By Jack Cotton, CRS
A lot of people stay on the sidelines of luxury real estate, thinking that they had to be born rich and well-connected to interact and work with people at the high end of the market. That’s really all in your head. Basically, the only difference about these homes is an extra zero or two on the price of the properties. Agents might feel intimidated or they don’t know where to start. And since they don’t have experience dealing with this type of client, they wonder, “How am I going to get that experience?”
When an agent approaches a new client, often the first questions they are asked are: “How many wealthy homes have you sold? How many million-dollar homes have you sold?” And the answer is zero. Agents tend not to put themselves into a situation where we would have to answer that question. So, it takes a leap of faith and some confidence. And you can gain that by building some competence.
Wealthy people are used to dealing with experts in all areas of their lives, whether it’s for medicine, law, or tax and estate planning; you name it, they want an expert. So, you need to be perceived as an expert in your luxury marketplace if you want to succeed. And there are five areas of expertise in which you need to be proficient.
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You need to be an expert in markets and value.
You need to know all of the luxury markets that you want to work in. What are properties selling for per square foot, per front foot? Who are the people who live there now? If it’s a second-home market, which a lot of high-end markets are, what is the predominant geographic area where buyers are coming from? What does it cost to build there per square foot and who are the prominent builders? You need to be an expert on market value, sales price ratios, the ratios of selling price to property tax assessment, and so on.
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You want to be seen as an expert in pricing.
Take your market-value expertise and apply it to pricing one particular property. Now, you can’t go into a home and just say, “$3 million.” You need to have a process for determining that price, whether it’s three steps, seven steps or 10 steps, it doesn’t matter, as long as you have a process, because people equate process with expertise.
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Be the expert on preparing homes for sale.
The higher you go in the price range, the fewer people there are who can afford the property and the fewer showings you’re going to have. So every showing has to count. Some people call this staging; I call it market preparation. You need to be able to demonstrate your expertise in getting homes ready for sale, based upon your experience of watching people go through properties, and noticing what makes their eyes light up and what makes them glaze over. So, if I hire a stager, then I’m abdicating expertise to somebody else. In the luxury market, you can hire a stager, but that person should work under your personal control and direction.
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Develop your expertise in marketing.
Make sure you find people with the best skills in photography, copywriting and editing so your pieces have impeccable polish. Your company may have a luxury division, but also think about placing ads on WallStreetJournal.com, NewYorkTimes.com, Forbes.com, the InternationalHeraldTribune.com and—I hate to say it—Zillow. (I have dealt with a lot of Fortune 500 CEOs, and they are all on Zillow.) Your expertise comes in when you can art direct the photography to get the best shot that will attract the right buyer in 1.5 seconds on Zillow. That’s how you differentiate.
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Become a master negotiator.
People in the high end of the market want to deal with experts. You might be crafting a big deal for $10 million or $19 million or even $5 million, but understand that the people you would be dealing with are often doing transactions in their business in the hundreds of millions, if not billions, of dollars. How do I equalize the playing field between myself and them? By developing expertise in negotiating. Take classes. RRC has great negotiating training.
Once you have these skills, you might still be worried, thinking, “Oh, I can’t talk to a really rich person. What would I say?” Well, frankly, most rich people fall into two categories: the ones who made their money and the ones who didn’t. In my experience, the ones who did are very down-to-earth and very easy to deal with. And if you play your cards right, they will see a little bit of themselves in you.
For more information on Jack Cotton, CRS, and how you can break into luxury real estate, visit CRS.com/learn/instructors/jack-cotton.
Photo: iStock.com/sqback/sqback/Maria Voronovich
