Should You Become a Luxury Real Estate Agent?
The Pros and Cons of Selling Luxury Real Estate
The Pros and Cons of Selling Luxury Real Estate
Jacqueline Kyo Thomas
So, you’re thinking about becoming a luxury real estate agent, but you have two problems. First, you’re not sure how to do it. And second, you’re not sure that you have what it takes to be a success.
Never fear. In this post, we reveal the top benefits and considerations of a career in luxury real estate, as well as how to make it happen.
Let’s get started.
Luxury real estate seems to be glitzy and glamorous. You sell amazing properties and can network with celebrities and CEOs. It can be an exciting job, but it’s also a lot of work.
But what exactly does it mean to be a luxury real estate agent?
First, let’s tackle the word “luxury.” What is luxury?
Luxury means different things to different people. While luxury usually means dealing with high net worth individuals, that definition varies based on location. For example, luxury in Des Moines is not the same as luxury in Beverly Hills.
Luxury usually means higher prices. If the top priced homes in your area sell for $400,000, any property in that price range will be considered “luxury” for your area.
Being a luxury real estate agent is more than simply selling expensive homes. You’re actually selling a lifestyle and not just a home. To be successful as a luxury agent, you’ll need to know what your client wants from a home. (Hint: it’s not just shelter and amenities).
As we’ll discuss below, luxury real estate clients may have additional considerations when purchasing a property. As their agent, you’ll need to source properties that fit their objectives and be there to advise them.
There are a lot of benefits to becoming a luxury real estate agent. Let’s discuss why you should consider this specialty.
This may be the biggest reason to become a luxury real estate agent. Because you’re selling more expensive properties, you’ll earn a larger commision.
By networking with high net worth individuals, like athletes, business owners, and celebrities, you may get a boost in your own reputation. Name dropping can impress others and get you more business, especially if you’re able to get referrals.
You won’t need to sell as many properties to earn as much revenue. Instead of having 12 clients per year, you may only have three. This gives you a chance to build a solid relationship with your client.
Despite the global pandemic, the luxury real estate market is thriving. According to the most recently available report from The Institute's Luxury Market Report, luxury homes are selling for 100% of their listing price.
There are a lot of great reasons to become a luxury real estate agent. But here are a few things to consider before pursuing this specialty:
Because you’re selling luxury real estate, you’ll automatically have fewer prospects. According to the National Association of REALTORS®, only 10% of all US home buyers purchased homes that were worth $500,000 or more. It’s important to note that less than 10% (8%) of home buyers have incomes of $200,000 or more.
Selling every listing matters to your bottom line, especially if you’re only dealing with a handful of listings each year. After investing months of your blood, sweat, and tears into a listing, you can’t afford for it to fall through.
Most luxury homes are custom builds that may not appeal to all buyers. You’ll need to help buyers see the potential in a space. You’ll also need to be patient in your search for the right buyer for a property.
The higher the price tag, the longer the property will be on the market. This also means that you’ll need to wait longer for your commission check.
Working in the luxury market will take more of your time because your clients will expect more from you.
It can be difficult to enter into the luxury market as a newbie. Luxury clients prefer to hire agents who have experience and, more importantly, success stories.
You can't sell a luxury listing for free. That’s not to say that you need to spend a fortune, but you’ll need to forget about free strategies on Craigslist and invest more in your marketing. This includes working with a stager, hiring a professional photographer, shooting a video, and then running a pay per click (PPC) marketing campaign on Google, Instagram, and Facebook.
Now that we’ve discussed the pros and cons, let’s discuss how to become a luxury real estate agent:
If you want to get into luxury real estate, it’s best to find a mentor to help you navigate the waters. Look for other agents, preferably in your same brokerage, who are selling luxury and ask them to mentor you. If they refuse because they’re too busy, then study them. What do they wear? How does their website look? What is their marketing strategy for selling premium listings? Learn everything you can from agents who are already selling to the clients that you want.
Another option is to sign up with a luxury brokerage in your area. Find a team who can support and mentor you. A luxury brokerage can also help you get clients. Be sure to research the brokerage before signing on. Find out their reputation in the community and how many homes they’ve sold in the last year.
As discussed earlier, clients prefer to work with experienced agents. But how do you get that experience? You work with an experienced agent by co-listing.
When you co-list, you can negotiate a smaller portion of the commission (i.e. a 25/75 split) while agreeing to handle more of the workload, such as hosting an open house. This is a win-win proposition for the experienced agent. They’ll earn a commission without doing as much, and you’ll earn both a commision and experience, which is definitely worth it.
To be the best, you’ll need to learn everything you can about luxury real estate. This includes learning what will matter to individuals who have more disposable income. They’re not simply looking for shelter. Learn what matters most to high net worth individuals in your area.
Also, deep dive into your local real estate market. You should know every luxury listing, including what’s new, sold, pending, expired, and FSBO (for sale by owner).
To expand off of that last point, identify what the average luxury client in your area wants. Do they want scenery? Isolation? Acreage? Square footage? What motivates them? What pain points do they have?
Remember that luxury clients aren’t concerned with qualifying for a mortgage. They’re likely to pay cash or work with a private lender. This requires a shift in how you’ll present a property.
Also educate yourself on issues that affect high net worth individuals, such as:
The more people you have in your network, the greater your chances of meeting high net worth individuals who are in need of your services. In your network, include people who are likely to work with the clientele that you'll be targeting. This includes financial planners, CPAs, attorneys, builders, and local business owners.
Selling luxury real estate can be glamorous and exciting, but it does have unique challenges. If you want to pursue a career in luxury real estate, go in with your eyes open and find a mentor who can help you navigate this new market. Also remember that every real estate client wants the same things from an agent: Competence and professionalism. You’ll succeed if you hold yourself to a standard of excellence.