SAN FRANCISCO — Working in the world of luxury real estate can bring about a boom or bust atmosphere depending on the current economy, but there are ways to combat the uncertainty of luxury clients.
Luxury Portfolio President Paul Boomsma, Concierge Auctions Vice President Krystal Aeby and Stribling & Associates President Elizabeth Ann Stribling-Kivlan shared some key advice on the matter while speaking on a panel at Inman Connect San Francisco.
So what sort of strategies do these real estate heavyweights use to keep luxury clients in the game when everyone else is dropping like flies?
It’s OK to wait
“If the market is uncertain, tell them it’s OK to wait,” Stribling-Kivlan said. “An uncertain market can give great opportunities.”
Imparting trust and education to clients isn’t always easy, but it has to start at some point, Boomsma said. Just know that you’re not dealing with a typical buyer or seller. “This is all a discretionary purchase. They don’t need the house — they want the house,” he said. “It’s about their reality. And their reality isn’t necessary true reality.”
Aeby also stressed the importance of being honest with luxury clients and said they can be more understanding than expected. “Buyers are more elastic than you think they might be, especially in the luxury sphere,” she said.
Look at the past as much as the present
As George Santayana once said, those who cannot remember the past are condemned to repeat it.
Aeby said she still looks at luxury market data from 2008, before the housing crisis, as a point of reference. She also monitors the state of other industries and the currency exchange, as the rise in value of the American dollar can mean less foreign clients.
Boomsma views luxury transactions as investments just as much as home purchases, comparing the appreciation of a home to owning stock.
“They’re not throwing their money away,” he said. “They’re moving their money from one account to another, which is from the stock market to real estate.”
Sellers who put a lot of money and time into customizing their dream home can be in for a rude awakening when the price evaluation comes in, so it’s important to manage their expectations.
The longer the home is listed, the less likely it is that the home will be sold for the full asking price, Aeby said, adding that retail and market prices exist in homes and not just handbags and other merchandise.
Part of managing expectations is keeping a seller’s eyes off the listing prices of other properties, added Boomsma.
Have a plan ready before a home is listed
“Understand the house. Understand why they’d want the house,” Boomsma said “Who made the kitchen cabinets? What type of stone is on the floor?”
Not knowing the home’s surroundings can kill a listing before it even begins, said Stribling-Kivlan.
“Hit the pavement and actually see some real estate,” she said. “Get a set price before even trying to market. All the marketing in the world won’t solve a bad price.”
That’s why Aeby doesn’t get ready to go to market — she stays ready. “Signs, open houses, press, marketing,” she said. “You have to have it ready before it goes to MLS.”