One of the biggest differences when dealing with buyers and sellers in the luxury real estate market is that—unlike their counterparts in the traditional market—in many situations, these clients will not actually need to purchase or sell a home. They simply want to—especially if it’s their second or third home!
This can lead to erratic behaviors and decision-making, with these buyers tending to be both spontaneous and fickle. The Institute is very focused on offering its members key insights on the best practices of how to work with and appreciate the requirements of luxury buyers through training and implementable systems.
“Location, Location, Location”
Anyone who is familiar with real estate—or has watched 10 minutes of HGTV—is familiar with the phrase “Location, location, location.” This phrase takes on a whole new meaning when applied to luxury.
High-net worth buyers are not just looking for a home; they are looking for an experience. This makes closing a deal somewhat harder, as they could be looking for that experience all over the world.
One member tells us of a client she was working with in Hawaii, who discovered after speaking with several colleagues they were all working with the same client—in Hawaii, California, Canada and New York! The client was only going to purchase one property, but they were looking at a large range of locations and experiences.
Don’t just sell your property; provide them with the unique experiences that the location has to offer.
Wealth also brings the additional privilege of choice. If a home is not a necessity, then you could find that you are competing against an investment in a plane or a yacht. Understanding their goals and aspirations can be key to determining whether you able to truly find the right home within their timeframe. Their schedule could lead them to look at real estate at the drop of a hat, so it might be important that you grab their attention now. Equally, if they can not find a suitable home today, establishing a great relationship and building trust could bear fruit in the future.
The Billionaire Next Door
We’re all familiar with The Great Gatsby’s infamous “East Egg” and “West Egg.” For those who need a refresher, West Egg was the portion of New York that housed all the “old money”—individuals who had a silver-spooned childhood and grew up surrounded by wealth. East Egg, on the other hand, was full of “new money”—self-made billionaires. With 60-70 percent of wealthy individuals being self-made today, this comparison has never been more accurate.
Many of your clients will not look or seem like billionaires; rather, they’ll just look like the family next door. Many of these individuals have created wealth through start-up companies, introducing new technologies, leveraging new market opportunities or just through sheer hard work and the determination to succeed—and a few were simply fortunate to have that lucky break.
One Institute member tells us a story of a man who came into her office asking for assistance finding a home in Aspen. She watched as one of her co-workers started to brush the man off, thinking that the average-looking figure—wearing an old pair of jeans and a ski jacket that had seen better days—could not possibly afford one of the luxurious estates they were inquiring about.
On hearing his name, something clicked in our member’s mind, and after some quick investigation (using one of the member research tools) she was able to notify her acquaintance that the client was actually a painter of some renown, and, in fact, a trillionaire! (And, no, despite his antics at a recent Sotheby’s auction, it was not Banksy.)
According to the National Association of REALTORS® 2017 Profile of International Home Buying Activity, nearly half of non-resident foreign buyers purchased a primary residence in the U.S. These international buyers purchased more than 284,455 properties and spent over $153 billion in property sales.
Knowing that there are a lot of foreign buyers looking in the international market means that in addition to your regular best practices when dealing with the wealthy, you may also need to familiarize yourself with their country’s customs.
The Institute goes through how to properly address and respect foreign clients in the “Kiss, Bow or Shake Hands” section of our Luxury Training Course.
The Ultimate Decision Maker
The more money an individual has, the more people they have influencing their decision. These influencers can range from assistants and lawyers to family and friends. Depending on the client, you could be showing properties to these influencers, either as a part of a screening process before meeting the buyer, or sometimes in place of the buyer altogether. It is not uncommon in luxury real estate to never meet the client.
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