BEVERLY HILLS, Calif. — What does it take to locate, convert and successfully close a transaction with an ultra high net worth individual (UHNWI) client? In many respects, it’s an entirely different game from the typical real estate transaction. At the recent Luxury Connect, luxury real estate’s superstars revealed how they have succeeded in this hypercompetitive market.
Serving the UHNWI client requires skill, concierge-quality customer service, and a hefty budget to meet what is expected when clients pay up to $1 million or more in commission. You also need a powerful individual and company brand presence, plus the financial wherewithal, to be face to face wherever your client may be located.
Secrets for working with foreign UHNWI clients
Howard Lorber, chairman of Douglas Elliman, believes that “real estate is the new global currency. Clients are searching for a single firm that can handle their real estate needs anywhere in the world. This is what led Douglas Elliman to create an affiliate relationship with Knight Frank, the largest global real estate company in the world.”
As Paddy Dring, head of international for Knight Frank, explained, “In the U.K., agents are employees. The brand is absolutely critical.”
Boots on the ground
Where can you find the UHNWI buyer or seller? Speaker after speaker noted that there’s no substitute for “boots on the ground.” For example, Realtor Sally Forster Jones was getting ready to fly to Tel Aviv, Israel, to tie down her relationship on a new condo project listing with prices ranging from $2 million to $51.5 million.
Mark McLaughlin, CEO of San Francisco-based Pacific Union, noted that his company’s China strategy required him to travel to China.
He was invited to a party at the U.S. ambassador’s residence where he was introduced to 10 Chinese billionaires. This introduction led to Pacific Union’s decision to focus on generating leads from their introductions rather than trying to market to 1.2 billion people. In China, who introduces you strongly influences your probability of success.
A number of panelists repeatedly noted that they were pulling money out of print and other resources to travel to foreign destinations to build their foreign client base. Nevertheless, as one savvy speaker noted, “You can’t expect to bump into clients at the intersection of ‘Walk’ and ‘Don’t Walk.’ ”
Building the relationship
Even when you are introduced to the right people, building a relationship can take years.
John Aaroe of The John Aaroe Group described the rigors of what he experienced as he built his international business:
“I have ridden in rickshaws, stood for hours on a freezing trade show floor, and have even drunk snake’s blood. You have to be culturally aware and follow what is customary for that culture.”
Laura Brady, president of Concierge Auctions, explained how her firm has built its database. Brady attributed part of her company’s success to two key tools: Salesforce’s customer relationship management (CRM) platform and HubSpot’s data analytics program. Whenever someone inquires about a property or participates in one of Concierge’s auctions, they are added to the company’s Salesforce CRM. They also use HubSpot as a way to monitor the success or failure of their online marketing efforts. As Brady puts it, “Tracking is critical.”
Another way to strengthen your relationship with foreign clients is to help them to avoid decisions that can cost them substantial amounts of money. For example, before they purchase or sell in the U.S., they should visit with a tax attorney and CPA who handle international real estate investment. Taking title in a limited liability company (LLC) or some other entity can help them to avoid costly federal and state income taxes.
J.P. Morgan Securities Vice President Steven Tann and its head of banking and lending, George Epstein, recommended that agents have their clients talk to their banker before they decide to purchase or sell.
Epstein noted that UHNWI clients, “hate to be told ‘no.’ Nevertheless, they need to consider the tax ramifications, as well as the liquidity issues. Yes, they can pay all cash for the property, but what happens when that money is needed elsewhere? How will they raise the cash if it’s tied up in their real estate? Also, there can be substantial savings when they offset those costs against other sources of income.”
Tech tips you need to know
Zillow Chief Revenue Officer Greg Schwartz asked an intriguing question: “Are the bulk of wealthy foreign clients using desktop or mobile devices?” The crowd was overwhelmingly in agreement that the correct answer was “mobile.” The truth is foreign buyers are overwhelmingly desktop-based. That means that any marketing to foreign buyers must be tailored for both mobile and desktop devices.
In terms of which websites to use, McLaughlin noted that Juwai has a strong U.S. marketing presence, but inside China the most visited sites are SouFun and Fang. To use these sites, you will need to have your data translated into Chinese.
A new top-level domain site that luxury agents will probably embrace is .Luxury. This is a domain registration site that luxury agents and firms can use to market themselves. They can also create specific URLs for their luxury listings, such as 1011BeverlyDrive.Luxury. Fees per site range between $600 and $800 per year. Partners Trust is the first real estate company to launch a .Luxury site.
In terms of chat and social media tools, Facebook acquired the WhatsApp messaging service earlier this year for $19 billion. According to Wikipedia, this is currently the most widely used global messaging app with 600 million users. This is followed by China’s WeChat app (438 million users), Japan’s Line (400 million users) and South Korea’s KakaoTalk (160 million users). Savvy agents will inquire which apps their clients use and then communicate with them through that app.
In terms of new technology, Brad Inman was most excited about holograms. Although the technology is still not widely available, it does represent the next wave of the future.
The bottom line is that the best practices, tools and strategies discussed at Luxury Connect are the secret to success no matter what price range you serve. Put them to use in your business.
Editor’s note: This is Part 2 of a two-part series on the top takeaways from Luxury Connect in Beverly Hills on Oct. 23.
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.