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Understand Today’s Luxury Consumer: Put Smart Strategies to Work and Prosper

Aug 23, 2011

Posted by

Laurie Moore-Moore

Laurie Moore-Moore is the founder and CEO of The Institute for Luxury Home Marketing, an international training and membership organization for agents who work in the upper tier. The Institute offers Read more

 

There’s a resurgence of consumer confidence on the part of the affluent.  The net result?  The luxury home market segment is outperforming the housing market in general.

 

The number of affluent in North America has rebounded after the drastic decline of 2008.  The economic downturn saw the number of high net worth individuals (both in the U.S. and in the world) drop by more than 25 percent.  Today the number of wealthy is at least back to where it was pre-2008.

However, the attitudes of the affluent have undergone changes since the economic meltdown.  At least for now, “whispering wealth,” rather than “flaunt it if you have it,” seems to be a common philosophy.  Although some propose that this is the result of feelings that the current economy demands restraint, research actually shows that only a small percentage of the affluent report this as a reason to spend differently.  Instead, this new attitude may be driven by a growing desire for quality, artisanship, and exclusivity over excess and bling.

If you want to tap into this rebounding luxury home niche, there are some things you need to know about the affluent and about the strategies necessary to be successful. 

Today’s Luxury Homebuyers

•  Are looking for lifestyle experiences and stories to tell;

•  Want seamless service which saves time;

•  Are demanding more and better information about the market and about the property;

•  Are looking for value, will negotiate price, and expect prices well below those of 2006 and 2007;

•  Are skeptical of pre-construction offerings;

•  Are often looking for lower-key, less flashy properties;

•  Want neighborhoods with health care, low cost of living, and safety (especially if they are boomers);

•  View green as desirable, but may not be willing to pay a premium for green.

Strategies to Implement

Here are four important strategies for building a strong position in the luxury market:

•  Position yourself as the luxury expert.  Do the research to define exactly what’s happening in each price range within your luxury market and compile that research on a monthly basis in a luxury market report.  Don’t fall into the common trap of relying on market averages as they are just that -- averages -- and do not give a true picture of what is going on in a specific price range.  Today’s affluent consumer wants to understand the market and will gravitate to the source of specific market information.  Also, take the time to understand your prospects’ wants, needs, and expectations, so you can use your expertise to effectively help your buyers and sellers reach their goals.

•  Know your competition and network with them.  Determine which firms and agents really do business in various price ranges in your community (don’t assume you know).  Doing this research will give you a list of local luxury agents to target for networking.  These agents can be one of your greatest resources.  These are the agents whose properties you will sell and who will show and sell yours.  Visit their “broker opens” and send them personal invitations to yours.  Send them links to your luxury property websites.  Creating good working relationships with these agents will pay off.  Many luxury agents go on to formalize relationships with competitors by creating luxury agent networking groups.  These groups may tour each other’s listings and provide written feedback, may share wants and needs, and usually work together in a variety of other valuable ways. 

•  Work to build necessary competencies.  Make sure you have the right “marketing toolbox.”  Success is dependent upon understanding who the affluent are, how to reach them, how they choose their Realtors®, what they expect in a marketing plan, and so forth.  You must also understand how to market a luxury property using lifestyle marketing and the concept of “best prospects.”  Luxury home buyers aren’t buying shelter as much as they are buying lifestyle.  Remember, you are not just selling eight bedrooms and ten baths;  you are selling the lifestyle the home represents.  Be sure you have the marketing savvy to do this. 

•  Know your inventory.  Take the time to learn what’s available on the market.  Preview as many luxury homes for sale as possible and review others online.  This “product” knowledge is just one of the things that will differentiate you in the market.  It also will give you the information necessary to help in identifying comparables and in pricing luxury homes.

Be sure you understand today’s affluent home buyer and seller, spend some time building your competencies, and you should prosper as the luxury housing market leads what we hope will be the residential real estate recovery.