Major shifts are afoot in the luxury real estate market, especially internationally. What are today’s luxury buyers seeking and how are agents today providing the stellar service this market segment demands?
The Luxury Connect session at Real Estate Connect San Francisco was packed with great strategies and data that can help you better serve this important demographic. Here are seven of the top takeaways:
1. Luxury Asian clients look to the U.S.
Marti Gallardo, vice president of global advertising sales, vertical markets, for The Wall Street Journal, noted how the habits of international luxury buyers have changed in the last two years.
Two years ago, 64 percent of luxury Asian buyers planned on making a purchase in Asia within the next two years. Today, only 44 percent plan to make a purchase in Asia.
In fact, 67 percent of the Chinese who are purchasing property want to buy overseas. Moreover, of the $92 billion in foreign sales, $22 billion is from Chinese investment. The younger Chinese buyers see the United States as a secure place to invest.
2. Criteria for purchasing
In terms of the criteria for purchasing, security is the No. 1 factor. According to Jason Padilla, president and CEO of Seals on Security, many of his ultra high net worth clients have full-time security. Before the client ever goes anywhere, the security team checks out the security, as well as safe exits in case of an emergency.
Given the heavy smog and other pollution in parts of Asia, a second highly ranked criterion for purchasing is environmental friendliness.
A third highly ranked factor is return on investment. A common approach is for the buyer to do a property tour during the summertime. Next, they will make a small purchase. If that works out, they will then consider buying more.
To reach these clients, consider putting together a video or other marketing campaign that addresses “The Ten Things You Must Know Before Buying in the U.S.” You could also do an additional campaign for your state and/or your local market area.
3. Summer day camp purchases
Gallardo also noted another important trend. Not only are international buyers buying property for their children to occupy when they are in college, they are buying property to have their children attend elementary school or even summer day camps. Once their children complete their schooling, many of these clients see owning a property as an important step in helping their child to become established in their career.
4. Cultivate relationships face to face
Madison Hildebrand, president and founder of Malibu Life Inc. and former star of Bravo’s “Million Dollar Listing Los Angeles,” takes face-to-face prospecting to a whole new level.
Hildebrand makes a point at being at the places where the ultrawealthy hang out during different parts of the year. He may be skiing in Aspen during the winter or partying in the Mediterranean during Yacht Week. At these events, his goal is to cultivate a long-lasting relationship with the people he meets, regardless of where they live. For those who are from Los Angeles, Hildebrand keeps in touch. Ultimately, many of them become his clients.
In terms of his other marketing (both print and digital), Hildebrand is doing a heavy ad spend to reach the Russian luxury client as well.
Michi Olson, vice president of global business development and relocation for Alain Pinel Realtors, has traveled to the Luxury Property Show in Beijing as well to Malaysia and Thailand to cultivate relationships there. Alain Pinel has also taken out a large ad in the international terminal at San Francisco International Airport as a way to generate more international client leads.
Laura Brady, founder and president of Concierge Auctions, provided an additional explanation as to why being face to face internationally is a smart strategy.
“International luxury buyers are opportunistic. They may be considering a ranch in Montana this month and a beachfront property in Hawaii next month.”
In other words, if the ultrawealthy buyer has an interest in purchasing more real estate at this moment in time, you may make the sale simply because you were the agent who was present with them face to face.
5. Follow the money
Canada just recognized the virtual currency bitcoin as a legal currency. Bitcoin is becoming increasingly popular among the international community because the fluctuations in its valuation are not as volatile as many other international currencies. This is particularly important for many South American investors where inflation often runs rampant. In fact, bitcoin is extremely popular in Argentina.
Another important factor is tax rate. In fact, when France dramatically increased the tax rate on the ultrawealthy, many international investors moved their money elsewhere.
6. Ultra wealth finds its own property
In the past, ultra high net worth individuals would have a trusted business manager, attorney, or other staff member locate properties for them. Today many ultra high worth individuals are vetting homes online. They love researching information and actually enjoy the hunt. Consequently, the person contacting you about that pricey listing may be the actual buyer rather than one of his or her representatives as was the case in the past.
7. What hasn’t changed: concierge-style service
Meghan Barry, president of LuxuryRealEstate.com, noted that the expectations of luxury clients have not changed. They expect their agents to be able to locate the legal, tax, immigration, and other professional help they need to work across different countries and in different currencies.
They also expect you to help guide them through tasks such as obtaining a driver’s license, showing them where to go for medical emergences, as well as where the best dry cleaners, dog groomers or nail salons are located.
While the payoffs can be huge, the game of attracting and retaining ultra high net worth clients is more costly and competitive than ever before.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Discover why leading Realtor associations and companies have chosen Bernice’s new and experienced real estate sales training for their agents at www.RealEstateCoach.com/AgentTraining and www.RealEstateCoach.com/newagent.