Broker Associate at LIV | Sotheby’s International Realty based in Breckenridge, Colorado.
Luxury real estate sales are unlike any other real estate sales. Here in the mountains of Colorado where we see staggering price tags starting at around $2 million, only the most experienced and multi-talented real estate professionals are making the cut. Success is subjective and each transaction is different, but the following blueprint will help lead you down a path to success when it comes to closing transactions and netting sellers the highest returns.
Many professionals fear the changes brought by technology and the expansion of companies such as Zillow, Redfin, Realtor.com and even Amazon. However, if we look at brands such as Ferrari, Tiffany and Louis Vuitton, which are likely to always be commercialized by extensively trained salespeople, luxury real estate is not much different. Just like the aforementioned companies, luxury real estate requires just as much, if not more, extensive, personalized service and local knowledge.
My state of Colorado’s population reportedly grew from 4,301,262 residents in 2010 to 5,893,634 in 2021. This kind of growth is not limited to the Colorado mountains and can be seen in many other resort markets as well. With such population changes, the demographics have also changed. With recent world events and the newfound (for many) ability to work from home, resort locations have seen a record influx of travelers and even new residents. With this in mind, the wants and needs of buyers can be drastically different. Some look for seclusion and nature, while others prefer to be close to local attractions, such as ski-lifts, hiking trails, restaurants and more. It is essential for a real estate professional to live and breathe the local lifestyle to help clients find the perfect fit for them.
Know Where the High Net Worth Clients Are Coming From
How are luxury properties matched with high net worth individuals? Most resort real estate markets show distinctive patterns as far as where buyers are coming from. Knowledge and connections to feeder markets is an essential skill to find a high net worth client who is likely to purchase the luxury listing. A great luxury real estate professional is never waiting for the syndication or an algorithm to match the listing to a client. A proactive strategy is likely to cut time from the overall process and produce a higher quality result for all parties involved.
Accounting, Tax And Local Regulations Knowledge
Real estate agents are often reminded to not provide clients with legal, tax or accounting advice. However, having a basic understanding of accounting principles and the tax code allows an agent to clearly understand the seller’s intentions. A common practice among HNWIs is a 1031 exchange. According to the IRS, “The simplest type of Section 1031 exchange is a simultaneous swap of one property for another,” but there are a lot of ramifications that are encountered with a 1031 exchange, such as finding a “like-kind property” and following a strict timeline.
Often, multi-million-dollar properties are owned by an LLC, S corporation or business entity. Such transactions are governed by federal and state laws. It is essential not to only understand those regulations but also to keep up to date with any changes.
Be An Expert Negotiator
Negotiation skills come with experience, however, there are designations and certifications such as the Real Estate Negotiation Expert (RENE) and Master Certified Negotiation Expert (MCNE) that are directly tailored to real estate professionals. Another great way to gain such knowledge is to assist or co-list with another seasoned agent. While negotiating, it is important to always strive for win-win situations. Although a seller’s or buyer’s market can shift the balance needs, there are almost always ways to provide win-win situations for every party involved in the transaction.
Concessions And Incentives
This is where seasoned professionals bring the personal touch to the game. Selling agents can incentivize the purchase by including some desirable bonuses — everything from country club memberships to high-end furnishings and media equipment. This is one of the most noticeable differences from mid-range real estate professionals. Successful luxury agents are masters at providing this kind of personalized value.
Cutting Edge Marketing Assets And Luxury Networks
Although every item is similarly important, state-of-the-art marketing is likely to seal the deal. Luxury property sales require a fine cocktail of marketing assets that are both printed and digital. With at least 4.28 billion unique mobile users and an estimated 3.6 billion social media users, it is clear that digital marketing is taking the lead. Impactful digital content includes cinematic videography, stunning photography and an extensive social media marketing strategy. Sophisticated printed and digital assets can also be syndicated directly to a personal network of luxury real estate professionals, which is a huge asset to find prospective buyers.
Each one of these components is part of the blueprint for luxury real estate sales success and is equally important. Implementation varies from deal to deal and is learned with training, experience and practice. There is no shortcut to success, and it is very important to build a strong foundation that can withstand the earthquakes as the real estate industry is continually reimagined.