The dream of every real estate agent is to be the luxury agent. The agent that lists all the homes of the rich and famous and gets paid. It’s the closest thing to being a sports agent and real estate agents everywhere want to live vicariously through their rich clients. Or so they think.
The reality of the luxury real estate market is much, much different than what most agents think. Whether it’s lower pay, higher costs or worse treatment than what was expected, luxury real estate isn’t what they show on HGTV and youtube.
First let’s classify luxury real estate. Luxury real estate is the top 2% of real estate in the market. So if you’re in Atlanta, that starts at $2 Million. However, $2 million doesn’t even get you a starter home in silicon valley. Let’s be clear, almost every sale of “real” luxury could be a news story for the area, that’s how elite it is to classify as “luxury” in real estate. This standard comes direct to you from the real estate agents, so don’t just take our word for it.
With that out of the way, let’s dive into reasons you don’t want to be a luxury agent.
The majority of homes don’t sell
Sad but true. “The market is on fire!” you say, but the reality that’s in the median price point. New home buyers and move-up buyers fuel the market. Luxury real estate sells because someone wants to buy, not because they have to. Your new luxury real estate usually needs to stand out among the sea of opportunities. If a home buyer has a few million to spend on your new listing, they could just as easily buy in a different area or buy a home with the exact amenities they want. The point is that if your luxury listing doesn’t communicate to buyers that its as exclusive as they are, it’s going to sit.
It will require money
What usually happens when you can’t sell a home? As a real estate agent you know the number 1 reason a home doesn’t sell is price. However, if you don’t have enough backbone to communicate that to a seller, you likely do a dog and pony show hoping that you can stall long enough for a buyer to come along and ignore your lack of professionalism. You do things like open houses and ridiculously poorly executed 3D tours to placate your seller.
Imagine that experience times 10. Whether it’s true or not, everyone thinks real estate agents are uneducated and overpaid. Luxury home sellers often feel the same way. They often fall into two categories.
Many luxury clients are there because they are successful in life. They will expect you to perform as well. In this instance, it won’t matter if they are unrealistic, they will want a short listing period. The only bonus on this type of client is often they won’t hold you accountable when you put your 5 cell phone photos on the MLS and call that luxury real estate marketing.
Other luxury clients will go along with whatever you want as long as it includes the drone footage, the matterport floor plan, and VR tours. The problem with luxury clients in this bracket is that they are out of touch with reality and when the performance based home buyer offers them 70% of asking they’ll get offended.
TL,DR version – do the research, the days on market for luxury is often up to a year or more.
It’s not usually full commission
I know your broker told you not to talk about commission, but we don’t care about what your broker thinks. Most people recognize that a full real estate commission is going to be around 6% with that being split among brokers. Luxury clients know this and expect that because their price is much higher than the norm your fee should go down. It’s hard to argue with the logic unless you’re doing more for them. Limo rentals anyone?
You’ll be expected to do more than you think
Speaking of working for less money, you’ll probably be asked to do more. Luxury real estate is a darned if you do and darned if you don’t prospect. If you get your Mercedes washed before the appointment, they’ll expect the best but if you drive up in an unwashed F-150 clients will wonder if they made the right choice. The point is that you’ll be asked to do far more for you clients in a luxury home setting. Instead of rambling, here’s a list.
- In person showings of listings (to buyer’s agents)
- 3D Tours
- VR Showings
- Drone Footage
- Home Trailers
- Attend to the dog
- Swing by the house for errands
- View “what if” scenarios for buyers. Like let’s look at both the penthouse in the city and the golf course mansion in the suburbs and everything in between.
- Open house complete with open bar
It will require money
It goes without saying that anything on the list above is going to cost money. As mentioned before, a luxury real estate client got to where they are either through success in life or being surrounded by their parent’s success. They are going to expect some “action” on your end.
You probably won’t get to work with your favorite athlete or celebrity
Real talk. Every agent has a story where they either know a celebrity or are friends of their friends and almost had that one client. Unfortunately, unless you are legit bffs with a celebrity chances are good you won’t be representing them in a real estate transaction. There are 2 people that help celebrities. Their friends or their people’s friends.
You probably have the wrong mindset
If you’re reading this then wake up! You’re thinking about being an HGTV star and selling million dollar homes while sipping some adult beverage in your lambo. It’s not going to happen. Yes, it has happened before. If you want it to happen for you, then you’re going to have to network like a politician. However, for the vast majority of agents, it’s better to treat your business like the insanely profitable business it is and get after it. Once you’re selling 100’s of homes a year as a business, the luxury sales that pop up from time to time are that much sweeter and… you’ll be able to actually earn the business like a boss, vs a wanna-be.