Working with a luxury real estate client in a low inventory market is challenging and can sometimes be frustrating. If they lose 2-3 homes, who do they blame? That’s right, they blame you. But I don’t believe in letting them lose a few to bring them into reality. Why would we want to put them through the pain and disappointment? Instead, I believe that — as their wise advisor — it’s your job to educate, inform, and provide them with proper guidance so that they have a strong chance of winning. Then, if they choose not to listen to you, it’s on them!
Stick to the Facts, and Avoid Opinions
Remember, beauty is in the eye of the beholder. Be careful about giving your opinion as to which property they should buy or what they should offer. Of course, you can give them the facts and the data, but only they can decide how much the property is worth to them.
Setting Your Luxury Real Estate Client Up For Success
Strive to write flawless offers. One way to do this is to tighten up all contingency periods, eliminate any unnecessary requests, and be gracious, courteous, and efficient to work with even when they are not! You must be the calm, cool head in the deal. Often, the listing agent will have specific details and instructions in the MLS remarks. Pay attention, and do your best to include whatever you need to include to avoid a counter offer. Do your best to win rapport with the listing agent. Ask them if they prefer everything in one PDF or separate attachments, and ask them if the seller has any timing issues or special requests.
Many top buyer agents are even encouraging their luxury real estate clients to make bigger deposits than are requested, and to offer the sellers free, additional time to move out. If you like to run CMA’s on properties they are interested in, remind them that they should pay more attention to what is pending and what they have to choose from rather than the closed sales — which are not as current. We owe it to them to be as on point as possible because the home they love may not be easy to replace. This is why we have to move swiftly, especially since — now more than ever — time is of the essence.
Below are a few quick tips I compiled from a recent conversation with our great coaches.
Coaching Tips for Luxury Real Estate Professionals
1) Be a market expert. You want to be able to move your luxury real estate client forward with powerful data driven conversations. It’s important to know the following information:
Days on market;
How many homes are for sale;
Trends in the market;
Interest rates and changes in financing;
Keep a list of 5-10 reasons why now is a good time to be a buyer.
2) Always conduct a thorough home buyer consultation with each luxury real estate client. If you know there will be very little inventory for them to view, you will want to open up as many areas and pare down as many features as you can. Buyers usually end up happier if they buy a home at the top of their price point. Ask them. “If the home were perfect in every way, what is the most you might be willing to pay?” Encourage them to buy what they will be really happy with.
3) Educate them on the offer process. Prepare them for a potential low appraisal and any other issues common to your area or your current market. Remember to keep a positive slant in the conversation though. While you want your luxury real estate client to understand the issues, you certainly don’t want to simultaneously crush their spirit to buy.
4) It may be wise to counsel them to have reserves or a source of additional funds in the event of a low appraisal, reminding them that — in a hot market — the closed data may not keep up with the escalation of values. Also, remind them that banks are very cautious and will often err on the low side to protect their interests. Explain why a seller is not likely to drop their price if the appraisal comes in low when they have had multiple bids and back up offers waiting.
5) Tell them to think of the list price just like the opening bid at an auction, it’s just a starting point in the negotiation.
6) Encourage them to write their highest and best offer because they may have only one shot at it and they don’t want to have any regrets.
7) “Let’s start the negotiations” is a terrific line to encourage your luxury real estate client to write an offer, and is typically more effective than simply asking, “Do you want to buy it?”
8) If they hesitate to write an offer, you may want to remind them that submitting an offer is the best way to get their foot in the door, and that they still have time to do their due diligence and make their final decision through the contingency period.
9) Be sure they are working with a quality lender, and if they insist on using someone you do not know or have concerns about, you would be wise to insist that your luxury real estate client submit a double application with a lender you trust.
Your lender’s goal would be to win them over so that you feel you have someone solid working on their behalf. Make sure you have proof of funds and any other documentation — like a pre-approval letter — to bolster their buyer profile. Also, it’s a plus to have the lender call the listing agent before the offer is submitted to assure them of your luxury real estate client’s qualifications.
10) Prepare a summary letter of why you feel your offer is strong and a bit of information about how solid and excited your buyer is and how experienced and diligent you are when it comes to facilitating a stress free transaction. I wouldn’t recommend submitting a picture of the buyer or too much of their personal information; just what you need to in order to tip the seller in your favor.
11) Call the listing agent and have a conversation with them. Find out what terms you can write in to make your offer more advantageous. Don’t assume it’s always about price. It can be about both price and the terms the seller needs to make their move.
12) Pay attention to deadlines set by the listing agent in a multiple offer situation, and read the agent remarks in the MLS so you have a full understanding of what the listing agent wants. Work quickly. Time is of the essence and your response time says a lot to a listing agent who wants to work with someone on the other side of the deal that is on top of things, responsive, and professional.
13) Prep your luxury real estate client for buyer’s remorse and the well-meaning advice of family members who are unfamiliar with the market. If they get scared, get them back in the house and reconnected to the emotion of the purchase.
We have the pleasure of working with some of the brightest and best luxury agents in the real estate industry across the nation. Go to https://forwardcoaching.com/consultation/ to book your complimentary session.