5 Ways to Break Into The Luxury Real Estate Market
Anyone can transform their business to work with high-net-worth individuals (HNWI), typically defined as someone who has at least $1 million in liquid financial assets.
Back in Minneapolis-St. Paul, I was an affordable housing lender, originating mortgages in emerging markets for individuals with low to moderate income levels. After relocating to San Diego, I had no personal network. However, with a strong digital-marketing strategy I became a top producer in the luxury real estate market.
Over the past five years, (this article was written in 2015, numbers are very different now) I have grossed more than $2 million — thanks to 100% online lead generation. These sales have included significant and record-breaking sales in the luxury markets of Del Mar, La Jolla, Laguna Beach and Rancho Santa Fe.
An Emerging-Markets Specialist to a Luxury Real Estate Agent
In early 2009, I was the No. 1 lender with Lake Area Mortgage for the Minnesota Housing Finance Agency. There, I originated loans in emerging markets for low- to moderate-income buyers. Essentially, a couple earning $12 an hour each could purchase a $120,000 single-family home and make a down payment of $500.
Although helping hard-working families buy their first home was fulfilling, I was frustrated and bored originating 25 to 35 loans a month.
In the midst of the humdrum, there was finally one specific event that reassured me I needed to get out.
Here’s what happened.
In order to qualify for the Minnesota state down payment programs, the buyer has to underwrite at least $500 directly from their payroll deposits.
In most cases, this involved getting a bank printout signed and stamped the day payroll hit, because by the time the actual bank statement was due, the funds were no longer there. This required coaching the buyer on exactly what was required.
In this particular instance, the buyer’s fax arrived directly from the bank, signed and stamped by the banker the day before our scheduled closing with a balance of $488 — $12 short. I then had to call the buyer’s and seller’s agents to explain there’d be a delay in closing until the buyer’s next paycheck.
The reason for that $12 discrepancy was a charge to Little Caesars Pizza the evening prior.
Luckily, the buyer was paid weekly. But still, this was the beginning of the end for me as an emerging-markets specialist.
Why Luxury Real Estate?
Working with high-net-worth individuals (HNWI) or ultra-high-net-worth individuals (UHNWI) requires the highest level of service and sales expertise.
I’ve talked to many agents across the country in the past six years, and I recognize some communities simply don’t have multi-million dollar homes. But think of it this way: There’s always a gated neighborhood, a street, a lake or a golf course where the homes are more high end than the rest.
I can remember when I was originating $150,000 home loans and was envious of those originating $350,000 loans — double my commission rate. At that time, I had not yet figured out how to break through the glass ceiling.
Now, I often get asked, “Doesn’t branding yourself as a luxury real estate agent turn off possible middle-tier price points?”
I believe you can always sell down, but it’s almost impossible to sell up.
As an example, compare Neiman Marcus to JCPenney. You won’t find many Neiman Marcus shoppers venturing into JCPenney. However, shopping up is possible, if, say, someone is looking for a special gift.
You’ll also notice Neiman Marcus has a more upscale store design, the store associates are dressed better, and the overall service is more personal. The standards are higher.
The key here is to learn the luxury lifestyle and what’s considered quality service. By studying these skills, you can apply them to all aspects of your business — even if it’s not exclusively luxury.
That’s why we sell both luxury homes and homes with middle-tier price points.
This has become important to our business model as the luxury home is often considered a discretionary purchase. Oftentimes luxury homes in San Diego serve as a second residence or as an investment. Because relocating to San Diego is not necessary, we’ve lost clients to other warm-weather markets, including Florida, Hawaii, Arizona and other parts of California.
5 Tips to Help You Break Into the Luxury Real Estate Market
If you’re looking to tap into the luxury real estate market like I did, here are a few tips that’ll help you get on the right track.
1. Learn Luxury
It’s important to learn luxury brands beyond the obvious mainstream travel destinations and dining options and to elevate the level of your perspective.
One of the best ways to learn luxury is to follow influencers on Twitter and Instagram.
I purposely mute Twitter followers who don’t teach me new things or are a brain drain. I want my feed filled with news, luxury purveyors, influencers and technology. I follow high-end home design, architects, interior decorators and builders.
If you want to dig your nose in some books, I recommend Dr. Stanley Thomas’ books: “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy,” “Selling to the Affluent,” “Marketing to the Affluent” and “Networking With the Affluent and Their Advisors.” These books will begin to reshape your thinking and understand the mindset of a HNWI. Additionally, I recommend Selling Luxury Homes by real estate agent Jack Cotton.
I also got subscription passes on iTunes to prior seasons of Bravo’s “Million Dollar Listing.” If you ignore the made-for-TV drama and instead watch the different scenarios between potential buyers and the agents, you might feel more prepared for your first interactions.
Overall, learning more about these topics will give you conversation starters for future prospects.
2. Consider Your Online and Offline Image
If you don’t have a blog yet, I have a DIY real estate website tutorial. It’s quick and budget friendly.
First, check out my article on REDigitalUnicorn: How To Create A Website in WordPress Step By Step.
Next, here are a few tips on how to build your online image.
Know that high-end clients almost always check you out online prior to the first meeting. Be prepared with consistency, and optimize your profiles across all social media.
An easy way to ensure consistency is to use the same professional headshot.
Your photo is your No. 1 marketing message, and many agents don’t take it seriously. Their photos are outdated, out of focus and not presenting them at their best. Spend the extra couple of hundred dollars on a top headshot photographer. Make sure your outfit is tailored, and even use small clips on your sleeves and suit jacket if there’s extra bulk.
I’m also very cautious regarding whom I’m connected to on social media. Can you imagine losing a client because someone you are “Facebook” friends with posts inappropriate things? Then your prospect judges you adversely based on that?
So now you might be wondering: How do your brand yourself if you’ve never sold a “nice” home? Prior to selling my first luxury home, my about me section read simply, “I specialize in selling luxury homes.” Then, enhance your luxury image with earned credentials, certifications and affiliations, which can also help boost your self-confidence.
Additionally, be sure to maintain your website and to write articles. You can also try to get published by sending out press releases. Make sure that your press release is of interest to your intended audience — and not about you. If you write about how awesome you are, your article will die, and no one will care.
I wrote an article “Skyrocketing of Ultra-Luxury Home Sales in San Diego for 2013,” which led to a quote in Unique Homes Magazine and in our local San Diego Premier. I’ve also had two local spots on San Diego Fox 5, thanks to evening anchor Jenn Karlman noticing an article I wrote.
I found the following paid real estate affiliations, trainings and designations helpful when I was starting out:
- The Institute For Luxury Home Marketing
- Luxury Home Council
- NAR CIPS Certified International Property Specialist
- Jack Cotton’s Luxury Agent Academy
In terms of wardrobe, you’ll want to first splurge for the most expensive pair of shoes and belt you can afford. You can build everything else around that. Sometimes you can find used items in excellent conditions at luxury consignment shops.
Your car is also important, depending on your market. If you can’t afford to buy a new car at first, know where to get a rental car for when you have a VIP client.
3. Break Into Digital Marketing
To break into the luxury San Diego real estate market with no personal network, my plan was to take advantage of digital marketing.
I’m also a very strong believer in intentional marketing dollars versus vanity marketing dollars. Intentional marketing dollars will bring in a direct response — humans with email addresses and phone numbers.
Vanity marketing dollars, on the other hand, might make you famous in your town. However, calculating a rate of return at the launch of a real estate business is more difficult. Examples of vanity marketing are bus benches, grocery carts, billboards and “Call Me I’m Awesome” magazine ads.
4. Google Page One Rankings
One large misconception real estate agents have regarding websites is that if you buy a site that’s already nicely designed, you’re good to go.
In reality, organic traffic is earned, and it takes hundreds of hours of work.
There are leading real estate website designers selling websites for $5,000 to $20,000. Sure, they are gorgeous, but with no organic footprint, their value is truly insignificant.
It’s more advisable to build a basic template site for $1,000 to $2,000 and invest the rest of your budget in professional copywriting, videos and photography. After your organic traffic begins to take hold and after you close your first sale, upgrade the design aesthetics.
Start by building out pages for long-tail lifestyle keywords. These are three- to four- word keywords that are specific to what you’re selling.
5. Learn Emotional Intelligence
There is a two-step process to successfully closing high-profile real estate transactions.
The first step is procuring the lead or prospect. Many agents have these prospects in their sales funnels thanks to online lead generation, but they fail to make it to the finish line.
The second step involves lead conversion — but not in the traditional sense. An agent could follow all the right steps through the lead-nurturing process, have their scripts memorized to perfection, but still fail.
Colleen Stanley’s book, Emotional Intelligence for Sales Success speaks about the Emotional Intelligence Quotient (EQ) relating to sales.
EQ is the ability to identify and control your own emotions and other’s emotions. I think high EQ is the predominant differential for sales agents that sell consistently in the high end. In managing a high-profile sale, you have two super egos on either side of the table that both want to win — and are used to winning. And depending on the other party’s broker you’re negotiating with, you may have another adversarial party.
More often than not, the seller states emphatically that they don’t have to sell. This essentially means, “I’m not motivated by your quick cash, quick close offer for less money.” You have to navigate home inspections where the buyer expects every small deficiency repaired or credited with a substantial repair credit.
Unemotional intelligent real estate agents negotiate with their real estate commissions, have difficulty accepting delayed gratification and can’t adapt quickly to the prospect.
How These Tips Lead Me to Significant Sales
In the fall of 2012, I remember touring 2984 Sandy Lane in Del Mar, listed at $18.995 million on the Weekly Caravan.
I can remember sitting on the oceanfront deck thinking to myself, “Wouldn’t it be amazing if I could sell something like this?”
In November 2014, that dream became a reality when I sold the most expensive on-market home in San Diego County for $15.995 million.
Around 140,900 adults worldwide can be classed as UHNW, with personal wealth of more than $50 million, according to Credit Suisse Group AG’s Global Wealth Report. This puts into perspective the number of opportunities you have to meet and transact with an UHNWI through an online marketing plan.
Need More Information on Real Estate Leads?
You may find a couple of our other articles helpful:
- Instagram Tips For Real Estate Agents
- Pinterest For Real Estate
- How To Create A Real Estate Website
- How to Break Into the Luxury Real Estate Market
- How To Transition Into A Career in Real Estate
- Internet Lead Conversion Strategies
- My Real Estate SEO Strategy
- Real Estate Marketing Unicorn
- Best Way To Setup Google Adwords
- How To Attract High End Real Estate Clients
Would you like to learn more digital marketing, SEO, search engine marketing for real estate, and how I use this method to close high-end buyers and sellers? Request to join my new Facebook Group Luxury Real Estate Sales – Breaking Into The High End
Do you need more information about real estate Google Page One Rankings? Looking for professional real estate SEO services to get started? Reach out to me today for real estate link building, real estate content marketing and real estate guest blogging.