With 19.45% of existing North American home sales in the $ 500,000 and up range, the luxury property market has seen rapid unprecedented growth over the past year. To add to this increase, ultra-low stocks create fast growing seller market where the competition is fierce. So what does it all mean for luxury real estate professionals and their clientele? And how do emerging luxury real estate professionals start selling in such a strong seller market?
To gain a deeper understanding of this phenomenon, The Institute spoke with real estate instructor and consultant Tami Simms to find out how the rise in the luxury goods market came about and how this shift is affecting the way luxury real estate professionals. network approach, consulting and marketing strategy in the real estate industry in general.
Why is the luxury market so hot after an unstable year?
First, it’s important to understand the luxury market regularly outpaces lower price points… At the top level, buyers and sellers are less prone to financial constraints and tend to be more mobile. Naturally, when the pandemic became part of the equation, wealthier clients gained even more mobility through telecommuting and retained their purchasing power.
According to Simms, “Wealthier people suffer less from job loss, layoffs and reduced working hours. I work in all price categories, and when the pandemic hit, I lost buyers who were no longer eligible for a mortgage because their hours were reduced. “
In contrast, she added that high net worth clients who had liquidity or the ability to buy a new home did so, whether it was a new main residence or an additional home, to survive the stopover, as they were no longer tied to a location-dependent job. …
How does ultra-low inventory affect the buying and selling process?
As you’d expect, a significant reduction in inventory is forcing buyers to lash out at affordable properties. often with money offers above the listing price… While this may sound great to sellers and their listing agents, the quality of buyers is becoming less reliable, especially for those out of town.
Simms tells the Institute, “There’s a new dynamic happening here … People are jumping on real estate. get them under contract because there is such competition, but they don’t necessarily stick to it. So we are starting to see the resistance of the sellers, which is not very good for the buyers from the city. “
In addition, she says, “Sellers are fired by people in other cities who make beautiful, cash-only, with minimal contingencies, overpriced offers that sellers accept — and then buyers fly down and decide they don’t. I really like this hotel and go away. “
However, Simms predicts that the seller’s market may continue to grow for the rest of the year. However, she believes there will be some nuances that will change depending on which offers sellers accept.
In the coming months, she estimates, the “best offer” will not necessarily be the highest bidder or the one that looks best on paper from the start, as in most seller markets. Instead, sellers and their listing agents will learn to lean more towards the offer with the highest likelihood of closing while still generating favorable returns for the seller.
What opportunities does this seller offer for emerging luxury real estate professionals?
With the rapid pace of change and a strong seller market, emerging luxury real estate professionals face some major challenges, as well as some great opportunities, Simms said.
She said, “New professional in luxury real estate will not be easy in one respect and has excellent opportunities in another. On the one hand, anyone can put up a sign in the yard and sell it. But this is crazy … The difficulty is that there are very few offers for sale, so whatever you want, for example, agriculture, building your sphere of influence and all the methods we know that will help people build their portfolio and their business are still working. to be true, but this is not about getting listings in the short term. It’s about business when it’s right. “
To this she adds: “Relationship building will be overwhelming… Also, following the data. Because everyone reads the headlines that say everything is on fire and that people are getting twice the asking price … but knowing when an area changes or a certain price range changes is what really helps your salesperson. “
Overall, Simms predicts that emerging luxury real estate professionals who can quickly adapt and position themselves as capable of driving the market as it is now, rather than as it has been for decades, can thrive in this environment.
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Diane Hartley is President of the Luxury Homes Marketing Institute, an independent body for training and appointing real estate agents in the luxury home market. Hartley brought her passion for luxury goods marketing and over 20 years of growth and business management experience as president of The Institute. For more information please visit www.luxuryhomemarketing.com…