As the real estate market in the US continues to slowly regain its position, many agents see this moment as an opportunity to redefine their market. With so many agents abandoning, or at least significantly cutting back, their marketing systems to save money, others are jumping to take advantage of the marketing vacuum. In other words, they are taking an offensive approach to put themselves in a prime position when the market starts to rise.
In most of Canada, on the other hand, the market is still active and agents are looking for the best way to grow their business. They seek to expand the reach of their marketing and maximize revenue opportunities. Whether in the US or Canada, several agents we are talking to believe that now is the time to transition to the ultra-high-end market.
Traditionally, luxury real estate is one of the most difficult market segments to enter. Why? There are some common reasons. It may be the presence of a dominant agent already installed in the community or the fact that everyone already has a peer in the real estate business. It may be because the agents themselves do not have the patience to work in a generally slower-paced market (fewer transactions, tougher competition, and slower sales process). It could be that they are simply not prepared for the unique challenges posed by a high-end market.
In my experience, it is often a combination of these reasons that prevents most agents from being successful in luxury real estate. There are many things you need to know before making the quantum leap to the next price range. We’ve put together a list of five factors to help you decide if moving to luxury real estate is right for you. # 1. Know what you’re getting into
Agents often take a blind leap into luxury real estate because they think that’s “where the money is.” Of course, it is simple math. If you get the same division, it is worth listing houses with higher sales prices. In theory, you can make more money by making fewer transactions. On the one hand, that’s true, but if you go into luxury real estate with this mindset, you’re probably destined for failure. Yes, your transaction income increases significantly. That’s great, but a new set of challenges is often presented when working in a high-end market: competitive stakes are much higher, social circles are much more closed, politics is different, and there are many other factors that go into it. I will detail throughout this article. Additionally, marketing and service costs are generally higher when it comes to luxury homes and clients. Both buyers and sellers expect more and demand more and the properties themselves need even more attention (marketing, staging, photography, etc.) to attract a more sophisticated audience.
Carol Barkin from Toronto, Ontario has been a successful Sales Representative for 20 years, but it took her some time to build her business in her upscale markets (both in town and at a lakefront recreational market an hour from Toronto ). “For me, the biggest challenge was making that first connection,” he says. “They already have close social connections and know how to get what they want, so building relationships is a matter of trust. It’s important to engage with customers as a helpful friend and partner, not just presenting yourself as a service provider.”
# 2. Patience, patience, patience
It’s clear that high-end real estate is a different animal than traditional residential markets. It tends to move much slower. In general, there are fewer houses on the market at any given time and there are fewer buyers with the means to buy such expensive properties. There is more at stake for everyone involved. So on average, it takes a lot longer to sell one of these homes. Additionally, there is a my4walls lot of competition for a limited number of properties, so more patience is often required to enter the market and build a strong client base.
This is really a case where the end generally justifies the means if you have the right understanding and commitment. Although listings are harder to come by and take longer to sell, it’s worth the big check at the end of the transaction. But not all agents have the stomach to wait longer between commission checks. Often this is the obstacle that stops them in their tracks.
“In my experience in high-end real estate, six months on the market is nothing. On average, it is more like nine to sell a listing,” says Robin. “Also, if they are not really motivated to sell, you will waste a lot of time and money marketing. In some cases, I will adjust my commission rate so that the seller covers the marketing costs. This helps offset the time it takes to sell.