Real Estate Marketing in a Luxury Market

As the real estate market in the U.S. slowly continues to regain its footing, many agents are looking at this time as a chance to redefine their market. With so many agents abandoning-or at least significantly cutting back-their marketing systems to save money, others are jumping in to take advantage of the marketing void. In other words, they are taking an offensive approach in order to put themselves in prime position when the market starts to upswing.

In most parts of Canada, on the other hand, the market continues to stay hot and agents are looking for the best way to grow their business. They are looking to expand the reach of their marketing and maximize income opportunities. Whether it be in the U.S. or Canada, a number of agents we are talking to believe that now is the time to make the transition into the ultra high-end market.

Traditionally, luxury real estate is one of the hardest market segments to try and break into. Why? There are a few common reasons. It might be the presence of a dominant agent already ensconced in the community or the fact that everyone already has a peer in the real estate business. It may be because the agents themselves don’t have the patience to work in a generally slower-paced market (less transactions to go around, tougher competition and slower sales process). It could be that they are simply not prepared for the unique challenges a high-end market poses.

In my experience, it’s usually a combination of these reasons that prevents most agents from becoming successful in luxury real estate. There are many things you need to know before you make the quantum leap into the next price range. We’ve put together a list of five factors that will help you decide if a move to luxury real estate is right for you.

#1. Know What You Are Getting Into

Agents often make a blind leap into luxury real estate because they think that’s “where the money is.” Of course, it’s simple math. If you get the same split, it pays to list homes with higher selling prices. In theory, you can make more money by doing fewer transactions. On one hand, that’s true, but if you go into luxury real estate with this mentality, you are probably destined to fail.

Yes, your income per transaction goes up significantly. That’s great, but there is often a new set of challenges introduced when working a high-end market: the competitive stakes are much higher, social circles are much more closed, politics are different, and there are many other factors which I will detail throughout this article. In addition, marketing and servicing costs are generally more when dealing with luxury homes and clients. Both buyers and sellers expect more and demand more and the properties themselves need even more attention (marketing, staging, photography, etc.) to appeal to a more sophisticated crowd.

Carol Barkin of Toronto, Ontario has been a successful Sales Representative for 20 years, but it took her some time to build her business in her high-end markets (both in the city and in a lakefront recreational market about an hour outside Toronto). “For me, the biggest challenge was making that first connection,” she says. “They already have tight social connections and know how to get what they want, so building relationships is a matter of trust. It’s important to relate to clients as a friend and a helpful peer, not just present yourself as a service provider.”

#2. Patience, Patience, Patience

It’s clear that high-end real estate is a different animal than traditional residential markets. It tends to move much slower. Generally, there are fewer homes on the market at any given time and there are fewer buyers out there with the means to purchase such expensive properties. The stakes are higher for everyone involved. So on average, it takes significantly longer to sell one of these homes. In addition, there is a lot of competition out there for a limited number of properties, so it often requires more patience to break into the market and build a strong client base.

This is truly a case where the end usually justifies the means if you have the right understanding and commitment going in. Though listings are harder to come by and it takes longer for them to sell, the large check at the end of the transaction is worthwhile. But not all agents have the stomach to wait longer in between commission checks. Oftentimes, this is the hurdle that stops them in their tracks.

“In my experience in high-end real estate, six months on the market is nothing. On average, it’s more like nine for a listing to sell,” says Robin. “Also, if they are not truly motivated to sell, you will waste a lot of time and money on marketing. In some cases, I will adjust my commission rate so that the marketing costs are covered by the seller. It helps to offset the time it takes to sell. You also shouldn’t go into luxury real estate without money in the bank. It’s a long-term process to build your business and if you are not prepared, it can break you quickly.”

#3. Know It. Live It. Keep It Exclusive.

Another reason that some agents struggle to find their footing in an ultra high-end market is that they cannot relate to the clients or communicate effectively. You’re dealing with a much savvier and usually more demanding crowd who know what they want and are used to getting what they desire. Now, you don’t necessarily have to live in the luxury community you are targeting, but you have to present yourself like you do. The way you dress, your ability to network within their circles, the way you communicate with these sophisticated individuals, the quality of your marketing materials-you have to be able to make a personal connection and develop a strong professional image. If they don’t buy into you as a luxury home expert who’s tapped into their community, they aren’t as likely to do business with you.

Jack Jeffcoat III is an agent who is in the process of transitioning his market focus from high-end golf communities in Central Florida to ultra high-end waterfront properties along Florida’s Space Coast. From his marketing presence to his personal presentation to his servicing strategies, everything he does is to support his image as a luxury real estate specialist. He’s often bold and unwavering in his approach because he never wants to lose credibility.

Think of it like any high-end product that is in demand because of its scarcity and exclusivity. So as a real estate agent specializing in high-end properties, you, your marketing image, and the service experience itself need to reflect the utmost quality. If you look and act like the best agent around, people will aspire to work with you.

“When I take a listing presentation, I conduct an interview with the seller to make sure they are willing to follow my recommendations,” Jack says. “At every opportunity, I want to remind them why they are hiring me. They know I am a luxury real estate expert that only works with an exclusive group of clients. From the beginning, they are instilled with the belief that if they want to have a successful sale, they need to follow my lead. It gives me the upper hand and keeps me positioned as the market specialist.”

Also, keep in mind that high-end real estate isn’t necessarily going to be the same from region to region. A waterfront community in Florida will have a different set of challenges than a mountain resort community in Colorado or a downtown high-rise in Toronto. In some places, “high-end” may be $400,000 and up. In others, prices could be in the multi-millions. So when it comes to your personal presentation and the way you market yourself, be sure to properly present your niche and look impressive.

“Always look bigger than you are,” says Robin Milonakis. “You have to have exceptional marketing materials. They have to make people feel good about hiring you. It feeds their ego knowing they are working with the best.”

#4. Image is Everything, Especially in Marketing

When it comes to your marketing materials, quality is key. You can’t position yourself as a high-end agent if your materials look unsophisticated. A first-rate personal brochure and dynamic website are absolutely essential. Your personal brochure should take the place of your business card whenever you meet a potential client. It needs to look sharp and feel impressive at the very first glance (exceptional photography, nice glossy paper, sophisticated writing, clean design). It needs to reflect your personality, but also relate to the luxury market you are targeting. In a way, you are a representative of this lifestyle and your marketing should convey that. It shows your unique expertise and highlights the service/knowledge benefits that make you a specialist in this distinctive market.

It’s very important that you don’t skimp here or it will show. You simply can’t fake high-end quality. You must be committed to investing the money to do the marketing right or people will see through it.

Put simply, the brochure and all other marketing materials need to be of the utmost quality. This includes your house advertising. You should at least have a tabloid-size glossy flyer/brochure that you use to promote each property. The staging must be great. The photography must be very professional. Of course, you should keep the property marketing pieces branded clearly with your personal image (logo, colors, fonts, etc.) so you don’t lose your own identity.

“My brochure is quality and people associate the piece with its sender,” Carol Barkin says. “I send it out prior to meeting someone to warm them up. It gives me more credibilty and shows my knowledge of the market they are concerned about.”

The same is especially true when it comes to your website. It needs to reflect the quality of your brochure and other print materials. It needs to look sharp and feel representative of your luxury market. Two of the agents I spoke with-Jack Jeffcoat and Robin Milonakis-are both actually in the process of revamping their compaigns to better target their high-end clientele. Even though both of them have been highly successful with their current campaigns, they know it’s worth the investment to take their marketing to the next level to promote an exclusive luxury niche.

One bold strategy Jack uses is to feature only properties above a certain price on his website. Does he take listings at lower prices? Yes, when the situation calls for it. But his image is that of a luxury real estate expert and his website is one more way to show that. “If one of my high-end prospects goes to my website and sees a bunch of low-priced listings, then it’s not really helping my cause,” Jack says. “Like a doctor, specialists make more money and earn more credibility, so I want to be known as a high-end listing specialist in every aspect of my marketing.”

When it comes to online marketing, you also need to make sure you are very active on your web site. You cannot just put up a site-no matter how nice it looks-and expect it to generate business over the long run. You have to actively post information-links, articles, blogs, calendar events, community information etc.- to make it a resource that people want to return to on a regular basis. Your active engagement on the site will enable you to better communicate with your target market. And of course, it also boosts your SEO (search engine optimization) to help you generate more leads through all the major search engines.

#5. Be Prepared to Back It Up

In addition to making sure your marketing campaign and personal presentation are representative of your market, you must also make sure you are fully in-tune with the market itself. If you don’t know everything that’s happening around you, you will never be able to establish yourself as a luxury specialist. This is one area where you will not be able to fake your way through a transaction with minimal knowledge or experience. Clients will expect more and demand more from you, so you have to be able to back up your claims as an expert-in terms of both your knowledge and your service experience.

“Expectations from clients are different and, in general, they are more demanding. They want you to be available to provide answers and information,” Carol Barkin says when referring to the clients she works with. “In the end, they need to make their own decisions. They are gathering advice and professional recommendations from me so they can come to their own conclusions.”

That said, never underestimate the clients’ need for up-to-date information. Be proactive in giving them regular updates (at least one call per week) on market activity. Always stay current with everything that is happening in the market. Word travels fast in luxury real estate, so make sure you know what’s going on-what listings have sold, for how much, how long they were on the market, and so on. If you are not all over the market, your clients will be all over you. How and what you communicate will make them feel better about the experience

“No matter what, I personally call every one of my clients on Monday with a detailed market update,” Jack Jeffcoat says. “I make it a point to always know what’s going on in the market. If any home sells, I need to be aware of it and discuss it with each client so they know what’s happening.”

Then, make sure your service experience reflects your marketing image. You have to be able to deliver on your claims by making the client feel special throughout the process. Think of it as the difference between the Ritz-Carlton and the Marriott. It’s a completely different experience from the moment you walk through the doors of either hotel, and it’s why you pay substantially more to stay at the Ritz. Imagine your real estate service as a luxury experience. That will make you a valuable commodity in the market.

Is the Luxury Market Right for You?

Ultimately, that’s for you to decide. You must be prepared for the unique challenges and tough competition found in the world of high-end real estate. You have to make sure you are patient enough to handle a slow-moving market. You need to be willing to invest the time and money it takes to not only brand yourself as a luxury specialist, but to back it up with higher standards of service and expertise. If you are ready for what the high-end market has in store, it can be a very lucrative place to do business over the long-run. And whether you are in a slow market or a hot market, right now may be the time to take the big leap!

Indian Real Estate Market: Bubble or a Bit Trouble?

A fear of bubble comes in the mind of everyone who is looking to buy or invest in real estate now a day. But without looking at facts one should not come up with any conclusion that speculates real estate bubble in India.

Indian real estate industry is growing with a CAGR of more than 30% on the back of robust economic performance of the country. After a little downturn in 2008-09, it has revived rapidly and shown tremendous growth. The market value of under construction project has increased from $70 bn at end-2006 to $102 bn by end-June 2010, which is equal to 8.2 per cent of India’s nominal GDP for 2009. Besides the Govt. initiatives- liberalization of foreign direct investment norms in real estate in 2005, introduction of the SEZ Act, and allowing private equity funds into real estate, key factors contributed to this tremendous growth were ‘lower price’ which has attracted buyers and investors not only from India but NRIs & Foreign funds have also deployed money in to Indian market. In addition to that, aggressively launching of new projects by builders had further improved this positive sentiment which paved the way for rapid growth in market last year.

Now question is whether any Bubble is forming in Indian real estate market? Let’s look at the recent housing bubble in USA, Europe and middle-east. Beside economic factors, key contributing factors in those bubbles were rapid rise in price beyond affordability, home ownership mania, belief that real estate is good investment and feel good factor among which rapid price hike is a key cause of any real estate bubble.

Comparing it with Indian scenario, all those factors are working in major cities of India specifically Tier-I cities. Prices has skyrocketed and crossed earlier pick of 2007 in the cities like Delhi, Mumbai, Bangaluru, Chennai, Kolkata, Hyderabad, Gurgoan, Chandigarh & Pune. Even in some cities like Mumbai, Delhi, Gurgoan and Noida prices have gone by 25-30% higher than the pick of the market in 2007. However during economic downturn in 2008-09, prices fell by 20-25% in these cities. Other factor is home ownership mania and belief that real estate is good investment. Need based buyers and investors were attracted by lower prices in the end of 2009 and started pouring money in real estate market. Tier-I cities Mumbai, Delhi-NCR, Bangaluru, Chennai, Pune, Hyderabad, Kolkata has shown maximum investment in real estate projects. Developers have taken the advantage of this improved sentiment and started launching new projects. This has further boosted confidence among those buyers and investors who had missed opportunity to buy or invest earlier which has further increased price unrealistically fast. And at last feel good factor which is also working since last few months. The key factor of any bubble market, whether we are talking about the stock market or the real estate market is known as ‘feel good factor’, where everyone feels good. For the last one year the Indian real estate market has risen dramatically and if you bought any property, you more than likely made money. This positive return for so many investors fueled the market higher as more people saw this and decided to invest in real estate before they ‘missed out’. This feel good factor is at the heart of any bubble and it has happened numerous times in the past including during the stock market crash of 2008, the Japanese real estate bubble of the 1980′s, and even Irish property market in 2000. The feel good factor had completely taken over the property market until recently and this can be a key contributing factor for bubble in Indian property market. Even after flow of negative news on real estate market correction and/or bubble, people are still highly positive on real estate growth in India.

Looking at above factors, there is possibility of bubble formation in few cities in India but it can harm buyers and investors only if it bursts. Generally bubble form with artificial internal pressure and can stay for long time if not acted by external force. Similarly, in case of real estate market, bubble can burst if demand and price start falling suddenly and drastically. Few findings of recent research by IKON Marketing Consultants throw more light on this. According to that majority of investors from Delhi, Mumbai, Bangaluru, Chennai, Kolkata, Hyderabad, Gurgoan, Chandigarh & Pune are now not willing to invest at this level of price as not seen any rise recently. Majority of them are about to exit and book profit on their earlier investment. Other factor is demand supply gap. In city like Mumbai were around 6500 apartment with 45 million square feet space is under construction but majority of developers are worried on lack of 100% booking. Same situation is with Delhi and other major towns of India which has demonstrated higher than expected enthusiasm. Though developers giving positive outlook of market while interviewing them but their confidence level is very low which is giving negative signals of falling demand in nearest future. Third important factor is expected outflow of foreign fund. India, as an attractive investment destination a huge fund has been deployed in Indian property market by foreign institutes and NRIs. But now property market in US, Middle east and Europe has been stabilized and started growing gradually which is attracting foreign funds due to lower prices. A huge fund is expected to withdraw from India as foreign investors see greater opportunities in those countries. All these factors may act as external pressure which may lead to bubble burst.

Considering above facts, IKON Marketing Consultants predict that there is a possibilities of real estate bubble in Tier-I cities like Delhi, Mumbai, Bangaluru, Chennai, Kolkata, Hyderabad, Gurgoan, Chandigarh & Pune. However, IKON does not see much trouble in overall market as Tier-II and Tier-III cities are growing gradually and are the backbone of Indian real estate industry. According to IKON’s research, Indian real estate industry may see some down turn in 2011. It may start from 1st quarter of 2011 and last up to 3rd quarter of 2012. However it will be not too intense as it was during recession period. It is expected that price may slash by 10-15% during this phase of correction but under certain situation it may last up to end of 2013 with price correction of 30% specifically in Tier-I cities.

By its nature, a bubble is a short-term phenomenon while Indian property market has shown continuous growth, apart from periodic adjustments, in the last few years. One should not forget that there are more than 400 million Indians waiting to hit the middle class group which will require more than 75 lacs housing units by 2013. Whether bubble burst or see a bit trouble in short-term, growth story will remain intact for Indian real estate industry. However affordability is the most important factor when it comes to housing prices and middle class housing is much levels of affordability in most of the major cities in India. People, who compare India with developed European cities, forget the huge difference in affordability in both areas. Of course there is a huge demand for housing but they can only buy what they can afford.

Real Estate Marketing Plan

Are you looking to hone or develop your real estate marketing plan?

For those looking for marketing tools for realtors (R) and real estate agents, the “best practices” of multi-million dollar agents includes several “pillars”, or sources of leads, and refinement to the three key points of client contact. These three key points of client contact are initial real estate lead production, point of sale (listing presentations and buyer representation processing), and post-sale referral generation.

One common mistake agents make is choosing either a “consumer direct marketing” approach, or a “referral only” approach. This is a mistake simply because to achieve top performance, you’ll need both. Fortunately, when done well, this does not need to be expensive. A referral-only real estate marketing plan is based around actively cultivating (farming) a group (farm) of referral sources. For most systems, this is based around systems of consistent contact to ensure presence of mind and respect by potential referrers, usually via handwritten low-tech stamped notes, monthly phone calls to people who have agreed to refer you when they hear of people who want to buy or sell, occasional client parties, and occasional pop-by’s to see someone in person a few times per year. These systems are carefully designed to look casual, but when combined with real estate newsletters and tools, will cause your farm to both like you personally and respect you professionally. Imagine getting 2-3 referrals per month from a financial planner, another 2-3 from a tax professional, another 1-2 from your grandmother, etc. and you really have a solid base of business. Closing ratios on referrals are always much higher from referral marketing, and the cost-per-lead is lower.

So why not use just that?

Because you may not have 1,800 people who like you and will refer you, and even if you did, there are surely some people buying or selling in your area who would like to work with you.

But they don’t know you.

It’s up to your consumer direct marketing to change that. While bus stop ads can help neighborhood visibility, who honestly calls a realtor because they saw a bus stop ad? Print ads and bus stop ads these days should be used only after you have completely dominated the real estate internet marketing in your area.

How do you dominate an area? Message and delivery. These days, delivery happens via internet for over 90% of buyers, and virtually all sellers who research agents online before selecting which agent to sign with. While the internet is a large space, you can dominate page 1 of Google using our free report on search engine optimization (SEO), and dominate other areas through pay-per-click (PPC), social media marketing (facebook, myspace, twitter, etc.) and trafficked verticals like craigslist. Our company focuses on creation of incredible, compelling offers so you don’t have to, though you can certainly create your own.

Here are a few suggested pillars to consider:

- Expired Listings & Withdrawn Listings. These are the easiest “cold leads” you’ll find. If you decide not to purchase ours, you can certainly create your own. The #1 mistake people make in expired listing marketing is expecting immediate conversion. Usually sellers get flooded with offers immediately, but relisting activity peaks at 6 to 8 weeks after expiration or withdrawal. Pair up with a mortgage lender to reduce the cost, as this can produce refinances and loan modifications.

- FSBO’s. A strong FSBO pillar alone can get you 1-3 listings per month in an average area. For this you’ll need a real estate postcard marketing system or fsbo postcard system. Click through to our site below for some free templates and help on this.

- Homebuyers. The #1 most common mistake in real estate marketing for homebuyers is offering a home-buyer’s seminar. Try “fishing upstream” by instead offering a “credit seminar” or at least adding that to your marketing. We have an online system for this, that if you choose not to buy you can certainly model on. Be sure to “market to the unaware”, i.e. people who haven’t yet decided to buy a house, because chances are if they know for sure they want to buy a house, they probably know an agent. Be the agent (or broker) to plant this seed and most likely you’ll get the business, instead of their “dog’s former owner’s cousin who practices real estate on the side”.

- Investors. A lot of agents ignore this market, but a single good investor client can get you numerous deals per year, both buying and selling. If you’re just out of real estate school starting out, don’t start here – they’ll eat you for lunch and suck up your time, but if you have the other pillars down cold, this can put you into the big leagues, with millions of dollars in commissions.

- Relocation. This can be a tough market to crack, but that barrier to entry can work for you once you do. This is not for the rookies, but for experienced agents with top-notch customer service and the first pillars down, this should be on your real estate marketing plan. Maximize your real estate internet marketing to start working on this business, and use a lot of online video such (again, see our site for examples to model on or purchase).

- HR Benefits. Human Resources real estate marketing for Realtors and lenders can be an excellent source of business. This is a perfect agenda for a mid-career agent.

If all of this sounds good, first, see what you can swipe and implement. Don’t re-invent the wheel, because everything you need for all of the above pillars have been produced. Focus your time and budget, and setup the systems starting with the pillars above. As you get them stabilized, within a month, you should not spend any time whatsoever on production of these leads. Just setup the system, then leave your pay-per-click budget alone and just keep an eye on profitability, and hire offshore e-assistants for other tasks like craigslist marketing. Roll the pillars out, and within six months, there is absolutely no reason why you won’t be the #1 agent in your area, with the #1 paycheck. The tools are built and ready to work for you.