Author: Special Contributor

How to break into the luxury real estate market

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By Michael LaFido

As a real estate agent, it is difficult to break into luxury home sales. Many agents believe they have to be licensed for X number of years before they can sell luxury real estate, but that is false. Many agents believe they have to be affiliated with a certain brokerage to be able to consistently sell luxury homes. That, too, is false. Many agents believe they have to drive a luxurious car or live in a high-end home to sell luxury homes. Those ideas are also untrue.

What IS true is that luxury sellers rarely allow agents who are inexperienced in luxury home sales the opportunity to interview, let alone work with them, until you can show them that you have successfully sold similarly priced homes in that area. One of the most important truths to getting hired is that you have to build sellers’ trust and be likable. As psychologist Daniel Kahneman, a Nobel Prize winner, discovered, people would rather do business with a person they like and trust than with someone they don’t, even if the likable person is offering a lower-quality product or service at a higher price. The bottom line is, be likable.

If you’re trying to “break into selling luxury homes,” my advice is to attend other agents’ luxury broker open houses in your market. You will gain an understanding of the styles, materials and construction involved, and you will gain confidence and more knowledge. Perhaps the listing agent may even grant you permission to “shoot a live video” from the property. You might also consider hosting an open house at another agent’s higher price point listing from your office.

I believe that when an agent is more knowledgeable, they will be more confident. When you are more confident, you will be more likely to step out of your comfort zone and know that you can work with high-end or luxury buyers and sellers. Once you make the first couple of sales, it’s easier to sustain business with those upper-price-point clients.

So, what exactly is a luxury home, Michael, you ask? Some people classify it by the style of the house, or perhaps by its finishes, or by the product brands in the home. So, how do we define a luxury home from a price standpoint? I know different brokerages and different real estate firms define luxury real estate differently. Many define a “luxury home” as a property that is priced at $1,000,000 or higher.  For the purposes of this article, we’re going to define a luxury home as a home that is listed for sale at at least three times the average sales price for that market. (There are four primary price points in most markets: starter-/entry-level, average, high-end and luxury pricing. I define high-end homes as homes that are two times the average sales price for that given area.)

Luxury is relative to that specific market. Most markets have luxury homes based on our definition; it’s all relative, however, because when people think of luxury, they often think of McMansions or estate homes, and that’s not always the case. To take action, you need to develop graphs and other visuals that can articulate the data for luxury and high-end real estate for/in your marketplace: Are you in a buyer’s market or a seller’s market? High-end and luxury homes start at what price point for your market? You need to know this information. You also need to align yourself with luxury strategic partners and become a student of local and global luxury trends. Almost every ambitious agent in this business wants to break into the luxury market, so you need to set yourself apart by proving you have excellent market knowledge and proven plans to successfully help homeowners sell their homes. Now go prove to the luxury sellers in your market that you’ve got what it takes!

I love sharing our content to our e-mail database, as well as sharing them on other platforms like Facebook, LinkedIn, Twitter, Instagram, and, of course, YouTube. I would love to hear from you. Let’s connect over Instagram @LuxuryListingSpecialist, and let me know how we can help!

Michael LaFido is the founder of the LUXE Designation (LuxuryListingSpecialist.com), founder of the Luxury Listing Specialist Podcast and author of the book “Luxury Listing Specialist.”

The real estate market has changed, the fundamentals of a successful business haven’t

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By Dirk Zeller

There has been a lot of change that we all have experienced in the last few years. While change is a constant, the depth and breadth of the change has been historic. With all the change and challenge, foundational truths still apply in the real estate business.

Sales is an odds-based business

I realize that many agents don’t view themselves as a salesperson. If you want to replace service or professional representation service for the word sales, OK. There are odds in any business. The odds for some buyers has become extremely low in today’s market. Buyers who need closing costs from the seller, who have low money down or who have zero dollars they can allocate for appraisal gap coverage are having a tough time. You are investing your time, effort, energy and expertise in a buyer client whereby presently, the odds might be heavily stacked against them. I am not advocating to not work with them. I am advocating monitoring your buyer pool to make sure all your clients don’t occupy this category.

Wants and needs don’t change the odds

Just because your client wants it or needs it doesn’t change the odds of them securing it. There are untold buyers currently struggling to move to the new market realities. They want to buy their home at the pricing of 6 to 12 months ago. They think if they just wait, diligently look and are patient, they will find the “proverbial” needle-in-the-haystack home.

We need to select our clients with a heart of service, as well as a head for business. We are in a service-based business. The purpose of a service-based business is to provide outstanding service for compensation. The second part at times is omitted. The “for compensation” is important. The two are linked together and occur in proportionality to the odds of the marketplace and the buyer. With a buyer that has low odds due to marketplace conditions and their individual buyer conditions (low down, type of loan, no appraisal gap funds, etc.), your earning compensation is equal to or worse than their individual odds. The odds must be evaluated logically with our head while we serve them with our heart.

Client selection plays a more important role in achieving success in today’s marketplace. It does pain me to write that, because I wish for all that want to become homeowners to become so. Due to the nature of the present real estate marketplace, low inventory conditions, escalating prices and, now, interest rate increases, the field of successful homebuyers has narrowed. As we all know, our income is attached to their successful outcome. As a businessperson, I have to use my head and my heart at all times with prospects and clients.

Murphy’s law will always get a portion of your output

Murphy’s law — whatever can go wrong will go wrong — is alive and well in the world today. Plan for Murphy to take a portion of your business. Not to think of that as fact is to be naïve. The sales ratios in the real estate business have changed. Historically, if you wanted three buyer-pending transactions each month, you would need to be working with about six active, motivated, ready-to-buy clients. About 50% of your buyers would find what they wanted in 30 to 45 days in a normal inventory market.

In today’s market that timeframe for some is longer. That has caused the ratios of 2:1 to increase to 3:1, maybe even 4:1 or 5:1 in most markets. That requires us to alter our formulas. You might need nine buyers or even 12 active buyers to secure three pended deals a month. The sales ratios have changed, so we must adapt to the new ones if we are to achieve successful outcomes for our clients and ourselves.

The more challenging the market conditions, the more truth is revealed if we are observant

Market difficulties shrink the allowable margins to success, narrowing the lane of opportunity. Disruptions in the market don’t remove opportunity; they just narrow the variables and tighten the shoulders of the road. For example, if you are inconsistent or non-existent in lead generation activities in your business, today’s more challenging market conditions will reveal that a lot sooner. We must be observant and strategic to marketplace changes, conditions and prospects’ and clients’ odds of success. The market demands improvement of our business, skills and strategies and habits.

Dirk Zeller is the CEO of Real Estate Champions.