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The luxury real estate market is in a transformational phase, according to broker Jason Oppenheim.
The founder of the The Oppenheim Group in Los Angeles and star of the Netflix series Selling Sunset said affluent buyers are increasingly looking for quality: stellar views, thought-out design and land use and high-quality finishes in every room, all perks that a high asking price does not necessarily guarantee.
As a result, the base of clients who are looking to spend big money on extravagant homes is very much there but mansions can still end up sitting on the market.
“Buyers are becoming more discerning,” Oppenheim told Inman. “Quality product has become more important than ever in terms of what’s selling and what’s not selling.”
On the show, Oppenheim and his team of female agents view multimillion-dollar properties and close celebrity deals. The star broker will be talking about high-end real estate at Luxury Connect, Oct. 15-17, at the Beverly Wilshire Hotel. Follow our interview on the luxury real estate market here.
Which skills do you need to be a luxury agent?
You need to have a high degree of confidence in what you do and you need to know what you’re doing. You’re dealing with very smart, very sophisticated clients — and a lot of money. Any mistake is compounded so you need to be much more careful.
What is happening in the world of luxury real estate in 2019?
We see a lot of differing opinions from agents and buyers. In the uber-luxury market, we’ve seen some of the highest sales ever in terms of overall price and in terms of volume of sales. It’s probably our best year ever which is interesting because there’s also some concerns about the luxury market. In the $10 to $30 million range, we’re seeing a little bit of softening but in the over $30 [million]-$40 million range we’re actually seeing a strengthening. I don’t know how to explain that dichotomy.
So the market trend of luxury houses sitting for weeks without a buyer hasn’t been your brokerage’s experience?
No, it has. I think some things are sitting longer but I think that there’s a real difference between high-quality product and low-quality product. Low-quality product is sitting on the market for longer than before because of market shifts. Quality product is still selling like before but 80 percent of what’s out there is not quality. A lot of what we’re seeing now are spec homes that are poorly built, poorly conceived and built into the hillsides with very little land. That’s most of what’s on the market and it’s not selling.
What are some challenges you’ve seen in this sphere lately?
There’s two problems — overbuilt, low-quality product and unrealistic seller expectations. We’re also seeing a lot of scammers and fake buyers. It’s rampant everywhere but the number of fraudulent buyers in the luxury market is just unbelievable. There are people who just want to see nice homes and feel important.. You have to be super diligent about who you’re working with. Some people have even tried to submit fake proof of funds.
By unrealistic seller expectations, you mean homeowners who expect to get much more than the house is worth?
Yes. In 2015 and 2016, it wasn’t the biggest deal if a property was overpriced because the market was hotter. Now, the market’s cooling while seller expectations have remained the same.
How do you start out in this branch of the industry? What’s your trick for finding star clients and securing luxury home listings?
The same way it’s always been. You start out by doing leases, luxury leases that are $20,000, $30,000, $40,000 a month. And sell a few one and two-million properties. That’s how I started my business and it developed into a completely luxury company.
As buyers get wealthier, they’ll look to sell and move into someplace bigger or they’ll refer you to somebody or they’ll have a father who’s wealthier and can buy something. It’s about getting clients rather than wealthy clients. And socialize!
Go to where the homeowners who are selling luxury properties are. It could be a nice restaurant in town or it could be golfing. The more you’re out socializing, the more opportunity you have to secure a client. Go and talk about the fact that you’re a real estate agent as often as you can.
How important is a strong social media presence for a luxury agent?
It’s important to market yourself. Your clients want to see that you have a strong social media following because it’s one more feather in your cap. But in the luxury market, getting the deal still comes down to networking. Luxury clients are not finding their agents on social media.
What’s the question you hear most from your clients?
Number one is the market. What is going on in the market? Are they going to be losing money by buying the house now?
Some people don’t even know if the market has gone up and down in the last year. You better know about interest rates. Being well-informed about loans and interest rates and taxation and market information is certainly a way to set yourself apart.
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