Luxury buyers don’t have the same mindset as their counterparts in the traditional market. Learning how they think and what motivates them is key to working with luxury buyers and gaining coveted referrals. Unlike traditional buyers, many luxury buyers aren’t buying because they need to but because they want to. This can lead to erratic behaviors and decision making, with these buyers tending to be both spontaneous and fickle.
Here are five key insights into the best practices of how to work with and appreciate the requirements of luxury buyers through training and implementable systems.
1. “Location, Location, Location”
Anyone familiar with real estate or has watched 10 minutes of HGTV will know the phrase, “Location, Location, Location!” This phrase takes on a whole new meaning when working with luxury buyers.
High net worth buyers are not just looking for a home. They are looking for an experience. This makes closing a deal somewhat harder as they could be looking for that experience all over the world.
An Institute member told us she discovered after speaking with several colleagues they were all working with the same client — she was working the client in Hawaii while her colleagues were working with the same person in California, Canada and New York. The client was only planning to purchase one property but was looking at a large range of locations and experiences.
What you should do: Don’t just sell your property, provide your client with the unique experiences that the location has to offer since that’s one of the factors they’re definitely evaluating. If your buyer enjoys surfing, bring them to different surf breaks in Hawaii so they can get a sense of what’s just steps away from their luxury home. If they’re looking for a property on the ski hill, arrange for a day of skiing so they’ll fall in love with the experience of living close to the lifts.
2. Spending power means few limitations
Wealth also brings the additional privilege of choice—if a home is not a necessity then you could find that you are competing against an investment in a plane or a yacht.
Understanding their goals and aspirations can be key to determining whether you’re able to truly find the right home within their timeframe. Their schedule could lead them to a different interest and away from their real estate pursuits rapidly, so it might be important that you grab their attention now. If they can not find a suitable home today, establishing a great relationship and building trust could bear fruit in the future.
What you should do: Don’t take it personally if your potential client cools off because their interests diverged. Keep the communication channels open and continue to be a spokesperson for your location. You never know when they’ll return to you, or refer a friend.
3. Stay alert for the billionaire next door
Depending on your perception of what a billionaire is, many of your clients will not look or seem like billionaires. Rather, they’ll just look like the family next door. Many of these individuals have created wealth through start-up companies, introducing new technologies, leveraging new market opportunities or just through sheer hard work and the determination to succeed. A few might have simply been fortunate enough to have a lucky break.
What you should do: Be respectful to everyone since you never know who you’re dealing with. One Institute member told us a story of a man who came into her office asking for assistance finding a home in Aspen. She watched as a co-worker brushed him off, thinking that he looked average in an old pair of jeans and a worn ski jacket.
On hearing his name, something clicked in our member’s mind, and after some quick investigation (using one of the member research tools) she was able to notify her acquaintance that the client was actually a multi-million dollar painter.
4. International buyers have money to spend
According to NAR’s “2018 Profile of International Home Buying Activity” nearly half of non-resident foreign buyers purchased a primary residence in the U.S. These international buyers purchased more than 266,800 properties and spent over $121 billion in property sales.
What you should do: Knowing that there are a lot of foreign buyers looking in the international market means that in addition to your regular best practices when dealing with the wealthy, you may also need to familiarize yourself with their country’s customs.
5. Get to know the ultimate decision maker
Typically, the more money an individual has the more people influence their buying decision. These influencers can range from assistants and lawyers to family and friends. Depending on the client you could be showing properties to these influencers, either as a part of a screening process before meeting the buyer or sometimes in place of the buyer altogether. It is not uncommon in luxury real estate to never meet the client.
What you should do: Get to know the gatekeepers as they’ll probably screen potential properties and potential real estate agents. Learn to get along with everyone on the team, your client trusts the people who work for him and her so impressing the whole team is crucial.
Adjust your mindset when working with luxury buyers
As you work with luxury buyers you may find that your preconceived notions of how a high net worth individual operates change. This mindset shift is crucial to understanding the realities of what luxury buyers are looking for and how they make purchases. If you want to work with luxury buyers effectively, knowing their motivations and habits is essential.