, when you sell a home, is kind of everything — these are the people who are able to and want to buy your property, and it's a finite pool. In the entry-level and mid-tier price points the pool is bigger, and it's about exposure, as we've talked about in other episodes. But as your price goes up and your niche settles in, that pool shrinks — first by virtue of price, and then again by virtue of amenities and buyer interest.

Chase: When I was an appraiser, I always thought about it this way: the more money you spend, the more particular you're going to be about what you're getting in return. Everybody does it — whether it's a vehicle or anything else. So even though you may have a beautiful luxury home with all these amenities, they may not be the specific amenities that already-pared-down group of buyers is looking for. I want a sports car, I want a yacht — the more I'm spending, the more personalized I want it to be, the better a fit I want it to be. And that smaller buyer pool is just going to require a longer timeline to sell your home.

Jerod: And I think it's fair to say it's significant — and probably becoming more significant, because our price points are going up. We're not just talking one-, two-, three-million-dollar properties anymore; now we're talking double-digit-million-dollar properties. Not everybody can buy that, or wants exactly what you have.

Chase: If you spend that much, you've probably got some ideas about what you want it to look like and what you want in it. It's always been interesting to me — now, especially on social media, you see that so-and-so's house went up for sale, what they paid for it, what it ended up selling for, how long it took. It can get pretty crazy in those double digits of millions — what those buyers are and aren't willing to forgo to have that property.

Jerod: The one thing I wanted to make sure we communicated today is this fine line of days on market. In the entry and mid-tier price points, a stigma can be acquired very rapidly today. Since the hot market years, people perceive that homes should be sold in days and weeks — not weeks and months. When that's not happening, a stigma can attach. There's not quite the same stigma on luxury homes, because buyers get it — there aren't as many people buying them. But you still have to be aware of it. You can't miss the mark on price, carry an unrealistic or questionable amount of days on market, and expect buyers aren't going to wonder why. At some point, they will.

Chase: I would think so — if it were me. And the other thing is, that's always a gauge for you as well: if we're on the market too long, we may have done something wrong in the pricing, or the market has shifted while we've been marketing the property. Being able to make those adjustments — that's typically a key piece of information about how things are going. And with higher-end properties, I don't even know what the average marketing time is — with luxury it's hard to say, because you could be anywhere from two million to fifteen or twenty, and each of those is going to have a different statistic. It definitely gets more difficult as you go up.

Jerod: And that's our job — to figure out which price-point tiers are seeing a significant, notable increase in days on market, and what to expect from that. Each tier carries its own realistic, reasonable amount of time on market, and the property type gets more niche as the price climbs.

Chase: And higher-end buyers can be less affected, right? It's not a shot at anybody, but the more money you make, the less you can be affected by the day-to-day happenings in the economic world.

Jerod: And that depends on price. A listing at the lower end of the luxury range could have a different percentage of buyers who are aware of what's going on with interest rates, the economy, their job field. You get to the two- and three-million-dollar mark, and my experience is a smaller percentage of those buyers are affected by those trends.

Chase: That concern goes down as the price point goes up. But there are just so many things that affect what you're trying to do with these properties — knowing all of it, and being able to analyze it, is super important to the clients.

Jerod: That's our job — to factor in where these folks are coming from, what's going on in that market, whether the percentage of buyers sensitive to conditions is bigger in the relocation markets or not, and whether the market is shifting locally — more inventory coming on, or less. But however you slice it, we've got to appreciate that — just as in the other price points — the first couple of weeks matter. We've talked about presentation being the strategy in the luxury space, and that first impression, those first couple weeks on the market — that's when the pool is the largest, because everybody that can buy is looking. After those first couple weeks, it's whoever happens to come onto the market, which is never as large as that initial buyer pool. So you have to be aware of that first impression: how you go to market, how it's perceived, and did you answer the questions. I'm a big proponent of providing as much detail as you can — we put dimensions on our listings for things like garages, because you don't want the buyer who already knows what they need wasting time on a garage that won't fit their toys. You want people to get answers quickly so they'll go look at your property. Check that box, check that box, check that box — let me go look at the house. So when I say presentation, it's all of that: on point, at the right time, priced well. That's the formula.

Chase: I love it — these properties are fun. The interesting thing is that a lot of them were built custom for someone. We're starting to see more specs, but historically the majority of luxury homes that came on the market were built specifically for a person. Think about how times change and how design changes — now you've got a property you're trying to sell for three million dollars that's maybe from the period when the Italian look was in, and now it's not. Marketing all of that is a big challenge, because the style gets very specific, and you have to find the right characteristics that will help sell the property to the right person. Sometimes I don't envy you, my friend.

Jerod: You said it earlier — it can be kind of fun. It transitions from a science to an art. We've talked about this in earlier episodes: you comp and price an entry-level or mid-tier home and it's mostly what we'll call cookie-cutter — comps are straightforward. As the price points go up, it becomes more of an art. And in these high-end homes, you're really trying to figure out: yes, I've got the buyers, but where are they? Are they specifically interested in this property? How will they receive it? How do I present it to them, and when? Are those buyers even in this state? And what's going on in their market?

Chase: Here's a personal question. I've seen agents use a pocket listing — market it to their network — as something that's going to hit the market, to help generate excitement for the property coming on. It must be difficult to generate that excitement when it's going to stay a private sale, right? I've only seen the pocket listing used to build anticipation for an upcoming listing.

Jerod: There's a lot that comes around that. We've got NAR — National Association of REALTORS® — requirements we have to meet, and multiple listing service requirements we have to be considerate of when we market that way, including the Clear Cooperation Policy that NAR has. There's a lot to it. What are the seller's specific requirements? Does it make sense to go private? Does it make sense to go on market? And what are the trade-offs? We've talked in previous episodes: going private typically — not always — equates to a lesser sales price, because you've got fewer buyers looking at it, and you're not generating that demand and competition.

Chase: Even when there's no direct competition, there's perceived competition — "I know there are tens or hundreds of people looking at this property," not thousands. Do you feel like it really comes down to your network? With private listings, your expertise and your network are your personal exposure avenue.

Jerod: Yes — and working in a larger brokerage and office matters there, because the office exclusive has pretty much replaced the pocket listing. It's just like it sounds: you're marketing within your office. And there are legal and ethical considerations about who you can share it with and who you can't — fair housing comes into play, because we have requirements to make sure all buyers have access to properties. There are real nuances to consider.

Chase: That's a lot.

Jerod: As far as staying on market: say you've tried to do all of that right, and you missed the mark for some reason — the market shifted, or something changed in the market where we thought the buyers were. A trap comes into play that we call the death spiral — the pricing spiral — and the job is getting ahead of it. How do you make price adjustments? What signal does an adjustment send? How do you track whether adjustments are working? If you've identified that price is the issue and you've got to make the adjustment — how deep do you go, and when do you make it? Don't make it on a holiday weekend. A little "pop" is perceived as rude by potential buyers — "you just did that to get attention; you wasted my time" — versus what's actually going to get traction. Is your traffic going up? If we were having one showing a week, did that price reduction turn into one and a half or two showings a week? That's the measure.

Chase: Think about it in dollar amounts. If you're buying a $400,000–$450,000 house, a $10,000–$20,000 price reduction could be significant — that could change things for the buyer, or a seller credit in that amount could. On a three-million-dollar property, ten to twenty thousand isn't even going to register — it's a fraction of the price. Simple math: it won't affect their purchase whatsoever. So if you get to that point, the adjustment has to be fairly substantial to move the needle — especially for buyers who already came, saw it, and didn't buy.

Jerod: It's like making a thousand-dollar adjustment to a $400,000 or $500,000 home — you just did that for visibility. Thanks for wasting my time; move on. And then there are tier considerations. Everybody has some budget — so is the adjustment significant enough, and is there a buyer threshold we should go below, so that the people already looking are more interested and there are now more people who weren't seeing it before the reduction?

Chase: Look at the MLS — listings are broken into those price sections, and they're built that way because of buyer habits. Even on a private sale, buyers think in thresholds — "we're not going above four-ninety-nine." You need to know where a change will actually move the needle for people.

Jerod: The good thing about luxury is a couple of things. Sometimes the threshold is self-imposed — those buyers can push up out of a tier, because they're making money. But when you drop into a tier — maybe the tier they already had in mind — now you're even more attractive. Price it right, time it right, present it well. And the last topic on our overlay: a good understanding between the agent and the seller. A good conversation around all of these things, so the seller feels confident — what the buyer pool looks like, where it's coming from, how buyers will receive your property, how they'll respond to price adjustments, and the fixed objections you have — the things you can't change — and how to correct the price to adjust for them. Because that's a requirement for luxury home buyers: if I'm going to overcome something, I'm going to do it at a price.

Chase: And I'd assume — correct me if I'm wrong — it's also about being ahead of that throughout the transaction. Market shifts happen in the middle. Knowing: do you want to stand pat and weather this, or do we need to make adjustments? It's not just an upfront "here's what we're going to do" — the longer the marketing time, the more probability there could be big changes in the middle of that transaction.

Jerod: That's why we as agents have to stay highly attuned to all of it. The discussions around a listing can start weeks — in some cases months — before we go live, while we do what the property needs. We've talked about the trend line for that type of property, and we're going to try to match that trend when we go live. Did something happen while we were preparing that moved the trend line up or down? Then we correct accordingly. Or we're on the market and things happen — interest rates, gas prices — and the buyer pool shrinks a little for whatever reason. How do we adjust, and when? Because if we wait too long, we've got a stigma from days on market anyway.

Chase: Piece of cake, right? Lots to think about, and lots to communicate about.

Jerod: It was last episode or so we talked about how it can be fun — the art side of things, and how you massage the status of the listing as things adjust and change.

Chase: It goes along with everything — being challenged in life holds your attention way better than doing the same thing over and over. That's probably partly why we're in this industry.

Jerod: One thing I'd say to close: every property, especially in this space, is personal and specific — the property you have, the objectives you have. We welcome the opportunity to discuss what that looks like, how we can help, and what strategy to employ: when you go on the market, at what price, or whether you go private initially and transition to the market. A no-obligation consultation can go a long way.

Chase: Absolutely.

Jerod: Well, as always, Chase, we appreciate you coming on — bringing your appraisal experience, your lending experience, and your market knowledge. You're for all intents and purposes a native here, so you know what's been going on in the valley and what's going on now. We appreciate the insight.

Chase: Absolutely — I enjoy it. Love the conversations, as usual.

Jerod: All right — other than that, we'll wish everybody a blessed one. Take care.