All month long in July, we’ll survey the changing luxury real estate market, talk to top producers and offer advice on how to level up — all leading to the gathering of the year, Inman Luxury Connect, Aug. 2-3 at the Aria in Las Vegas. Make plans now to join us there.
This post was last updated July 26, 2022.
Want to increase your income as a real estate agent? Sell more homes or increase your average sales price. Easier said than done, of course, and selling more homes requires either more time or a more systematic approach to the business.
On the other hand, increasing your average sales price is simply a small shift in focus followed by a strategic plan to position yourself as the luxury expert. The following six steps will help you do just that.
1. Choose your farm area well
No matter what price range you’re focused on, your goal is to find a farm area where you can become the local expert and add as much value as possible for people who live there as well as those who would like to live there.
Note that it’s just as easy to select a farm where the average price is $600,000 as it is to choose one with an average price of $300,000. The effort — and in many cases the expense — to farm a higher-average-price neighborhood is the same.
Pivoting your efforts to a higher-priced neighborhood is a subtle shift that can yield an increase in income. When choosing a farm, keep these two important factors in mind:
- Make sure there’s no dominant player farming the area already. It’s not that we want to avoid competition, but why not search for a neighborhood where your ability to become the dominant agent is easier? I define dominant players as agents who take more than 20 percent of the listings over 12 months for the specific farm area you are considering.
- Ensure that the farm area has enough turnover to support your business. If only two houses sell in that farm every year, it won’t be worth the time you’ll devote to farming. As a rule of thumb, if you can take 10 percent of the business from a farm in your first year and cover your expenses, then the farm will likely be worth the time you’ll invest because, farmed correctly, you will take away more than 10 percent.
Choosing a farm area with a higher average sales price is the easiest first step to increasing your average sales price and building a luxury real estate business.
2. Understand your luxury market
Learn everything you can about luxury homes and neighborhoods in your area. You should:
- Know the sales that have happened over the last few years.
- Meet the owners who live in the luxury neighborhoods.
- Learn as much as you can about the builders and architects for the neighborhoods.
- Familiarize yourself with the location and the amenities in the area.
Become the agent who knows more about the luxury neighborhoods in your area than anyone else. This will prepare you so that when an opportunity to help customers buy or sell in the area comes along, you’ll be confident in your ability to represent them well — and you’ll begin building a reputation as the agent of choice.
3. Know the tax consequences for luxury real estate owners
The tax considerations for luxury homeowners and investors will differ from first-time homebuyers, so understanding those tax codes will position you to build significant value for your luxury customers.
We never give tax advice, as we are not licensed to do so, but having an understanding of the effects ownership or selling on the client is crucial to gain trust. Building a relationship with an accountant that services high-net-worth individuals is invaluable as a resource and potential referral partner.
Educate yourself about the benefits of buying, selling or holding properties so your customers will view you as a consultant who understands their unique considerations.
4. Be where the luxury clients are
There’s a saying that birds of a feather flock together, and luxury real estate clients are no different. So how do you find those clients?
Glennda Baker with Ansley Atlanta Real Estate out of Atlanta, Georgia, wanted to move into luxury real estate as a new agent. Even though she was a single mom living in a one-bedroom apartment at the time, she found a way to become recognizable to the clients in her targeted luxury neighborhood.
Every day, she parked outside the neighborhood she wanted to farm, put her baby in a stroller and walked the neighborhood to get to know the people there. She became a familiar face to the residents and used that to build a farm in that area.
Attend fundraisers, go to community events and spend time in the places that luxury clients go so that they’ll get familiar with you. Start conversations that will allow them to know, like and trust you, so you’ll be positioned to provide expertise to help them make the best real estate decisions when the time comes for them to buy or sell.
5. Step up your marketing
You must present yourself and your properties in a way that suggests luxury to your customers. Here are a few things you should consider doing:
- Insist on high-quality professional photos.
- Improve the quality and content of your videos.
- Build content that educates your audience about the considerations of luxury real estate.
- Present your marketing in a way that exudes luxury and quality.
If you aren’t sure what luxury marketing looks like, find other luxury markets and model what you see other top-producing luxury agents doing. Rather than copying what you see them doing, adapt those ideas to your own farm area so that the people in your audience will recognize you as a local expert in luxury real estate.
Be active in the market you’re looking to move into.
- Go to every open house in every luxury neighborhood.
- Preview every possible luxury property that might attract the potential clients you’d like to work with.
- Build a database of luxury homeowners and potential buyers.
- Make phone calls, send emails, and use drip campaigns to notify luxury customers when a property that might interest them comes on the market.
When people see you sharing valuable information about luxury properties and they see you working in the neighborhood, they’ll recognize your work ethic. They’ll associate you with a higher level of service and expertise, and they’ll reward you for that effort.
No matter what market you’re currently serving, you can move into luxury real estate by tweaking the things you’re already doing and engaging with luxury clients. Understand the market and the clients, and then build value for the people who engage in that market, and you’ll establish yourself as a luxury real estate agent.