How to navigate the luxury real estate market

Written by Posted On Saturday, 13 May 2017 21:13

The luxury real estate market tends to be a challenge to Realtors and sellers due to the fact that it is by definition an exclusive market. In fact, the 2015 Profile of Home Buyers and Sellers found that the percentage of first-time and repeat buyers with household incomes of $200,000 or more stood at just 8%.

The aim of this article is to help Realtors and prospective buyers to navigate the luxury real estate market.


How to sell more luxury homes

Most Realtors who jump into the luxury property market soon ‘downgrade’ to the low and mid markets due to lacking certain skills. Before we delve into the skills required, it is worth looking at the mindset of the typical upscale property buyer. 

Besides the beauty of a property, affluent buyers crave for a sense of exclusivity, safety and versatility. Therefore, half of the sale lies in what the property looks like, and the rest lies in how it would make other people react to them. Unlike the lower end of the market, luxury buyers tend to look for something long term; as a result, the sales cycle tends to be longer.

Notably, luxury home buyers tend to have specific requirements, and aren’t in a rush.

One of the best skills you can have as a luxury home Realtor is being a power networker.  Some of the best luxury listings never make it to your local MLS.  Visibility to these “off-market” or “pocket listings” is typically exclusive to a very small group of real estate agents.  Your ability to make connections with other luxury home Realtors and sellers will give you access to these exclusive luxury homes

Moreover, networking and social skills would enable you to give a more personal service to your clients. Affluent people enjoy the experiences their wealth can afford them, and that also carries over to a property search. Therefore, remembering their favorite wine or beverage and referring back to comments made in the past makes a big difference.

Property potential is an attractive factor for affluent buyers. Some of my luxury home buyers in Washington DC have even told me that they want something “barebones” which they can build to their specifications. Seek out such information early in the process so that you don’t waste time showing them a typical luxury property when a small home with a lot of land would do.

The luxury market is affected by uncontrollable market forces, which can make it challenging. For instance, many decades ago, a luxury home with a swimming pool could persuade a buyer to sign on the dotted line. Fast forward to now and swimming pools are relatively common to the extent that they are just expected. Your ability to spot new luxury trends and recommend renovations to sellers will make a big difference.

Notably, some luxury homebuyers are looking for a holiday home and don’t mind the location. This is where your network can make a big difference. You need to be able to spot global trends around the world in order to give your clients what they want. They could request a specific art piece or renovation to “complete” the home. You need to know where to source these end items and the best people to fit it.

Selling luxury homes isn’t easy, but the rewards can be huge.


How to buy a luxury home

This section is useful to buyers, and might also be useful to Realtors as it enables you to see the decision process of an affluent home buyer.

Buying a property is an important decision. Fortunately, if you have the budget for a luxury home, you have a lot of choices and can take the time to make the right decision.

Firstly, don’t get swayed by mentions of who used to live at the property or who your neighbors could be. At the end of the day, you will spend a lot of time in the property, so the focus should be on that.

Secondly, security should be a top priority. This is because high value property are prime targets for robberies. It is within your rights to ask for the latest security equipment to be installed prior to a purchase. Moreover, it is worth checking the crime rate in an area prior to signing on the dotted line. Some areas look safe, but have a high number of robbery attempts. If you find two similar properties, the crime rate could make a difference in your decision.

The choice of Realtor can make a big difference. Some are fairly new to the game and will say almost anything to get your signature. On the other hand, some know the importance of getting you the right property and are willing to be patient and show you multiple properties. They also know the right people in case you wish to renovate or even acquire an additional property. They would also be able to negotiate with the buyer on your behalf in order to get a price all parties are happy with. This type of Realtor is worth their weight in gold.

People have different reasons for launching a property search. However, if you plan on upgrading in the future, it is worth looking at the property trends in an area. Some areas have sharply falling property prices and struggle to shift property. Research this beforehand and pay close attention to the reasons for a drop. If you are still interested in it, contact a reputable Realtor or other professional for advice.

Lastly, be patient. There is no rush. Luxury property jump onto the market on a frequent basis. Some Realtors would be able to tell you which properties are likely to come on the market, and the circumstances of the sale. It isn’t uncommon to end up paying 50% of the listed price. The last thing you want is to sign for a property which isn’t what your heart desires only to have the perfect property get listed a few days later. Knowledge and patience is power in this part of the market.

In conclusion, I hope that you found this article useful, and use it to navigate the luxury real estate market.

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Charles Muotoh

Serving the Northern Virginia and Washington DC areas.

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