This summer we’re looking at the state of the luxury agent and broker in today’s increasingly complex real estate market. In October, we’ll gather in Beverly Hills at Luxury Connect to share best practices, network and create blueprint for the luxury agent/broker of tomorrow. Don’t miss it.
Buying a home is often the biggest purchase a person will make during his or her lifetime, and it’s an integral part of long-term wealth building goals for many Americans.
This gives real estate agents and brokers a unique opportunity and responsibility to help their clients make a purchase that only benefits them in the short-term, but for generations to come.
Elizabeth Ann Stribling-Kivlan, the president of NYC-based luxury real estate brokerage Stribling & Associates, recently spoke at Inman Connect San Francisco in a session called “How To Become a Fiduciary for Your Clients.”
Below, she and Aaron Woodman, a former real estate agent and current real estate wealth adviser, share four steps to helping their clients reach their wealth goals.
1. Ask the right questions
Stribling-Kivlan and Woodman say the first step in becoming your client’s real estate wealth adviser is to ask the right questions about your client’s financial health and their wealth-building goals.
Stribling-Kivlan says it’s tempting to simply pre-qualify a buyer and find a property that fits within their budget. But, a real estate agent who is truly invested in their clients will go beyond the numbers.
“You want to listen to what they’re saying and think about, ‘How do I help someone create a home?'” she said. “Owning a house is the single largest asset the average American owns, and often that’s someone’s legacy for their kids and for their grandkids.”
Stribling-Kivan says she’ll ask clients about their personal, family and financial goals, and use that information to pinpoint listings that will help them reach those milestones. Sometimes, she says, clients have no concrete plan and are truly buying with short-term needs in mind.
“It’s important to have the conversation,” Stribling-Kivlan said. “Sometimes they don’t know [the answer], but I think it shows a lot of proactivity [to ask].”
Woodman, a former agent who now primarily works with real estate investors, says every agent should ask their client if they can comfortably afford the down payment and if they have a hefty savings account.
“At the worst case scenario, do you have six months of reserves ready to go if something bad happens or you lose your job?” he said. “Do you have enough money for a down payment, plus that six-month reserve as a buffer?”
“If not, it’s a no-go,” Woodman added.
2. Do your research
Both professionals say providing a comprehensive comparative market analysis (CMA) is crucial in helping clients choose a property that best fits their wealth goals.
Woodman’s analyses include information for one real estate cycle, which covers the past seven to eight years. The information covers home price growth trends, appreciation trends, migration trends and jobs growth data. He’s then able to use the historical data to provide a projection of how the property will appreciate in the future.
“Look at what those cycles are and where people are moving to,” he said, noting that migration trends will give you a clue of the buyer pool you’ll have when it’s time to sell. “If you’re buying a property that’s $2 [million] to 5 million, look at jobs growth and what kind of people are moving to your area. Is the clientele [who could afford that property] moving to where you are?”
Stribling-Kivan says she’s careful not to make projections of what might happen in the future because it’s impossible to know the economic and legislative changes that will happen. Instead, she focuses on historical trends that cover at least the past 10 years.
“Of course, you can’t guarantee anything. Recessions happen, zoning changes happen, anything can happen. But you can tell them this is what’s happened,” she said. “Just have really good data, and learn how to read the data, and be clear that you can’t promise anything, but this is what the data has shown.”
3. Be honest
For real estate agents, it’s crucial to put themselves and their commissions second, and put their client’s needs first — even if it means that you lose out on a sale, Stribling-Kivlan said.
“It’s important that when you’re working with a client, you’re not looking at it in a sense where it’s solely about yourself, and you want to make a commission,” she said. “What you want to look at is how you can be an agent or a broker that’s part of your client’s long-term life plan.”
When she sold homes, Stribling-Kivlan said she told buyers if it was against their best interest to proceed with a transaction.
“Ultimately, one day you will have to sell, and these are the obstacles you’re going to face,” she said as an example of what she’s told buyers. “You may not see the return because you’re looking at a brick wall. Or you may not see the return because people don’t want a neon yellow kitchen.”
“[The kitchen] is a changeable factor, but are some things you can’t change,” she added. “You can’t change the location, you can’t change the outlook, and you can’t change the structural flow of the apartment.”
“It’s all about transparency. Here are the pros, and here are the cons and just be aware of them,” she said.
When it comes to sellers, she’s told them to hold onto their properties because of market factors that wouldn’t allow them to get top dollar or the average days on market in a particular area is rising.
“Listen to what they’re saying,” Stribling-Kivlan said. “It’s ultimately their decision, but you need to point out pros and cons and give them something to think about.”
4. Create trust by being a team player
“I’m not a financial adviser,” Stribling-Kivlan said, laughing, while noting that she makes that fact clear to her clients.
But she does believe it’s her job to bring her client’s wider team, which often includes a financial adviser, lawyer, etc., together to start a dialogue and create a plan that benefits the buyer or seller.
“As much as it’s important that you have the skills to sell, you have to look at this as a long-term business and a long-term business is about creating trust,” she said.
“If you’re just trying to get people in and out and you’re not worrying about the next five years, I think you’re doing a real disservice to people.”
Thinking of bringing your team to Luxury Connect? There are special onsite perks and discounts when you buy those tickets together too. Just contact us to find out more.