Thinking of getting into luxury real estate, but not sure if now is the right time for you to specialize? Believe it or not, there are a lot of good reasons why you might want to become a luxury real estate agent right now. If this niche has been on your mind, you might want to seriously consider moving forward with that goal sooner rather than later.
Here are three reasons you should consider getting into luxury real estate this year:
- Wealth Is Increasing
Statistics from The Institute for Luxury Home Marketing training for agents reveal that real estate was the only asset class to see a significant increase in high-net worth asset allocation in 2017-2018.
At the same time, U.S. personal wealth grew by $8.5 trillion, while significant portions of wealth are being inherited or transferred—often through real estate holdings.
There’s a lot of money to go around if you’re working in the luxury niche right now, so you’ll have a larger client pool and bigger budgets to work with.
- International Buyers Are Ready
If you choose to become a luxury real estate agent, you aren’t limited to just domestic buyers. In fact, the Institute of Luxury Home Marketing’s data also found that sales to international buyers totaled $121 billion from April 2017 to March 2018. That amount represented a total of 266,800 properties sold to international buyers.
Another bonus is that 72 percent of non-resident foreign buyers pay cash when they purchase homes, so they’re typically serious, qualified buyers and don’t have to wait for approvals from lenders.
Not every international buyer will be interested in luxury properties, but the same statistics showed over 10 percent of foreign buyers paid $1 million for property.
- Luxury Is a Growing Segment
When you think luxury, you don’t necessarily have to be imagining multimillion-dollar celebrity estates. While that does represent the top of the luxury market, at the other end are homes that hover between $500,000 and $1 million that could be considered luxury depending on their location.
The number of sales above $1 million rose 6 percent in the last year, which shows that the opportunity in luxury real estate is continuing to grow. As wealth is transferred and millennials start to accumulate assets and purchase property, the luxury market could continue to see positive growth.
Do Your Research
While there are promising signs that the luxury market is a strong choice if you’re looking to specialize, you want to make sure you’re staying updated with the trends in your niche and location in case you start to notice changes.
It’s also a good idea to understand some of the challenges that luxury clients represent. Here are a few big ones to consider:
- Longer selling time than most properties
- More demanding clients
- Strong competition against other agents in the same niche
- Great complexity to some of the real estate transactions
There are a few ways to get started with your research on the luxury market before you dive in. First, talk to other luxury agents to learn how they overcome the challenges of working in this space. Then, use a research tool, such as the Luxury Market Report, to understand what’s going on in your market.
Should You Become a Luxury Real Estate Agent?
There are several strong reasons to jump into luxury real estate, but you should do your research and compare the pros and cons between other opportunities you might have available to you. Here are a few questions you can ask yourself to assess if you’re ready to make a move:
- Have you done the research on luxury real estate in your market?
- Are you familiar enough with the real estate business that you can speak intelligently to a luxury buyer who might have some real estate experience themselves?
- Is your current real estate business strong enough that you can specialize without hurting your core business?
- Do you need a change?
- Would choosing luxury as a niche match your personality and business goals?
- Are you ready to take the proper trainings to help you specialize?
If your answer to these questions is “yes,” then it’s time to get started. Start by taking a training course to get your Luxury Home Marketing Specialist™ (CLHMS) designation, so you can demonstrate to clients that you are in the upper tier of real estate professionals and ready to take on their luxury needs.
Diane Hartley is the president of The Institute for Luxury Home Marketing, a premier independent authority in training and designation for real estate agents working in the upper-tier residential market. Hartley brings her passion for luxury marketing and more than 20 years of experience growing and leading businesses to her role as president of The Institute.