In life and real estate, change is the only constant.
We spoke to CLHMS member Patrick Ryan, the owner and luxury condo expert behind Genuine Real Estate in Chicago, IL, about the changes he’s experiencing in his market and how he’s adapting to these real estate trends in the luxury market.
Ryan received our 2017 Outstanding Achievement Award and has been featured in publications such as Forbes, The Chicago Tribune, The Wall Street Journal, and Leverage. He also possesses a number of accolades including a Negotiation Certification from Harvard Law School and Residential Specialist Certification, which is only achieved by 3% of real estate agents.
According to Ryan, there is certainly a slowdown in some luxury markets, but success is not impossible. Ryan believes that consistently investing in your education as an agent and finding creative ways to serve your clients is key to not only surviving, but thriving in a changing market.
In some markets, buyers are showing less urgency
Even with astoundingly low-interest rates and real estate market trends leaning heavily in the buyer’s favor in his area, Ryan is noticing that buyers are dragging their feet on luxury estate purchases.
“Taxes did increase, but prices are adjusting to that. I’m amazed that there just isn’t an urgency in buyers since they have a great opportunity with low-interest rates and more inventory than there was even a year ago. They’re just not moving—there’s just not a sense of urgency.” He adds that even new developments are sitting on the market for longer than usual, with some agents willing to take just about any offer to move their listings.
Although our September Luxury Insights Report showed that real estate market trends are pointing towards a balanced market in the luxury sector overall, there are still some polarizing variations among individual, local markets. As Ryan acknowledged, this is partly due to recent changes in property tax increases and also due to shifting luxury real estate market trends.
Nonetheless, he adds that a little competition can help speed up sales. In a market with excess inventory, buyers feel they can take their time with making a choice. When they start to see properties they had an interest in have recently gone under contract or are pending with other buyers, they start to realize that there is still competition, however small. Therefore, it’s just as important for agents to include their pending properties in their marketing strategy to create a sense of urgency in the market.
Price cuts aren’t always the answer
Most agents’ initial response to slow-moving listings is to reduce the price. However, Ryan warns that this isn’t always the best way to entice luxury buyers to make a move on your property, especially with an abundance of other options available. In fact, seeing a price reduction may hint to buyers that there’s something wrong with the property and can undermine its luxury quality when real estate market trends are leaning in the buyer’s favor.
Ryan suggests raising the perceived value of a slow-moving listing by way of renovations to fit the most interested buyer’s needs after legal agreements are made, or even by taking the property off the market. While taking the property off the market may seem counterintuitive, he says that at times, the integrity to your original asking price can send the message to buyers that the property is, in fact, a valuable asset.
Taking your listing off the market to wait for better conditions also conveys an air of scarcity that can move buyers to make a decision. If you and your client are confident that you have done all that you can to showcase their property’s value, this can be a helpful strategy in the midst of a slowdown.
Clients are looking for real estate experts, not just an agent
At this point, clients are able to access a wealth of information about the local market online, which changes the role of a real estate agent. Ryan says that in his experience, today’s affluent clientele are looking for agents who can play the role of consultant or adviser when needed, and agents who want to break into the luxury market need to realize that it’s not just about making more money. That’s why Ryan is dedicated to consistently researching his market and attends a number of real estate conferences, such as our Luxury Live event, every year.
“Take a Maserati salesman: that salesman is completely different [than a traditional car salesman]. They know everything about that car; they know its competition. Being a top industry professional in any field, you have to be educated. So yes, going to these conferences and getting information from peers is important.”
He adds that attending events outside of your local market is especially helpful. “[In your local market], you don’t really give up your secrets because you feel like other agents might take business away from you. But you go to these conferences with other people in other areas, and you’ll have people saying, ‘this is what I do’, because you’re not seen as a threat. You really need to do that if you’re going to deal with the upper bracket in any industry, but real estate in particular. And I’m a firm believer in going to the Institute to get your designation.”