Every week, we ask an Atlanta real estate professional for their thoughts on the top trends in Atlanta real estate.
This week, we talked with Karen Rodriguez, the director of sales for The Residences at Mandarin Oriental in Atlanta and one of the top five producers at Dorsey Alston; since joining the firm, Karen has listed and closed more than $150 million in Buckhead high-rise condo sales, a success rate that has led to fellow Realtors and the media dubbing her the “Buckhead Condo Queen.”
Atlanta Agent (AA): Do you find that all-cash sales are still prevalent in the luxury housing sphere, or has financing come back?
Karen Rodriguez (KR): The financing available for condos is typically harder to get, especially in the luxury market after the downturn. Most luxury buildings today are going to have either a hotel, retail or commercial in the building, and there is still a Fannie Mae guideline that prohibits them from guaranteeing loans on buildings that have more than 25 percent commercial – they call it “non-warrantable” – so many conventional lenders, for the last five years, have been very hesitant to provide financing for such buildings, and most luxury buildings have commercial components.
So with all that in mind, it was all cash buyers a couple years ago; we just couldn’t find financing. However, that has started to change. For my Ritz-Carlton project, which sold out last year, we had a lender who wanted our business because we were getting so many buyers who were looking for financing in the higher-price point. The lender offered a portfolio loan, and it ended up being very beneficial for the lender, because half the buyers ended up financing and they got all of that business.
Lenders have started to see that business potential, and more are now willing to lend in the luxury condo market, because the buyers are extremely qualified. They could pay cash if they wanted to, but financing is still cheap and they’d rather not tie up all their cash. So I’m actually seeing 80 percent of my buyers wanting to finance their purchases.
AA: How has homebuilding been, in luxury housing?
KR: It’s been nonexistent. In the Atlanta market, there are really no new projects currently under construction. In the suburban areas of Atlanta on the housing side, I see tons of new neighborhoods popping up on the luxury side, but in the in-town market, it’s still very difficult for condominium developers to get financing; it’s still easier for them to get apartment financing, so what we are seeing are luxury towers being built for luxury high-rise apartments.
Those may eventually convert, and it would make sense, because the condo market has been on fire the last three years with inventory being so low. So if those apartment developers were smart, they’ve already built to condo standards and are ready to jump in and supply that need in the next year or two, because there’s such a void.
AA: Finally, what’s the most difficult aspect of marketing luxury homes?
KR: In general, marketing and selling to the luxury buyer is unique in that you’re providing something that they want, not necessarily something that they need. They do not have to buy that $2 million, two-bedroom unit; they’re buying it because they want it. So, if you provide them any doubt, from the very first visit to the day that they close (and every other visit in between), the experience has to be positive and consistent – doubt and a $2 million price tag do not go well together. The high maintenance aspect of it is quite different from someone selling to a first-time homebuyer who wants to purchase in a certain school district, for example.
That can be difficult, not only reaching them but also being extremely educated. These clients often negotiate for a living in high-paying, high-power jobs, so everything has to be completely buttoned-up all the time – and that can be exhausting. It’s my niche and it’s what I work with best, but there’s a lot more to it than putting a lockbox on the door and thinking that somebody is going to buy your unit. You’re selling lifestyle as much as you’re selling the actual space, and that’s a full-time, non-stop act.