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May 2010

WSJ: Luxury Home Sales Bounce Back


In today's Journal:

...a study for The Wall Street Journal by MDA DataQuick, a real-estate data provider, found that in some areas of the country, sales of homes over $2 million in the first quarter were actually on par with the levels of 2005, the peak year for existing-home sales volume nationwide.

In San Francisco, 49 homes sold for $2 million or more in this year's first quarter, according to the study, compared to 47 in 2005. In Manhattan, there were 402 sales of $2 million or more in the latest quarter, compared with 311 in the first quarter of 2005, according to the appraisal firm Miller Samuel Inc. Other areas with strong rebounds included New York's Hamptons, Menlo Park, Calif., and Beverly Hills...

What's the trend in your market?

Oprah creates a 'Family Office'

Financial folks are all abuzz over the news that billionaire media mogul Oprah Winfrey has just shifted the management of her fortune to her own “Family Office.”  As you’ll remember from training, a Family Office is the on-staff professional team that works exclusively to manage a family’s fortune.  Generally one needs at least $30 million in investable assets to justify employing a Family Office.  The less affluent use bankers and brokers.  Oprah’s estimated $2.4 billion net worth more than meets the minimum requirement.

According to an article in The Wall Street Journal, Peter Adamson, a noted family office financial manager with The Bass Family and Eli Broad on his past client list, has been hired to head Oprah’s  new financial team upon the recommendation of Oprah’s law firm. 

All this illustrates the importance of networking with the partners of your city’s top law firms, accounting firms and financial consultants.  These professionals often  have the clients you’d like to serve and are in a position to refer top notch real estate professions to their very successful clients who wish to be buyers or sellers. 

How's the market?


As usual, the folks at Altos Research are busy finding new ways to help you answer this important question with good market data.  This time they have help from Robert Schiller, of Case-Shiller fame and the firm he founded, MacroMarkets.  MacroMarkets has just rolled out the Gap Gauge, a free online tool that crunches the numbers and helps to answer the questions:

  • Where would we be if there had been no bubble?
  • How far are we from a "normal" level
  • Is now a good time to buy (or sell)?

You can find more details in this Altos blog post, and of course on the Gap Gauge page of the MacroMarkets website.

Here is a quick comparison of the charts for Miami and Dallas:




Fundamentally, modern marketing is all about finding a group of people with something in common and tailoring your business to their wants and needs.  Done right, it is much more efficient than mass marketing, and results in the marketer and client often having shared interests and values and a "relationship" beyond the transaction. 

As our personal lives and business lives become more data rich, marketers have adopted increasingly sophisticated approaches towards gathering and analyzing data.   Their goal of course is to improve their offerings and their communications and to sell more with less invested.  The catch is that as people we don't know have access to more and more information about us and our families, it can start to feel a bit "creepy."

There is an interesting article in Smart Money that looks at how nonprofits are increasingly using data-based marketing techniques and more and more information about potential donors.  The article is titled "Are Charity Fundraisers Spying on You?"  The answer of course is "Yes," but the fundamental questions are "How do we feel about this?" and "How should responsible marketeers behave?"

When your favorite nonprofit isn’t busy saving the whales, chances are it’s making a serious behind-the-scenes effort to know you better—and using increasingly sophisticated technology to do so. Whether it’s the local museum or an international relief group, a charity’s prospect-research staff can survey your salary history, scan your LinkedIn connections or even use satellite images to eyeball the size of your swimming pool. And if it’s really on the ball, it’s keeping better tabs on your financial life than you are. Should your stock holdings double, your friendly fund-raiser can get an e-mail alert prompting her to make an impromptu call...

Data is playing an increasing role in when, where, how and with whom marketers seek to create relationships.

...the rising tide of data on hand can speed the getting-to-know-you process. Suppose a fund-raiser gets a candidate’s business card at a cocktail party. The next morning he can download an instant report on his new prospect from data providers like Blackbaud or WealthEngine. The summary starts with a simple numerical score assessing the prospect’s net worth and whether she’s likely to donate. But the details in these reports, which can run past 10 pages for a top executive, can include a prospect’s career history and education, stock holdings, pension, charitable-giving history and campaign contributions. If she owns a plane or a boat, it’s in there, along with the names of family members and board cronies.

There is no doubt that when done right, data-based marketing can be very effective.  It is also a tool that can be misused.  Beyond the obvious privacy issues that all of this data aggregation raises, there is the "creepiness factor."  At the heart of this creepiness factor is the issue of TRUST.

Does it bother me that my financial advisor knows my investment portfolio?  Of course not, we have a relationship built on trust.  Does it bother me that some random telemarketer knows it too?  Yes, it feels downright creepy. 

Relationships are built on trust, not information.  Our friends aren't necessarily those who know the most about us, but those who have earned our trust.  Information tools are invaluable in the marketing tasks of segmentation, targeting, and positioning--finding prospects and creating an offering--but it is important to remember that customer or client relationships are built on trust. 

Successful luxury agents are good target marketers.  Of course few are doing the type of intensive data-mining or data-driven marketing discussed in the article.  Nonetheless, in our increasingly data-rich world of market research firms and social media, it’s a point worth remembering.  I think we’d all rather be trusted “friends," not “creeps.”

May Wealth Report Newsletter now available


The May 2010 Wealth Report Newsletter is now available for members.

In this month's issue:

  • Retail Round-Up: Recovery Gains Momentum, Stocks Turn Shaky
  • Luxury Institute WealthSurvey: Apple vs. Sony: Brand Face-Off
  • Luxury Institute Luxury Brand Status Index (LBSI) Rankings:
  • Ultra-Luxury Automobiles: Rolls-Royce, Maybach, Bentley
  • Luxury Jewelry: Graff, Asprey, Buccellati
  • Luxury Watches: Blancpain, Vacheron Constantin, Breguet
  • Wealth Management: Boston Private Bank & Trust, Bernstein Global, Rockefeller
Members can access this report and an archive of past reports on our website (login required).  More on the report from our partner the Luxury Institute here.

Christie's quarter-billion-dollar art auction sets new records


Fast Company reports on Christie's sale of  author Michael Crichton's art collection, which netted $93.3 million and set a new record for a Jasper Johns piece with the $28.6 million paid for the "Flag 1960-1966" painting.  Overall the Contemporary Art Sale netted $231.9 million--almost a quarter billion dollars.

The gallery where the auction was held, on the second floor of Chrisite's Rockefeller Center headquarters, was jammed with high rollers. A clutch of Upper East Side champagne blondes hung on men with Gordon Gekko-like slicked back hair in the equivalent of the orchestra seats. In the back, a pair of artfully nipped and tucked women, dripping with diamond bracelets and Louis Vuitton leather goods, climbed over chairs to try and snag a seat.

Attendees included Marc Jacobs, Salman Rushdie, Michael Ovitz, and Peter Brant. Around 75% of the buyers were American. Eli Broad, the L.A.-based financier put it thus: "No one wants paper money--they all want art."

I found the last quote interesting.  It is consistent with what we've been hearing from others, and also ties in to our last post.  With the present level of uncertainty and volatility in the currency markets many of the affluent have increasingly been moving portions of their wealth into hard assets, dollar-denominated or otherwise.  Real estate is obviously likely to continue to play a large role in these assets shifts and diversification moves.

Currency volatility and the international buyer/seller

Anyone who watches the currency markets (or the news for that matter) knows that we've been seeing some pretty big currency moves lately.  There's been a strong appreciation of the Dollar against many other currencies and the Euro has been getting hammered.  

If you work a market popular with international buyers, you're probably seeing the effects of this.  Not too long ago, the weak Dollar meant big "discounts" for buyers converting from stronger currencies.  Lately the table have turned.  Noah of of the NYC real estate blog UrbanDigs did a good post on the subject last week.  He notes:

... the volatile currency moves are resulting in a decline of purchasing power for those foreigners converting Euros to Dollars when closing their transaction. In short, these guys can't buy nearly as much for their Euros as they could have just 7 months ago. On the flip side, this could make previous Euro investor-owners holding Manhattan property more inclined to sell to take advantage of the currency rise in their dollar based asset - especially if they bought near peak and are expecting to take a loss. The loss in the trade of the asset might be offset by the recent gain in the dollar against their local currency.  Interesting.

Obviously beyond simply timing the market, there are various tactics that international buyers and sellers can use to hedge against undesired currency fluctuations and minimize loss or maximize gain. 

If you are a Member and are interested in this, you might want to check out our webinar May 25th on Financing Options for Affluent Buyers.  Laura McLoughlin of the foreign exchange firm Moneycorp will be on hand to discuss some of the ways that international buyers and sellers can get the most for their money in transactions that involve currency exchange.

Forbes: America's Most Expensive Homes

Le Belvedere

"Amenity-laden properties at the top of the market continue to command just as lofty prices." according to a Forbes article this week. 

"Two of last year's homes [from their most expensive home list] have been sold--no small feat in a down economy. But neither commanded anything near their sky-high asking prices. The massive Bel Air mansion Le Belvedere, which went on the market in early 2009, was quickly reduced from $85 million to $72 million. The discount worked: It is currently in the escrow stage of a sale for an undisclosed price."

YPN webinar with Tom Ferry

Ypn Last week we hosted a great webinar featuring real estate coach Tom Ferry for NAR's Young Professional Network (YPN).  The webinar was full of great tips and ideas.  It was recorded and is available through YPN. 

Members of The Institute can also view the recording on the Webinars page of our website.  While you're there, check out the recording of our April webinar on websites for luxury agents, and sign up for our May webinar on Important financing options for affluent buyers (and why currency exchange services matter).

Seven real estate experts tapped for Leaders in Luxury Advisory Board

We’ve just announced the initial details for this year’s Leaders in Luxury (LIL), an invitation-only educational and networking event for real estate agents who work in the million and multi-million dollar home and estate market in the U.S. and Canada.  We’ve also chosen seven agents to serve on the Advisory Board, which is helping us plan the event. 

This is the sixth year we’ve hosted an event for top luxury professionals. If you saw our earlier post you know LIL 2010 is scheduled for October 20-22, at the luxurious Barton Creek Resort and Spa in Austin (TX).

Our Advisory Board is made up of a diverse group of luxury professionals from large and small markets across the country who have attended Leaders in Luxury in the past.  What they have in common is strong expertise in the luxury market and an understanding of what real estate professionals need to know to better service the affluent buyer and seller.                  


The 2010 Leaders in Luxury Advisory Board  -- Drum roll, please!    

DeAnne Cutthoff
of RE/MAX Elite in Brentwood (TN)

Nancy Henline
of Keller Williams in Hickory  (NC)

Maureen Kennedy
with Pacific Union in Oakland (CA)

Diane Kink
with Keller Williams in Houston (TX)

Ron Parks
of McGuire Real Estate in the San Francisco Bay area (CA)

Aaron Wheeler
of Oakville Properties in Silicon Valley (CA)

We are counting on these Institute members to help us make this year’s LIL the best one yet.  We hope to see you there. 

In addition to information and idea packed presentations, special recognition awards will also be given in several marketing categories including an award for overall excellence in marketing in the luxury real estate niche.

For more information, visit   Email or call us at 214-485-3000 to ask about an invitation.