Working with Luxury Buyers and Sellers
In the luxury market, buyers and sellers ask tough questions and have high expectations.
"You have to be on your game and know what you're talking about," according to Amy Worth-Paul, ABR, GRI, PMN, of RE/MAX Platinum Realty in Sarasota, FL.
At the same time, most REALTORS® who do well in this segment are dedicated and prepared with creative marketing and expert staging along with other bells and whistles – and they are true neighborhood experts.
What to Know
The luxury segment of the residential real estate market can be a lucrative one. For starters, and almost by definition, the home prices are higher than the average.
In addition, the market tends to be less vulnerable to the ups and downs of the overall economy. That's partly because many luxury buyers aren't as affected by tighter mortgage lending standards or unemployment levels as other buyers. Indeed, the luxury real estate market often tracks more closely with the stock market than with the overall real estate market, according to Tami Bonnell, chief executive officer with Exit Realty.
In addition, the luxury market tends to have a more global reach than the rest of the real estate market. Even if one country's economy is doing poorly, at least a few other economies should be in decent shape. According to NAR's "2013 Profile of International Home Buying Activity," the mean price of international home transactions in the U.S. was about $354,000. That compares to $228,000 for domestic transactions.
Real estate professionals in the luxury niche are well prepared for the challenges. Along with knowing the specific properties that are bought and sold, most successful luxury REALTORS® are experts on the communities in which they're working. Many luxury buyers expect up-to-date and detailed information on the performance of local public and private schools, as well as on the programs at any nearby colleges and universities. They're likely to be interested in the local theater and restaurant scene, as well as outdoor attractions like golf courses and beaches.
A Step Ahead
Luxury home sales and purchases often take longer to complete than is typical with other types of properties, according to corporate relocation specialist Lorraine Amaral, ABR, of William Pitt Sothebys International Realty in Danbury, CT. After all, individuals who can pay top dollar for a property generally have many options. Luxury REALTORS® need to remain committed throughout the process.
To form strong relationships from the start, many successful luxury REALTORS® research potential clients before meeting with them, Bonnell says. An Internet search typically will yield at least a few social media sites in which many clients participate. For instance, LinkedIn can provide information on a prospective client's career and professional affiliations. Having this information shows that a REALTOR® has done his or her homework, and it can be an ice-breaker when meeting new clients for the first time.
Also key is identifying the way in which prospective luxury clients would like to communicate, Bonnell says. Many luxury buyers and sellers are busy, and some will be located far from the market in which the transaction will take place. A REALTOR® needs to know the sorts of information they would like to receive, as well as how (phone or email) and how often they'd like to receive it. Determining the most effective ways to communicate can be critical to keeping a purchase or sale moving forward.
Moreover, providing timely and relevant communication can help agents selling luxury homes cement their relationships with buyers and sellers. After all, they want to feel confident about the REALTOR® they have chosen. "This is a large investment, and they need to know it's in good hands," Worth-Paul says.
Another attribute of effective luxury agents: they build strong relationships not only within the real estate profession, but with peers in related industries, including appraisal and mortgage, Bonnell says. Having access to such experts can help real estate professionals gain a well-rounded view of the market. In addition, "if it's a unique property, they can help you understand what really adds value," Bonnell says.
The non-traditional nature of many luxury homes also should influence the ways in which they're marketed, Amaral says. For instance, it's unlikely that the typical family with a couple of kids would be interested in a penthouse in the city. Instead, advertisements for the home might work best in publications that target well-off young professionals or empty nesters.
Expert staging also can be a life-saver when marketing luxury homes. "The house needs to show like a dream home," Worth-Paul says.
While moving into the luxury market usually requires an investment of time and effort, the payoff can be significant. "Sales have been rising recently with the improving economy and rising consumer confidence," Amaral says. "It's been a pleasing start to the new year."
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