By Lolly Spindler During a recent HouseHunt webinar with Joy Bender and Jack Cotton, we learned about breaking into and achieving success in the luxury real estate market. While Joy focused on breaking into luxury real estate, Jack gave us advice on how to be successful in the luxury market. In this article we’ll focus on Mr. Cotton’s contribution, reviewing his seven steps to luxury market success. Jack prefaced his presentation by reminding agents that they would meet some of the most interesting and accomplished people by working in the luxury real estate market, and that this would lead to some great connections. Jack himself has been working in the Cape Cod luxury market for over thirty years and has published three books on the subject. So, what are the secrets to Jack’s success? Below we review his seven step process.
Step 1: Map Your Market
Jack suggests that you first create benchmarks for what you want to accomplish. After you’ve set some goals, it’s time to truly establish your market expertise. If you are known as the real estate know-it-all in your market, others will value what you do and come to you for advice. Lastly, it’s important to connect with high net worth individuals (HNWIs).
First, know where you want to work and create benchmarks. Jack defines a benchmark as a “price per something,” like the price per square foot of the homes you want in your pool. Next, in order to become the expert in your market, Jack suggests that you build a resume, reputation and image. Create reports and newsletters, distribute personal promotion materials, and advertise. Have a complete two year sales history and know assessment ratios, absorption rate and MLS stats. Furthermore, you should connect with prevalent builders, architects, local business owners and other people of note. Finally, to go about making connections with HNWIs, it’s important to have a story. Your story is that of your real estate journey: why you became interested in real estate, why it’s important to you and any experiences that solidified your commitment to your career in the industry. Jack’s story focuses on his childhood tree houses and how he felt when he retreated to them. He draws a similarity between how he felt in those “homes” to how others feel in theirs, including luxury home buyers: a sense of belonging, peace and escape. “It’s their oasis from the storm of life. It’s how they celebrate their success, achievements, get away from the pressures of everyday life and how they get together and reconnect with family and friends.” These stories help agents connect with high net worth individuals, setting them apart from their competition and other people in the marketplace. Mr. Cotton continued by giving the categories of HNWIs: the “Wannas,” “Kindas,” “Reallys” and “Supers.” He explained that less than five percent of the US population is considered “wealthy,” and, by a stricter definition, only about one percent actually qualifies. Furthermore, Jack reminds us that the HNWIs you work with like to be unique, and hate to be manipulated!
Step 2: Be Different and Better
Because HNWIs want to be unique and hate run of the mill approaches or being a part of the pack, it’s important that you develop unique selling propositions (USPs) that create value in the minds of the affluent people in your market. To go about this, first identify the current leader in the luxury market in your area. Next, assess this individual’s strengths and weaknesses by looking at everything s/he does. Lastly, turn things around for yourself by using this knowledge to your advantage and creating a unique approach for luxury clients. This will be your unique selling proposition, a breath of fresh air from the new luxury market leader (you!).
Step 3: Turn Gatekeepers into Allies
Affluent people have gatekeepers, people you have to go through to get to them. In order to work with this breed of client, you first need to identify the gatekeepers and find where they are. Most agents view gatekeepers as obstacles, but it’s important for you to see them as allies. You will bring value to them and their wealthy clients, and they will bring their wealthy clients to you. A gatekeeper is usually a luxury client’s attorney, CPA, trust officer, and/or investment advisor. By sharing your acquired market expertise with these gatekeepers, they’ll come to trust and value you. This includes your knowledge of the market, value of homes, pricing, market preparation and marketing and negotiation skills. Your expertise in abatements, CMAs, writing and speaking will also be crucial in winning them over.
Step 4: Exceed Expectations with Process
Now it’s time to create your luxury processes. As Jack points out, affluent clients demand consistent, dependable and reliable results—something that can’t be accomplished without processes and systems. Within your process, value should be conveyed, reinforced and be value of reverence. For your pre-listing process, have a pre-listing package. This should include your resume, bio, endorsements, company materials, market data, and your stats. Practice for the presentation, focusing on your delivery, and make your first appointment feel like the second. For your listing process, think about what you do every time, and do something new. Keep in mind the strengths and weaknesses of your competitor that you unveiled in Step 2, and be different and better!
Step 5: The Big “O” and Other Objections
Mr. Cotton reminded us that there is one objection that agents will get from their first few luxury clients. This objection haunts many agents who want to break into luxury real estate, and ends up being the number one reason they stay on the sidelines. Although not having worked in the luxury real estate market before may be seen as a shortcoming, it’s important to market it as a benefit to your clients. Instead of running or hiding from it, use this objection to your advantage and attack it head on. Respond by using the “limited edition real estate” technique: this is the only listing you will take until it is under contract. By using this technique, your client will know you will be working exclusively for them and putting 100 percent of your effort into their transaction. Remind them that it will be the first thing you think about when you wake up and the last thing on your mind when you go to bed. Reassure your clients by informing them that you intend to “make your mark” in the luxury real estate market by effectively and efficiently closing the deal. At the end of the process, you will have been so effective that they will be thrilled to give you other luxury referrals, allowing you to build up your business with their successful listing at its foundation.
Step 6: Your First Luxury Listing
By using your killer pre-listing and listing presentations, you’ll land your first luxury listing. In order to deliver knockout presentations, you’ll need your process. Don’t show all of your cards during your first appointment, even if you know everything there is to know about the property. Instead, provide even more in-depth information during the second appointment. This will add that coveted value to your process, putting clients at the edge of their seats. Finally, make sure to highlight your USPs, the things that make you stand out from the crowd.
Step 7: Let’s Do It Again
After successfully completing a luxury transaction, tell the world! Once you have a luxury listing, you learn the unique, innovative and proven methods of marketing it. After closing the deal, tell the world so that you can do it again. Jack suggests promoting your success through a hardcover book instead of a brochure and using HDR instead of traditional photography. Furthermore, he urges agents to expand their efforts both online and via direct mail. This will make your marketing stand out and capture the attention of even more prospective clients.
By following these seven steps, you can not only break into, but be successful in the luxury real estate market. Lastly, Jack reminds you not to over-price, over-promise or under-charge, and to never give up! The more time and effort you put into becoming the local luxury market expert, the more invaluable your time and service will become.
The best of luck on your luxury real estate adventure!