What You Can Learn From Ultra-Wealthy Buyers Before Purchasing a Home

Luxury home prices and sales have continued to increase this year. According to a July 2024 report by Redfin, luxury home prices increased year over year in the second quarter by 8.8% — more than double the rate of non-luxury homes.

In addition, while sales of non-luxury homes reached the lowest level in a decade, falling to 3.4%, the sale of luxury homes grew 0.2%.

Redfin also reports that the most expensive Q2 2024 home sales in the U.S. range from $46 million in Glenwood Springs, Colorado (Woody Creek) to $51.3 million in West Palm Beach, Florida (Palm Beach), to $62.8 million in Los Angeles, to $77 million in Glenwood Springs, Colorado (Aspen).

Many of these buyers aren’t just wealthy — they’re considered ultra-wealthy, and here’s what you need to know about them. “Ultra-wealthy individuals are commonly defined as those with at least $30 million in liquid assets,” explains broker Andrea Saturno-Sanjana of Coldwell Banker Warburg in New York City. And she tells me the largest percentage of these people have acquired their wealth through their own efforts, as opposed to inheriting it. Similar terms that real estate experts might use to describe ultra-wealthy buyers include ultra-rich, high-net-worth, and affluent.

And while each ultra-wealthy individual is unique, there are some general trends in their decision-making process as it relates to real estate transactions that every homebuyer can learn from. I asked several luxury real estate professionals to share some of the secrets of ultra-wealthy buyers.

They Understand Market Value

“The ultra-wealthy are well-informed of general market value well in advance,” according to agent Lorraine Baker at Coldwell Banker Warburg in New York. They tend to have multiple homes and view properties as an investment, even if it’s purchased for personal use. “So, the purchase price is quite important in most cases, and if they can’t get to their desired range, then the ultra-wealthy buyer walks away without a second thought,” Baker explains. (However, she admits that inventory shortages in today’s luxury market segment may affect their negotiating posture.)

Pate Stevens, an agent at The Agency in Beverly Hills, agrees that the ultra-rich are very knowledgeable about the finance world and various real estate markets. “These days I see more of them breaking into conversations on trends and interest rates, too — they know the costs of everything, especially when it comes to new construction homes and renovating,” Stevens says.

That’s because ultra-wealthy buyers tend to invest wisely in improvements. According to Manny Angelo Varas, CEO of MV Group USA, real estate developer, investor, and home builder specializing in multimillion-dollar renovations and new builds, ultra-rich buyers invest in thoughtful renovations to improve the property itself while multiplying its value. “The analysis of the terminal value of the property is essential to avoid under- or over-improving the property based on its location and what is necessary for it,” he says.

In fact, Varas tells me that in almost every project he undertakes, the consistent analysis is based on a certain investment – for example, $700 to $1,200 per square foot on renovation costs. “This helps us determine what the completed value of the property will be, ensuring the creation of equity within the property,” Varas notes.

In addition, Varas says ultra-rich buyers tend to know how to identify and appreciate good quality. “These buyers know to prioritize the quality of the product, considering aspects such as the origin of the stone or the use of stainless steel and anti-rust maintenance products,” he adds. In contrast, Varas explains that buyers with a budget of $2 million or less tend to splurge on recognizable brand names in areas like kitchen and bathroom cabinets, but they forget to look at the materials used.

They Consider Long-Term Goals

Another trait of ultra-wealthy buyers is that they know how to play the long game. “Many ultra-wealthy individuals think in terms of legacy planning, whether to benefit the next generations of their immediate family, or to fund the institutions and programs of their philanthropic endeavors,” explains Saturno-Sanjana.

Since they may own many homes, you might think their purchases are purely for enjoyment, like a beachfront or golf course vacation home, or an apartment in the heart of the city near nightlife and cultural attractions. “That is likely not the only reason: many ultra-wealthy purchasers also look at the future income and appreciation potential of the property,” says Saturno-Sanjana.

According to broker Tate Kelly of Coldwell Banker Warburg in New York, another way ultra-wealthy buyers maximize their investment is through art. “For example, they will also seek out properties that either contain or are well-built to display high-end artwork,” he says. “Art is more than just decoration; it is also a strategic investment, and being able to own a property that can showcase art either publicly on display or in a secure portion of the home is important.”

Varas agrees that this group of buyers tends to think about long-term value and equity. “Ultra-rich homebuyers think about the potential market value of the property, compared to average homebuyers, who are often more focused on their wants, needs, and family situation, rather than looking at the property as an investment asset in addition to a home,” he says.

They’re Not Emotional Buyers

A major first-time home buyer mistake is being an emotional buyer. And sellers should also check their feelings at the door when they put their home on the market. However, Peter Mac, director of estates division at The Agency in Beverly Hills, tells me that ultra-wealthy buyers do not get emotional in real estate transactions. “For them, it's more about whether the deal makes sense, and if not, they will move on, which gives them more leverage than the normal buyer,” Mac says. He adds that they also know that the competition is pretty slim, which allows them to pretty much dictate the terms. “The pool of buyers in the $20 million-plus range is obviously slimmer than that of $3 million buyers,” he explains.

The average buyer may get frustrated if they lose out on multiple homes and then overpay when another opportunity arises. “They typically also have some kind of urgency to get into their new house because they need to upgrade or their rate lock is about to expire, but it's very rare that ultra-wealthy buyers have any urgency,” Mac says.

As stated earlier, these buyers tend to know market trends, and that contributes to their decision-making process. “The ultra-wealthy approach real estate transactions with a combination of strategic insight and disciplined execution that sets them apart,” says Chad Roffers, CEO at Concierge Auctions in New York. He says they’re known for exhaustive research and due diligence. “They leave nothing to chance, meticulously analyzing market trends and future value potential to ensure informed decisions,” he adds.

And, they tend to practice patience. “High-net-worth individuals wait for the right opportunity that aligns with their strategic goals, ensuring their decisions are both financially sound and in line with their broader vision,” Roffers says.

The financial cushion that they have also allows them to avoid emotional decisions. Saturno-Sanjana says they can often adopt a take-it-or leave it approach. But she believes they’re not necessarily immune to sentimental decisions. “The competitive instinct to want something either difficult to attain or in high demand can lead to paying more for a property than originally intended,” she explains.

They Exercise Discretion

Understandably, potential buyers are excited at the prospect of purchasing a home – especially if they’re first-time home buyers – and this excitement may be hard to contain. However, according to Rob Thomson, owner of Waterfront Properties in Palm Beach County, South Florida, high-net-worth buyers aren’t broadcasting their intentions.

“They tend to keep their motivations and their thoughts much more private like a card player keeping his cards close to his vest,” Thomson says. “They know if it leaks out how badly they want to buy, that could translate into a higher price.”

Compass licensed real estate broker Vickey Barron agrees, adding the wealthier the client, the more likely they are to practice discretion. “They do not celebrate a sale before it’s signed, post on social media, or disclose where they want to buy,” Barron says.

They Focus On Location And Unique Aspects

According to Baker, the two most common characteristics she’s seen in ultra-wealthy buyers is that they focus on location and they focus on the unique aspects of a specific property. “They quickly gravitate to neighborhoods which are well-regarded and also offer the lifestyle they desire,” she explains. “Almost without exception, they’re looking for a home that is either singularly unique or has many desirable features that aren’t common in that price range, either indoors or outdoors.” Baker points to both location and uniqueness as the keys to enhancing longer-term value.

Jim Hayes, a licensed real estate salesperson at SERHANT, provides an example. He says ultra-wealthy buyers purchase real estate with the rarity of the asset as a guiding principle. “For example, does the home have forever views if it’s located in a city like New York? Is it situated along a park or a place where value will always be retained and not subject to extreme fluctuations based on its inherent qualities?” he asks.

Another person who agrees that focus on uniqueness is an important trait is Ben Bacal, founder of Revel Real Estate in Beverly Hills. “They prefer gated properties with as much land as possible and have specific preferences for high-quality finishes,” he says. In fact, Bacal explains that they like the type of custom, bespoke homes featured in Architectural Digest — or homes with unique aspects by notable designers or famous architects. “They are interested in the builder’s reputation, any previous lawsuits, and who did the waterproofing, especially for historic homes with provenance,” Bacal says. He notes that these individuals also take the time to ensure plumbing, electrical systems, and other home functionalities are in top shape.

They Like Homes With Safes

Here’s an interesting trait that any buyer or homeowner can adopt: According to Barron, ultra-wealthy buyers like homes with safes. “These range from walk-in safes to small ones that are discreetly hidden in offices, closets, and various nooks,” she says. Fortunately, this is a convenient luxury that won’t break the bank. “We can all benefit from tucking away valuables like passports, wallets, and personal belongings that can quickly go missing if a home is on the market,” Barron explains.

They Leverage Their Networks

The importance of hiring an expert realtor or broker can’t be stressed enough. In addition to the 8 things realtors want you to know before buying or selling a home, real estate salesperson Maria Kourepenos at Coldwell Banker Warburg says wealthy buyers typically seek out experienced real estate agents who specialize in the luxury market. “These agents are skilled negotiators with in-depth knowledge of luxury property values and may have access to listings that are not yet publicly marketed,” she says. In fact, Kourepenos notes these buyers have a network of professionals, like contractors, lawyers, and architects to help thoroughly evaluate properties for potential issues. “These professionals help buyers understand various costs that might not be immediately evident, including the cost of a big or small renovation, state and city transfer taxes, title search fees, open permits, and the negotiability of flip taxes,” Kourepenos adds.

They Tend To Pay In Cash

Kourepenos tells me that affluent buyers often pay in cash because they understand the power of an all-cash offer. “This enhances their negotiating position and strengthens their offer by eliminating finance contingencies, thus reducing the seller's risk,” she says.

Morgan Blittner, a realtor associate at Brown Harris Stevens Miami who specializes in luxury waterfront homes, agrees that ultra-rich buyers give themselves an upper hand by making all cash offers, bypassing the need for financing. “This allows them to offer speed of the purchasing process, in addition it gives them an edge in competitive markets,” he says.

Takeaway Tips You Can Use When Purchasing A Home

You may not have a team of professionals on retainer or be able to drop a bundle of cash on the table when purchasing a home. However, you can still implement many of the tips provided by the experts.

“When looking at a listing, any homebuyer can work with their realtor or a design build team to view other available or recently renovated homes in the area to understand the value of surrounding homes and how that will affect your own investments and long term value,” advises Varas. “Ultra-rich buyers and sellers know the guidance and decisions from the right team will add hundreds of thousands, or even millions, to the initial real estate investment.

Kelly recommends doing your homework when seeing properties. “Find out if other properties are available that aren’t publicly listed, and know the market in terms of trends and current pricing data, or work with someone who does so you know you are making a sound purchase,” he advises.

Along with making sure the home in question is well-built, Kelly also recommends speaking with your tax advisor and financial advisor to see how you can maximize your money when buying or selling. “Think long term; purchasing and eventually selling a home is not a quick transaction; it is an investment in your future,” he says.

Saturno-Sanjana also recommends playing the long game. “If there is an immediate need, such as an easy commute or access to schools, also consider the potential value of the property when those needs no longer apply,” she says. Saturno-Sanjana also recommends asking yourself if the property could become income-producing, and would it still be attractive to purchasers at resale. “Are there capital improvements you could make over time to help the property appreciate in value?” she asks.

And even though you can’t pay in cash, there are other things you can do to be more competitive. “Buyers can get steps ahead of other buyers by getting their loan secured with conditional approval so they can offer strong terms in a contract and truly be competitive with the cash buyers in the market,” advises Michelle Schwartz, managing partner at The Agency in Sherman Oaks, Calabasas, and Studio City in California. “We are seeing buyers not taking those steps in advance, and lots of deals are falling through due to interest rates.” Schwartz recommends doing the heavy lifting in advance. “And then, leverage your hard work by getting a home at a lower price, as sellers view them as a more solid buyer,” she says.

Forbes, Terri Williams