Trophy real estate includes properties in the top 2.5% of listings in terms of location, demand, or other highly-desired attributes that increase their market value. The term, which referred to the best properties on the market, was defined by Bill Mundy in his 2002 article in the Appraisal Journal.
This article will help you understand what constitutes a trophy property, the pros and cons of purchasing it, and how you can enhance your listing if you’re selling such a property.
What is a trophy property?
A trophy property is a piece of real estate whose high value is derived from its uniqueness in terms of history, build, or other similar features that make it attractive to high-net-worth individuals. Parisa Afkhami, a real estate agent at Coldwell Banker Warburg, says that trophy properties are characterized by their “scale, beauty, impressive architecture, and location.”
Aside from their high price, what distinguishes these properties is the immense competition to own them. They are difficult to purchase, so once they are sold and off the market, they often receive considerable media attention.
Trophy properties can be residential or commercial. Well-known commercial trophy real estate includes The Rockefeller Center, The Empire State Building, and Les Galeries Lafayette shopping center. Citadel CEO’s $238 million Central Park facing Manhattan condo, the most expensive home ever sold in the United States, is a good example of a residential trophy property.
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Three factors that determine a trophy property
There are many different facets of a property that determine its value. However, most experts use the following three factors to identify a trophy property:
1.) The property is in a good location
Real estate agent Christopher Totaro states that location plays a significant role in determining trophy properties, citing upscale locations like Beverly Hills, Malibu, Aspen, and Manhattan as having a higher probability of becoming trophy real estate.
However, location is a multifaceted variable, and what constitutes a good location can be subjective. Being in a bustling neighborhood in a central metropolitan area can add significant value, as can being at a waterfront location.
While good location can be interpreted to mean good access, many coveted properties such as “trophy” ranches in Wyoming and Montana do not meet this criterion. In fact, remoteness and lack of accessibility can often be the key selling points of a trophy property.
2.) The property is unique with a high demand
Scarcity is another distinguishing factor of a trophy property: it must be hard to obtain. Since these properties are difficult to purchase, they generate immense hype, similar to that surrounding vintage cars, high-end art, and diamonds.
The term trophy property is often misused in real estate marketing. A $7 million property may be marketed as a trophy asset. However, this would be misleading if many similar listings were available in the market.
3.) The property is expensive
Undoubtedly, a trophy property is expensive. However, its price tag is not always calculated as per market value.
In a typical real estate transaction, the market determines the price range within which the sale price is finalized. All negotiations take place within this fixed range.
Transactions involving trophy real estate are rare, so analysts make valuations on a case-by-case basis. These experts consider extensive data, both symbolic and objective, before arriving at a recommended listing price.
What are the pros and cons of trophy properties?
Trophy real estate includes the most upscale properties on the market that are in high demand. While there are several perks to owning a prized piece of real estate, there are also a few drawbacks to consider. Let’s delve into both the pros and the cons.
Pros of a trophy property
It’s easy to understand the prestige of owning a trophy property. They are also a good investment because they can often be sold at a premium.
- It’s a rare and valuable asset
Only a tiny fraction of the population can afford to purchase trophy real estate. Its appeal is therefore derived from its unattainability by most of the population as well as from the prestige of possessing such prized real estate.
- It’s a good investment for individuals with a high-net-worth
While trophy properties have a high barrier to entry, they can be a good investment for those possessing considerable wealth. Investing in real estate comes with several benefits, like long-term security, tax advantages, protection against inflation, and portfolio diversification.
- You can resell it for a premium
Given the high demand and limited supply of trophy properties, they can often be sold at a premium to the next buyer.
Cons of a trophy property
Purchasing such a high value property does come with a few risks you should consider, as discussed below.
- Its price could fall
While real estate typically appreciates, its price can fall unexpectedly due to unforeseen circumstances. This was evident in 2020 when real estate prices fell due to the COVID-19 pandemic.
However, trophy property prices recovered quickly, according to the Knight Frank Prime International Residential Index. The value of the index increased by 8.4% in 2021, up from just under 2% in 2020. This was the highest annual increase since the index was created in 2008.
Moreover, among the 100 luxury residential markets tracked by the index, only seven locations saw prices decline in 2021, while 35% of these locations saw prices increase by 10% or more, showcasing the strength of the market even during the pandemic.
- It can be difficult to obtain
Since there are a limited number of trophy properties in the world, there is often immense competition to buy them.
- It can be hard to sell
Trophy properties are usually large and sport hefty price tags. Since they only cater to a niche market of high-net-worth buyers who can afford them, they are hard to sell.
However, you can make the selling process easier by using ingenious marketing tactics, such as capturing drone videos of the property.
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How can drone footage help sell a trophy property?
Showcasing a trophy property in the best possible light is key to attracting more visitors and selling at a favorable price. Getting high-quality aerial shots of your property used to be expensive, given the need to hire helicopters and airplanes to get the footage. However, drones have now made this process much more budget-friendly.
Drone footage offers several benefits when compared to in-person visits. It provides a top-notch tour of the property’s exterior, shows the property from multiple angles, allows potential buyers to view the property independently of others, and offers prospects the convenience of viewing the property anytime and anywhere.
Drone photography is, therefore, discreet, safe, budget-friendly, and convenient. However, if you’re still unsure about getting drone footage of your trophy property, you should consider the following:
- It helps contextualize your listing
The value of your trophy property depends on several factors, including the neighborhood, surrounding water bodies, and park views. Aerial shots from a drone contextualize your listing and help potential buyers better understand the varied facets of the property.
- It enables you to sell a lifestyle, not just a property
Aerial shots provide immersive and dynamic views of the property, adding to its appeal. These drone-shot images and videos do more than just capture a property’s physical attributes; they help potential buyers visualize the lifestyle that comes with it.
- You can use it to create a virtual tour
You can string together multiple images and videos from a drone to create a captivating virtual tour of the property. By combining high-quality footage with soothing music or a voice-over, you can develop a professional video highlighting the interesting features and history of the property.
This video can be shared as needed, saving the agent and the seller the hassle of organizing multiple showings of the property. It also helps buyers reduce the number of viewings they might otherwise need to partake in to make a purchase decision.
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Why should you choose Up Sonder for your real estate drone footage?
Up Sonder operates a marketplace of FAA-certified drone pilots in over 1,000 cities across the United States. Our pilots have over 415,000 hours of flight experience handling drone projects for various industries, including real estate, and are trained to highlight the property’s best features, being masters of selective omission. By being mindful of details like timing the flight to optimize for the best natural lighting, they can help you capture the imagination of prospective buyers.
The invaluable drone footage our pilots deliver helps you enhance your real estate listings while lowering your operational costs. Our easy online messaging feature and drone data transfer services also make direct communication with our drone pilots simple and convenient. In addition, we take care of the ethical obligations that come with flying drones and adhere to the latest FAA Drone Rules.
Book a drone flight with Up Sonder today for sharp and stunning aerial footage that can boost the valuation of your trophy property.