High-dollar home sales make up one of the most sought-after niche markets for agents – and one of the most intimidating. The clientele and the properties in this category can radiate a sense of exclusivity that seems untouchable to new (or even seasoned) Realtors®, with those extra-padded commissions only existing in their dreams.
The truth is, this high-end market is exclusive simply from a statistical standpoint. The number of luxury homes sold makes up a very small percentage of the market. According to The 2016 Profile of Home Buyers and Sellers:
- 8% of first-time and repeat buyers have household incomes of $200,000 or more.
- 10% of first-time and repeat buyers bought homes priced at $500,000 or more.
- 9% of first-time and repeat buyers bought homes that measured 3,501 square feet or more.
With numbers that low, you might think, “Why would I go after such a small percentage of the market?” For the agents that do handle luxury home sales, the answer is in their paychecks. They might not sell a large quantity of homes, but the ones they do sell provide some “luxurious” commissions.
Ready to take on those million-dollar homes? Here’s some realistic advice:
Know your audience
What’s the first image that comes to mind when you think of high net worth individuals? Many people would envision a middle-aged CEO type or maybe even a retired baby boomer couple who’ve made some wise investment decisions. While this may fit the description of some millionaires, be aware of what Paribas Global is calling the “millennipreneur” phenomenon. Millennipreneurs are loosely defined as millennials (born between 1980-1995) who are active entrepreneurs, often in the tech sector. Click here for some insight into how they are affecting the luxury market.
Regardless of age and employment status, there are a few things all luxury homebuyers have in common. They see themselves as unique and special, and they want to be treated that way. That means selling to them and getting their attention is going to take a little more time and a lot more confidence than with a typical homebuyer. This crowd also tends to be more skeptical and defensive than the average person. They have very little trust for mass media, so they rely more heavily on referrals when making decisions. Remember this as you design your marketing strategies.
Know how to find your clients
Unless you already run with a pack of High-Net Worth Individuals, you might have a hard time targeting this exclusive group. One way to get started is to purchase an address list of your city’s most affluent individuals from a database site like www.InfoUSA.com. While it’s true that purchasing a list can come with a moderate-to-significant price tag, it will only take one new client to pay for your investment. Once you have this list of addresses, get creative with your direct mail techniques. The term “invitation-only” will be your best friend in planning open houses, offering presentations, or requesting meetings.
For acquiring luxury home sellers, study some of the high-end neighborhoods in the area. Do some research on recent home sale prices, and use this information to entice other homeowners in the neighborhood to call you when they are ready to sell. Creating a simple postcard on www.CoreFact.com with some impressive neighborhood home sale statistics and sending it to potential luxury sellers could be just the ticket.
Know how to market the homes elegantly
Marketing with elegance and sophistication will require mastering two main tactics: “social marketing” and emotional marketing. Now, this kind of social marketing is NOT the same as social media marketing. In this scenario, the social aspect will include creating a buzz around the home within your potential buyers’ sphere of influence. Luxury sales guru Jim Remley suggests connecting with what he calls “network hubs” – people who are more socially engaged than others. Remley identifies three types of hubs: network, mega, and social. Read more about these hubs and the most effective ways to market to them here.
Emotional marketing involves showing the home in a way that appeals to the buyers’ senses. Don’t just mention the large gourmet kitchen, but encourage buyers to visualize themselves hosting family gatherings or parties with ease. High-dollar home buyers are looking to feel a certain way, and to be seen a certain way. Even more so than other buyers, they want to know how a home will affect their life as a whole.
Becoming a force in the luxury real estate market can be extremely lucrative, and it is attainable. Just be prepared to invest a little extra time, creative juice, and financial resources.