Developing a luxury clientele base within your real estate business is the same as developing any other clientele base. There are no short cuts, no tricks, says Charleston based broker-in-charge Leslie Turner. “In my experience, hard work and providing excellent services to all clients, regardless of the price of the home they’re buying builds an agent’s reputation for professionalism and reliability.”
That being said, Inman’s latest 2018 Guide to the New Luxury Real Estate Market offers real kernels of information and insights into the Who They Are, What Do They Want, Where Do They Want It and How Do They Want It. Let’s go.
First, who are the new luxury real estate clients?
The current crop of luxury clients fall into distinct categories with specific wants and needs.
- 433.9.12 % are Gen Xers, ages 38-53
- 33% are Baby Boomers, ages 54-72
- 15.7% are Millennials, ages 22-37
Most luxury clients of all ages are married couple and/or families with a household income of +$500,000 – $1M/annually.
Though Gen Xers are the majority of active buyers, all real estate experts agree that Baby Boomers have the most spending power of any distinct demographic group and that Boomers are seeking “…to embrace a new lifestyle…” as they near and/or enter retirement. Most Boomers are looking to be near the center of town/the center of action.
According to a recent study called “The Rise of the New Aristocracy 2018” by Luxury Portfolio International and YouGov, the US added 745,000 affluent households earning +$250,000 this year. The study describes the New Aristocracy as being “…well off young people ages 25-40…” who will have the financial capacity through inheritance and/or personal success “…to power real estate markets in the coming years.”
Sotheby’s International Real Estate said in its “2017 Global Affluence Report” that Millennials want homes, often second homes, to match their particular lifestyles, such as skiing or sailing.
Christie’s International Real Estate (CIRE) identified two “new” demographic groups of luxury real estate clients, “Xennials” or older Millennials born between 1977-1985, and “Nomad MIllennials,” ages 22-37. CIRE indicated that most Xennials work in finance and tech and are often looking for second homes. Nomad Millennials often work in tech companies, startups and creative fields and work remotely in places of their choosing, often “…reinventing (hip) second tier urban locales…” such as Austin, Charleston and Asheville.
What do they want?
All luxury real estate clientele ranks quality as the most important thing. Quality goes for both real estate properties and real estate agents. All luxury clientele want the promise and confirmation that the value of the agent and the property is and/or will remain high.
Almost unanimously, luxury clientele of all ages want single-family, detached homes. Over half of them are looking for larger (+7,500 square feet), four+ bedrooms and 3+ bathrooms that can accommodate multiple generations. The other less than half are looking for mid-size homes, co-ops, condos, and/or townhouses with smaller footprints that can accommodate occasional adult family members and/or guests.
Most all want outdoor and entertaining spaces specific to hobbies and at least one designated home office.
Architectural design preferences center first around contemporary and then colonial styles; interior design preferences favor contemporary and then modern styles with some 27% wanting traditional style elements. Open floor plans that provide flexible usage options are favored.
According to CIRE, mid-tier luxury clientele of all nationalities prioritize privacy and security.
Where do they want it?
- 49.12% prefer the suburbs
- 822.1% prefer a scenic waterfront
- 15.79% prefer an urban setting
- 5.26% prefer a rural setting
- 5.26% prefer a resort setting
- 1.75% prefer an historic setting
Boomers and Nomad Millennials are looking for proximity to restaurants and entertainment/cultural/shopping venues as well as walkability.
- 34.55% would like pool/grotto
- 23.65% would like an indoor home theater
- 18.18% would like an outdoor kitchen
- 5.45% would like a private spa/sauna
35.9% of luxury clientele of all ages would like to have a smart, sustainable, eco-friendly home. Within the parameters of “smart,”
- 53.57% would like a smart security system
- 28.57% would like smart climate controls
- 7.14% would like smart voice activated controls
- 3.57% would like smart kitchen appliances.
International buyers often prefer new development properties that are filled with amenities. Properties associated with marque brands such as The Four Seasons or W get high rankings.
Domestic buyers, on the other hand, prefer things such as location, cachet, storied histories and uniqueness. Co-ops around Central Park are good examples of location, location, location and the more stories and/or personalities associated with the property, the better.
How to generate and retain luxury real estate clientele?
Luxury real estate is often a combination of who you know, what you know and how you communicate your knowledge. This is where flourishing spheres of influence come into play.
Foster long-term relationships, not transactional ones. Long-term relationships may lead to trusting relationships and trusting relationships may lead to multiple sales and purchases on behalf of the client, the client’s family, friends and colleagues
Consider endorsements, introductions and referrals to be gold. Never underestimate them.
Luxury clients love “getting in early” on a deal. Again, this is where your spheres of influence come into play so you can have the inside track on any and all deals that may come from your networks.
Be attentive to market fluctuations in order take advantage of opportunities. For example, the prices of luxury homes in Florida have been rising at the fastest pace in 5 years and those prices are now higher, +25%, than they’ve been in a decade. All of this “new” action in Florida is due to last year’s changes in the tax laws.
Don Gottesman, an agent with Engel and Volkers in Seattle, thinks luxury clients are definitely worth any agent’s best efforts. “They’re savvy and sophisticated and usually can make decisions quickly about what they want and when they want it.”
Hopefully, Inman’s 2018 Guide to the New Luxury Real Estate Market will help you develop this rewarding niche within your overall business.