October is Luxury Month at Inman. All month, we’ll be talking to top producers from across the country, offering advice on how to join their ranks, and more. That all leads up to Luxury Connect at the Aria Hotel (Oct. 25-26, 2021, join us) and the live presentation of the Inman Golden I Club honorees for this year.
Want to join the ranks of the top luxury agents in the country? Well, it takes more than just hard work, a firm grasp of the market and an abundance of confidence.
As a luxury real estate agent, you must be prepared to deal with the inhabitants of your area’s local luxury landscape. Here are eight types of the luxury clients you’re most likely to encounter, including tips for dealing with each type.
1. Richistans: ‘Mine is bigger than yours’
The first category is the Richistani, which Robert Frank described in his book, Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich. To be a Richistani, you must have a net worth of between $1 to $10 million. The most exclusive residents are classified as members of the “Billionaire’s Club.”
Richistanis play the conspicuous consumption game with gusto. They constantly compete to have the biggest and the most expensive toys and properties. Greed and fear are their primary motivators. They thrive on risk, reinvention, brutal hours and intense competition.
Pro tip: Only show them the showiest, most prestigious properties where they can flaunt their wealth to the world. Also, be prepared with plenty of masks and hand sanitizers since they are often, but not always, germaphobes.
2. The millionaire next door
The second category is “the millionaire next door,” which Thomas J. Stanley and Sarah Stanley Fallaw first described in their book, The Next Millionaire Next Door: Enduring Strategies for Building Wealth.
According to Stanley and Fallaw, the millionaire next door’s mantra is: “Live below your means.” They are financially conservative, often purchasing a modestly priced, comfortable home.
They usually don’t appear to be rich and place a premium on flying below the radar in terms of their wealth. Instead, they prefer to spend time with their friends and families and are usually active at their place of worship and in charitable giving.
The prime example of this type is Warren Buffet, who purchased his current home in Omaha in 1958 for $31,000. He still lives there and has committed to giving away 99 percent of his wealth.
Millionaires next door may buy an expensive car but drive it for 10 to 20 years or buy top-quality shoes that they have repaired. To illustrate this point, Michael Bloomberg, the publisher of Bloomberg News and the 20th richest man in the world, reportedly had only two pairs of work shoes that he wore for over a decade. Nevertheless, his philanthropic charitable work supports a wide variety of causes worldwide.
Pro tip: You’re likely to encounter millionaires next door at your local place of worship as well as at charitable fund-raising events. If they become a client, avoid trying to upsell them into a higher-priced property.
Instead, pay close attention to what they want and focus on locating high quality, well-constructed properties. Always remember their focus is on family and community, not on how much money they have accumulated.
3. The ultra-wealthy cheapskate
Despite how much money they have, these people are the ultimate penny pinchers. Their mindset is to get what they want at minimum cost, even if it’s at someone else’s expense.
A common example of this approach is inviting their agent to join them for a lunch or dinner at a very expensive restaurant and sticking the agent with the bill. These people seldom tip and justify their behavior by complaining about the bad service they received.
Pro tip: If you work with a cheapskate, be prepared to be nickeled and dimed throughout the transaction. Keep in mind that whenever you give them a concession, they’ll just ask for more. Hang on to your wallet, and never take them out for a meal.
4. The ‘money guy or gal’
You have a high-profile luxury client who falls in love with the extraordinary million-dollar property just showed them. When you’re ready to write the offer, your client says, “Here’s my business manager’s phone number — she’s the one who will write the offer and handle the negotiations on this house.”
The “money guy or gal” can be a CPA or attorney as well. While your client may be buying on emotion, these people are all about the numbers and the details in the transaction.
Pro tip: In addition to providing them with your personal CMA, be prepared with the following for your meeting:
- A property report from NARRPR.com, plus copies of the automated valuations from HomeSnap.com, realtor.com and Zillow. These reports are free.
- A complete document package including the purchase agreement, the agency disclosure, mandatory inspection disclosures, plus any other documents typically used in your state or local area.
- The current absorption rates (i.e., the months of inventory on the market.) Be prepared to discuss whether this area is trending up, transitioning or trending down in terms of property values.
- Be prepared with pictures of other competitive properties that you have shown the client plus information of recent closed sales.
- Ask their advice about how they would like you to negotiate on your client’s behalf if there are multiple offers on the property.
- Have the number of your state association’s legal hotline available if you’re dealing with an attorney who doesn’t understand the current laws or regulations governing the transaction.
5. Upstart millionaires
Whether your clients just made a bundle as a hedge fund manager, from a startup, a big sport signing bonus or the lottery, this group usually behaves like a Richistan — minus the germaphobia. Most are eager to flaunt their good luck and success.
Pro tip: Plan on educating your clients on what is required to close a transaction, especially if there is a jumbo loan and an appraisal involved. Also advise them about what is required to cover the costs of owning the property, including taxes, insurance, and upkeep.
The very best advice you can give them, however, is to consult with a CPA or tax attorney before they commit to purchasing. Most are unprepared when it comes to how much they will pay in taxes on that big check they just received. As a result, they may be unable to afford as much as they think they can.
6. The traveling entourage
In the past, the traveling entourage that accompanies an ultra-luxury buyer might include family members and friends. With Facebook, Instagram Stories, TikTok and YouTube, a social media influencer’s entourage can be thousands or even millions of people.
While this can be good exposure for the property and for you as the listing agent, if something goes wrong, it can be a nightmare.
Pro tip: Ultra-high-end sellers often worry about being stalked as well as becoming targets for theft or kidnapping. As a result, they may have stringent requirements potential buyers must meet in order to view their property.
This can include a preapproval letter if they’re obtaining a mortgage as well as financial statements and proof of funds, especially for all cash transactions.
7. The collector
An important trait most ultra-wealthy clients share is collecting — whether it’s art, vintage cars, civil war swords or some other bizarre types of items.
Pro tip: Always ask your luxury clients if there’s anything they enjoy collecting. If so, ask them about how they started collecting, their favorite pieces, and if appropriate, if you could see their collection.
Read up on whatever you can find about their interest. If you come across an article or book they haven’t seen, share it with them. It’s a marvelous way to strengthen your personal connection.
8. The opportunistic luxury buyer
Laura Brady, founder and CEO of Concierge Auctions, works in tandem with luxury listing agents to sell their most prestigious listings using traditional marketing methods, coupled with a live auction that allows bidding both in person and over the web.
When I interviewed Brady several years ago, she explained how important it is to market these properties utilizing all the traditional marketing methods brokers use, coupled with exposing these listings to Brady’s private list of top-tier of luxury purchasers. Most of these individuals own multiple multimillion-dollar properties around the world.
According to Brady, many of these potential buyers are opportunistic. For example, an island advertised for sale in a boating magazine captures a potential buyer’s attention, and they decide to buy the island instead of the ski chalet in Switzerland. The online auction format lets them participate no matter where they are in the world.
Pro tip: Don’t underestimate the power of an auction. Imagine having a group of Richistanis each bidding against each other for a property they have decided they must have, no matter what the price is.
When it comes to marketing luxury listings, review this list to see which descriptions best fit your client, and act accordingly. Focus on providing them exactly what they want as well as building personal connection by focusing on what matters most to them.
Bernice Ross, President and CEO of BrokerageUP and RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles. Learn about her broker/manager training programs designed for women, by women, at BrokerageUp.com and her new agent sales training at RealEstateCoach.com/newagent.