Why it’s EASIER to sell a $3,000,000 house vs a $300,000 house

What's up, you guys? It's Graham here.

So, I get a lot of comments from aspiring real estate agents who think that the higher the price point, the more difficult the deal. Some like dealing with really high net worth buyers or sellers. Just because you're in a certain price point, it's got to be more difficult.

But in fact, from my experience, it's actually way easier selling a more expensive home than a less expensive home. From my experience, it's actually way easier to sell a three million dollar home than a three hundred thousand dollar home. And this is why.

And this sort of thinking, by the way, almost derives from the same mentality of like putting a luxury home on a pedestal or thinking it's almost something that you have to work your way up to when in reality, it's really no different than selling any other home. So, I have sold both. By the way, the least expensive home I've ever sold was a hundred and twenty-five thousand dollars, and if you count myself, I've represented myself on a sixty thousand dollar deal.

Now, on the flip side, the most expensive home I've sold is seven million dollars, and most of the business I do is somewhere between two million and four million dollars per sale. So, from my experience, and this is over nine years of doing real estate with over 120 million dollars worth of sales, is that the higher the price point, generally speaking, the easier the deal.

I've also noticed a lot of common traits between the multi-million dollar clients I’ve worked with, and it's almost interesting to think that, in my opinion, some of these traits are what led them to be successful enough to actually buy these homes in the first place. Now, quick background here.

But usually when you're dealing with a high-end market, the ones that take a long time to sell, or just don't sell at all, are usually the outliers in their price range. They're the ones that often price themselves in a different league from the competition or offer something else that's not customary for the area.

Here in LA, that might be having a huge lot or being overbuilt for the land or having some really specific characteristics about a house that just aren't going to appeal to every buyer out there. It could also have something that brings it to a price range where all of a sudden you're competing with homes in a different area that maybe is a little bit better than the one it's situated in.

It could also be a very specific remodel that is so specific that it only appeals to a small fraction of the buyers that are out there looking. Also, when you get into the mega stratosphere of luxury real estate, which could be like 10 million, fifteen million dollars and up, there's just a smaller pool of buyers out there that can afford to buy a home like that in the first place.

So, obviously, it's gonna take a little bit longer to find that buyer and sell. But besides that, dealing with the multi-million dollar buyers has been the easiest ones to work with. So, I'm gonna be making a lot of broad generalizations here, and obviously, there are gonna be exceptions to people who don't always fit this, but this has been my experience time and time again in my market of Los Angeles.

So, let's start with a type of buyer who's buying a multi-million dollar house and how they can often be the easiest people to work with. So, to start, from my experience, these buyers are often extremely specific about the type of home they want. They know exactly where they want to be, how much they want to spend, exactly what finishes they want, exactly what style they want.

It's less about showing them like a hundred different homes until they kind of figure out what they want, because they already know usually exactly what they want. So, it's less about trying to show them a million different things and more about just finding a home that fits their expectation as quickly as possible.

It fits their price range, and this whole process rarely involves me ever having to sell someone on something. I mean, I'd like the least salesy person possible ever out there in the history of the world. I feel like a lot of these homes just sell themselves.

So, in this caliber of home, it's really just about narrowing down exactly what they want using the least amount of their time as possible because time is money. And instead of showing them fewer homes that fit exactly what they want, it's really as simple as that.

There's no pressure, there's no sales tactic, there’s very little to do with it. It's just like, "This is what you want? Oh, this is it! This matches what you said. Boom, done!" And the same goes with the sellers. Oftentimes, they know exactly what they want for the home, and they could afford to keep the house until it sells at that range.

You know, I've known sellers to keep million-dollar homes empty just until they get the price they want, and they could totally afford to do that, and it doesn't matter to them. Usually, in a good seller's market with a lot of marketing, you're able to achieve that price.

Now, this is not to say that some sellers are just wildly optimistic about what they could get. I'm not really including those. I'm including the people who realistically can price their home and know what they want to take.

It's as simple as just bringing them an offer that meets their expectation. Now, I've also noticed that a lot of my million-dollar clients are extremely decisive. There's usually very little hesitation when they find something they like; they go for it.

I know so many buyers who have lost out on deals or end up paying way more money than they should have because they thought about it for too long. What usually ends up happening is that they think about it for a little bit, and by the time they're ready, there are four other offers on the table, and now they have to compete with all these other offers and risk losing it.

The buyers that I see that are usually the best are the ones that immediately write an offer. They know exactly what they want; they go for it when they see it, and it's done. This saves us a ton of time, and just being quick to move on a deal is usually what ends up winning the deal.

The next thing that I notice is that a lot of these buyers are extremely well-educated, and oftentimes, this translates into an education in business, real estate, and economics.

So, usually, there are two different types of clients that I've noticed that are really well-educated. You get the first type, which are really well-educated, know the real estate market, know what's out there, know what to expect. And you also get the people who are really well-educated in their own certain topic.

Because of that, and because they understand their own niche really well, they rely on you because you're the expert on your niche to go and sell the home for them. So, in either way, you end up winning because you either have someone who knows the real estate market really well and who knows business really well and has a realistic expectation of what they can get, or you get someone who trusts you entirely because you're the expert in your field.

Just like they're the expert in theirs, and they wouldn't want somebody getting too involved in what they do and telling them how to run their business the best because you're the one who knows it. Now, I know I'm making a lot of very broad generalizations here because it’s not every day that you get a client that knows the real estate market as much as you do or lets you do whatever you want because they just trust you entirely and want you to do whatever you do best.

But it happens a lot more than what you think, so because of this, it makes it a lot easier when your client understands exactly what they can expect and goes into it pretty prepared.

So, one of the biggest things with homes in this price range is that any repairs that come up are rarely ever detrimental to the deal. So, let’s say you have a $300,000 house that needs $100,000 worth of repair work. Chances are, in that scenario, the buyer and the seller just can't afford to split the work or to spend that much money, and they're at a standstill.

Rarely does that ever happen if you're dealing with a three million dollar home that needs a hundred thousand dollars of repair. Usually, the buyer and seller are in a financial position just to work it out, close the deal, and move on.

And the other thing I noticed too is that usually, a lot of the repairs are the same price in a $300,000 home as they are in a three million dollar home. At least here in Los Angeles, there's very little difference between the two except the cost of land.

That's the only difference for a lot of these homes. That price is something at three million dollars or three hundred thousand dollars. You can find an amazing $300,000 home an hour outside of LA. You put that same property right in the smack-dab in the middle of Beverly Hills, and that same thing all of a sudden is six million dollars.

So, for a lot of these repairs, it's exactly the same given the cost of the house. It's just the cost of the land that really bumps up the price.

Now, obviously, the home you're selling has like a marble bowling alley or has some sort of a golf course inside with like an indoor pool and the master bedroom. Like, obviously that stuff is gonna cost significantly more.

But I'm saying on average, for a lot of these homes, cost repair things is pretty much the same or very similar. So, again in this price range, people can afford to negotiate a win-win scenario where a $100,000 repair or a $50,000 repair or a $20,000 repair is not gonna kill the deal. It's not that detrimental, and most people can just afford to negotiate it. Both parties win and both parties close the deal.

Now, the last thing in this price range that makes it very appealing is the ease of financing that a lot of these buyers have when they're buying multi-million dollar homes. Usually, from my experience, when a buyer is buying something three, four, five million dollars, they are overqualified to buy a home like that.

Not only that, but I get a ton of all-cash offers, where financing isn't even an issue, and that makes it so easy going into a deal—having no loan contingency, no appraisal contingency, having a quick close. That's a huge competitive advantage over any other buyer.

And as a seller, you want a buyer that's gonna pay all cash because you don’t have to worry about a thing. Now, when you're dealing with people on a lower price point, usually financing is a big issue. Sometimes people stretch themselves a little bit too far; sometimes their debt to income just is a little bit too high to be able to buy the house they want.

But for a lot of these people, when they're buying a five million dollar house, money is not really an issue. It's just about going through the motions of the process of getting a loan.

And I actually don't think I've ever had a deal fall through because the buyer couldn't get financing on a multi-million dollar deal. I don't think I've ever seen it.

So, to me, because of these reasons, selling a three million dollar house is a lot easier than selling a three hundred thousand dollar house. And not only that, but you end up doing the same work selling a three million dollar house as opposed to a three hundred thousand dollar house—if maybe a little bit less work because the buyer is so specific about what they want.

It's just about bringing them that specific deal where the seller knows exactly what price they want, and it's just about bringing them that offer. It's pretty much very similar work, except the commission on that is significantly larger on a higher-priced home.

Selling three hundred thousand versus three million is the difference between making seventy-five hundred dollars in commission versus seventy-five thousand dollars in commission for pretty much the same work.

Now, keep in mind the higher price homes do have their own challenges as well. It's not as easy as they make it seem just to like find this magical house that the buyer loves or bring in a price that the seller really wants that the seller gets. It's not as simple as when I make it seem.

However, from my experience, doing that is a lot easier than doing 10 $300,000 deals, which would equal the same commission as one three million dollar house.

By the way, don't get discouraged if your area doesn't have multi-million dollar homes. Just keep in mind it also balances out when you factor in cost of living.

Like, if I want to go and buy a house in West LA, the minimum for a very small little three-bedroom, two-bathroom bungalow is probably gonna be about 1.2 million dollars. Compare that to anywhere else; you’re probably gonna get the same thing for about 200 grand.

So just keep in mind that even though the commissions are much larger, so is the cost of living. So I need to sell way more homes to be able to buy that 1.2 million dollar house than it would in Kansas, for instance, when I can sell fewer homes and still buy the same amount of house, if that makes sense over there.

So, my recommendation is often just sell where you are, or maybe go within a 30 to 45 minute radius and pick the most expensive area that fits that you want to work in. This would probably be the best course of action if you want to get into a higher price point without just picking up your entire life and moving to like California or Manhattan or San Francisco.

I've totally recommended just kind of stay where you are, but find the more expensive areas within your own area.

So, as always, you guys, thank you so much for watching. I really hope this video is helpful, and I hope it helped explain why for me, selling a three million dollar home is easier than selling a $300,000 home.

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