Luxury Insights

A mini-movie for Valentine's Day

Romancing your listings is something we teach in our Institute for Luxury Home Marketing two-day training class. Other purveyors of luxury products and services strive to romance their products, too.

Since today is Valentine’s Day, we thought we’d share a marketing mini-movie with you, one that’s all about romance. Here is uber- jeweler Cartier’s latest mini-movie (actually, it is a composite of three mini-movies which you can also view individually):

(View video on YouTube)

In our opinion, Cartier knows how to tell an effective story that ties emotion and their jewelry together with a big red bow.

Happy Valentine’s Day!

Could what you “know” about millionaires be wrong?

The number of U.S. millionaires is at an all-time high. Research results indicate that there are 12 million U.S. households with a net worth of a million dollars or more. (Remember net worth is calculated by all assets minus all liabilities equals net worth.) In fact, the U.S. has twice as many millionaires as the next top 10 countries combined.

Real estate professionals who have taken our luxury home marketing training know that many common perceptions about these millionaires are often clouded by myths. Who are these very successful Americans and what do we know about them? Just for fun, test your millionaire savvy with this quick trivia quiz.

Are the following statements True or False?

1. Most millionaires live in a home valued at less than $500,000 and drive a car which is at least two years old.
2. The largest share of millionaires earn between $100,000 and $249,900 annually.
3. There are as many millionaires created by inheritance as there are self-made.
4. Most millionaires own luxury goods from brands like Rolex, Gucci, Prada, and Louis Vuitton.
5. When it comes to shopping, the top two destinations for high net worth shoppers are the internet and discount department stores.

6. Which of these words best describe the average millionaire's spending habits?

• Saver
• Big Spender

Scroll down for the answers!

 

 

 

 

 

 

 

 

 

 

 

 

ANSWERS: Let’s see if you are millionaire savvy or have fallen prey to millionaire myths.

1. True. The majority of millionaires do live in homes valued at less than $500,000 and the cars in their garages are at least two years old.
2. True. Millionaires earn less than you might guess. The majority earn between $100,000 and just under $250,000.
3. False. The vast majority of millionaires in the U.S. (and in the world) are self-made and their money comes from business ownership and employment-related income.
4. False. Far from being conspicuous consumers, typical millionaires don’t purchase high-end brands such as Prada, Gucci, Rolex, and Louis Vuitton and may not even recognize these brands. Yes, really!
5. True. The favored destinations for high net worth shoppers are the Internet and discount department stores. In fact, 68% of affluent households with an average of $250,000 in annual income shop at discount stores according to research done in 2014 by Unity Marketing.
6. Saver.  The typical millionaire is generally frugal, saving 15% to 20% of his or her annual income each year.

If these government statistics and research findings documented by Unity Research and the American Affluence Research Center surprise you, find out more about the wealthy and how to reach those who are interested in luxury homes by joining us at one of our upcoming Institute for Luxury Home Marketing training classes, or register for our online class.

Is the 80/20 rule really true?

You’ve heard the statistic – 20% of Realtors do 80% of the business.

Is this true or is it just another sales myth that’s bandied about in the real estate business? A recent blog post by Ted Jones, Chief Economist for Stewart Title reports on a study by the WAV Group that provides some insight to this question.

The research company surveyed about 150 Multiple Listing Services regarding listings and closed transactions for the first half of last year. The accompanying charts show the percentage of agents who had listings in that time period, as well as the percentage with closed transactions.

Certainly some people subscribe to the MLS for reasons other than listing or selling residential properties. This includes commercial Realtors that keep tabs on the residential market, appraisers, or others that use MLS data. However, the 39 percent who had no closings in the first half of 2014 and the 43 percent who had no listings is still remarkably high and indicates that about 40% of MLS subscribers are not listing and selling (for whatever reasons).

Add to this, the fact that another 50% only had from one to ten closings in a six month period, bringing to 89% the total of those who had from zero to ten closings in half a year and you can conclude that the remaining 11% of the agents are doing a high percentage of the business. It’s pretty much the same with listings. Only nine percent of MLS members had ten or more listings in the first half of 2014.

Our conclusion? If we are talking about numbers of transactions, the 80/20 rule may not be far off the mark in real estate.

Blockbuster penthouse sale breaks $100 million price barrier in NYC

New York City residential property sales bounced as high as $88 million in the past several years, but as of late December 2014, the sale of a penthouse encompassing the 89th and 90th floors of the new One57 tower has closed for $100.5 million, setting a new record for the most expensive residence ever sold in New York City.

The buyers name remains a mystery since the purchase was made in the name of a limited liability company, P89-90, LLC. Of the apartments sold in the building to date, reports are that more than half are in the names of Trusts or LLCs for privacy’s sake. While the property sets a record for NYC, at least three other U.S. properties have sold for more than $100 million in the past year.

The nearly 11,000 square foot duplex unit boasts the longest south to north city views ever offered by a NYC condominium and includes outstanding views of Central Park and other landmarks. The distinctive blue building was designed by Atelier Christian de Poirtzamparc, the Pritzker-prize-winning French firm. The building sponsor is Extell Development Company.

One57 is among several high rises to break ground on “Billionaires’ Row,” where the tall new towers cast shadows over Central Park. A group led by investor Bill Ackman is reported to have paid at least $90 million for another duplex on the 75th and 76th floors of the building, but the sale has not yet been recorded.

NY Times: $100.4 Million Sale at One57

Global Market Volatility and Safe Havens

This isn't a financial blog, but the current state of the world financial markets has us pondering volatility, safe havens, and of course, luxury real estate.  

Anyone reading the headlines (or filling their gas tanks)  in recent days knows that the price of oil has plunged. OPEC and Russia have stuck to their guns and have not cut production.

The currencies of oil producing nations have taken a hit, the most obvious being Russia which has seen a massive increase in interest rates from 10% to 17% and seen the Ruble tumble sharply against the US Dollar.  It is being reported that many western banks are suspending USD/RUB trading and closing all open positions (ouch!).

In the Middle East, equity markets are taking a big hit.

Here at home, some are speculating that U.S. and Canadian oil sands, shale oil, and other high priced petroleum ventures will be priced out of the market at these levels. The Financial Times reports that ,"Oil price fall threatens $1 trillion of projects." 

While we might be enjoying the numbers we're seeing at the gas pump, the global commodity, equity, and currency markets are experiencing high volatility, if not outright turmoil.  

Obviously what this means on a practical level depends on one's positions and exposure.  I think it is safe to say that we will being seeing a global flight to "safe havens" and that's probably not a bad thing for luxury real estate.  Interesting times...

Qatar’s royal family to convert three London properties into palace worth more than US$300 million

The royal family of Qatar plans to convert three prime properties in London’s Regent’s Park into a huge palace, making it the UK’s first home worth £200 million (US$312 million). When completed, the mansion is expected to be the most valuable residential property in London in private hands.

According to a story in London’s Daily Mail, the 13-bedroom residence will be the London home of the current Emir Sheikh Tamim bin Hamad bin Khalifa Al Thani.

Sheikha Mozah Bint Nasser Al Missned, one of the three wives of former Qatari Emir Sheikh Hamad bin Khalifa Al Thani, purchased the homes for an estimated £120 million (US$187.67 million) in 2013 and has reportedly hired architects and lawyers to oversee the transformation of the properties into a 33,000-square-foot mansion which will include a spa, heated swimming pool, beauty salon, butler and nanny quarters, a children’s floor, games rooms, powder rooms, massage areas, two elevators and a gymnasium.

Complete story, floorplan and photographs in the Daily Mail.

Golden Visas - Real Estate Investment, Residency & Citizenship

There is an interesting article on WealthX today looking at the current trends in countries offering residency or citizenship to “immigrant investors” and in particular the shift among the Chinese from the US to the EU. The full article is worth a read. Here are some highlights:

• In recent years 80%-90% of foreign investment visas in the US, Portugal, Canada and Australia are taken up by People’s Republic of China (PRC) nationals, but this is starting to change.
• The US, UK, Australia and Canada are limiting some of their programs while they deal with the backlog of applications, or make them more expensive.
• The US’ EB-5 visa requires investment of between US$500,000 and US$1 million in return for a conditional green card. There are just 10,000 of these visas issued annually and a cap on each nationality.
• This year Canada stopped accepting applications for its immigrant investor program and the federal entrepreneur program, of which around 90 percent of applications were from China.
• Investor programs for residence, like in Portugal, Spain, Greece, Hungary, UK, Canada, US, Australia, where the investor receives only Permanent Resident (PR) Status, are more popular in China. Under these programs it is legal for them to invest abroad and obtain PR, while applying for immediate citizenship is against the law in China.

Just for fun, here are the details on the Greek program that affords residency to real estate investors: 

Living the Multinational Lifestyle

The number of high net worth individuals in the world is increasing. Fewer of them have inherited wealth and more of them are entrepreneurs and business owners. The world has "shrunk." They are increasingly mobile, increasingly multinational, and they're looking for more than just tax shelters.

If you'd like to better understand who's buying where and why, Barclay's recent research report Wealth Insights: The Rise of the Global Citizen? (PDF) provides some interesting insights into the increasingly multinational lifestyles of the affluent.

As Barclay's puts it, "The Rise of the Global Citizen? report aims to explore the mobility of today’s wealthiest individuals, and to assess whether their choices of where to live, work, study, retire, invest and donate wealth are indicative of an increasingly international group. It also looks at key trends in the make-up of high net worth individuals, and how these are impacting mobility, financial planning, identity and philanthropic behaviour."

Check it out. It's worth a read.

“Million-Dollar Closet Heist” Raises Issue of High-End Home Insurance

If you saw the recent Good Morning America feature on the three-story, 3000 square foot closet located in a home in the Woodlands area of metro Houston, you may have also seen the follow-up story – the homeowner failed to set the home security system upon leaving the house and returned home to find the closet had been burglarized. Gone were about a $1 million in high-priced jewelry, watches, and designer handbags.

In an interesting twist, shortly after the burglary, the local Houston newspaper received an envelope of jewelry and other items from a person claiming to be responsible for the theft, along with a complaint from the disgruntled thief that the items were fakes.

Nonetheless, in the case of a theft of authentic valuables, one might ask, “Does homeowner’s insurance cover thefts of valuables in the home?” After all, many luxury homes are full of expensive items – most of which are portable and can walk off with a burglar or be subject to fire, water damage, or other threats.

Since we believe it’s useful for a luxury home expert to know the answer to this question, we decided to turn to an expert in specialized insurance for the very successful, Carrie Ousley of HUB Insurance.

Here are Carrie’s answers to our questions:

Q. Is there a difference in homeowner’s insurance for high-end homes as compared to insurance for average priced residences?
A. A big difference. When it comes to homeowners insurance, there are two categories of loss -- partial or total. Standard companies will repair or rebuild the home based on “like kind and quality.” The insurance companies which offer insurance for high net worth clients include “Guaranteed Replacement Cost” coverage in their policies. Even if it costs thousands more to rebuild the home, they will rebuild back to the original “custom” built features.

Q. So, for example, if a home has an antique Venetian crystal chandelier , the insurance company will seek out an antique Venetian chandelier instead of using a high quality new chandelier?
A. Exactly.

Q. How much more expensive is it?
A. It is actually less expensive, in many cases! Based on a luxury property priced at $1 million or more, the insurance cost is most always less than coverage from a standard insurance company. I’ve saved many clients anywhere from $1,000 to $8,000 annually on insurance coverage for homes over a million dollars in value. It’s a win-win. The client gets much broader coverage at a lower rate.

Q. Do all insurance companies offer special high-end overage?
A. No. Not all companies have special high end policies. In the U.S. there are five companies that specialize in insuring expensive homes. They don't work with homeowners directly, but homeowners can go through an independent insurance broker like myself. We gather the information and can provide quotes from multiple providers for a homeowner to compare and choose from. That’s a real time saver for busy successful people.

Q. Thinking about the Houston closet heist, what home contents are covered by insurance?
A. Personal belongings, such as clothes, purses, furniture, electronics, etc. are included as “Personal Property” and are covered in a homeowners policy. For instance, if one has a million dollar property, the personal property is usually covered at anywhere from 40% - 60% of the dwelling value ($400-$600K). However, if there is a deductible of 1% for “All Other Perils;” then a $10,000 deductible would apply. However, there is limited coverage for jewelry on a standard homeowner’s policy. Jewelry theft coverage of $5,000 would not be uncommon; however, the $10K deductible applies. We always suggest our clients schedule their jewelry. There is a charge for scheduling jewelry, but there are many benefits to doing this. And, there is no deductible, if there is a Jewelry loss. A nice feature that the high net worth companies are doing is offering to “blanket” jewelry and fine arts coverage. This is nice because the clients no longer have to give us full descriptions of all of the items and/or provide appraisals. Only if an individual item is valued at $50K do these companies require appraisals. And, I recommend my clients get their items appraised every 3-5 years, so that they know what the current value is.

Q. What is an umbrella policy?
A. An Umbrella policy is an extra layer of liability coverage that “sits over” one’s homeowners and automobile primary liability policies. It will also “sit over” any other properties, such as vacation homes, rental properties, vacant properties and acreage as well as over watercraft, ATVs, etc. It is a much needed policy for everyone to have and especially those who have a significant amount of assets and risk.
The average cost of a one million dollar umbrella liability policy for a client with one home & two autos is about $500. We always say that you don’t have to be a millionaire to be sued like one.
A nice feature with most umbrella liability coverage is that legal defense costs are also included over and above the limit of liability coverage a client chooses.

Q. How could a homeowner get a quote for specialized luxury insurance to compare to a current policy?
A. It’s simple. A homeowner should provide the independent agent with copies of their current policies so that quotes will be apple- to-apples and then we have to send out one e-mail with a few additional questions. Once we receive this final information, we approach our companies for quotes. We include a side by side comparison for our clients. We include a summary reflecting their current coverage compared to our quotes (coverage and pricing) from multiple carriers.

Q. Why should a Realtor be knowledgeable about the differences between luxury home coverage and regular homeowners’ insurance?
A. The differences are in the coverage, the service, the specialty products and claims experience. We buy insurance with the hopes that we will never need it, but if we do, you WILL notice the difference. For instance, our affluent Chubb clients have very expensive vehicles. A bumper could cost $20,000 or more. Have a talk with a high end auto dealer, as I have, and they say that Chubb just writes the check. I’ve seen this with my clients’ claims. 

If I were a Realtor I would like to think that my client is getting the type of high-end coverage for his upscale property that he deserves. Specialty high-end coverage is much broader, one of the many coverage differences is the “Guaranteed Replacement Cost Coverage.” A client can also add special coverage for domestic employees, add kidnap & ransom coverage if they are worldwide travelers, and have an exceptional claims experience -- all of this at a lower premium cost than non-high end coverage. Why would a real estate professional not want his or her clients to experience this?

Q. Final thoughts on high end insurance?
A. So many of my clients have been with a standard insurance company since college and have never ventured out to even see what else is out there for them. They move from their first $300,000 home up to a $800,000 and then up and up and now they are in a $2,000,000 property and they have no idea that there is a much better insurance option in the market. A real estate professional who points them to high-end insurance can be a hero. I don’t know the insurance situation around the Houston closet heist, but I hope the homeowner had high-end insurance coverage with a schedule for jewelry.

Benchmark your real estate marketing against North America’s award winners

Each year in advance of our ILHM Leaders in Luxury (LIL) event -- for members who have achieved Million Dollar Guild status by working successfully at the million dollar and above price point -- we invite attendees to submit their best marketing efforts. Last year in Seattle over one hundred and twenty North American professionals specializing in luxury real estate gathered for networking, educational sessions and to see how their marketing techniques compare to the best in the business.

Here’s our list of award winners from last year– those we think are setting the benchmark for outstanding marketing. 

• Best Property Marketing
  Ed Kaminsky of Shorewood Realtors, Manhattan Beach (CA)
  
  
• Best Personal Marketing with Emphasis on Agent Branding (a tie)
  Collette Gerber of RE/MAX Select Properties, Vancouver (BC)
  Raziel Ungar of Burlingame Properties, Coldwell Banker Residential Brokerage, Burlingame (CA)
  
  
• Best Market Update Report
  Friley Saucier of Premier Sotheby’s International Real Estate, Naples (FL)
  
  
• Outstanding Personal Achievement (a tie)
  Mike Brodie of Keller Williams Realty, Plano (TX)
  Diane Kink of The Kink Team, Keller Williams, the Woodlands (TX)

If you are planning to attend Leaders in Luxury this October 28-30 in Denver, be sure to submit your Marketing Awards entry so that we receive it by Tuesday, September 30th. You may be this year’s winner!

Colette Gerber’s property marketing cards
are oversized and feature outstanding copy.  
Mailing them in an envelope adds perceived value.

ILHM members who’d like to take a close look at the winning entries should tune into our end-of-summer webinar on Thursday, September 4, 2014 when Laurie Moore-Moore will review the winners’ entries. Watch our email for the webinar invitation and register.

Tune into the webinar for more details.