How does one go about marketing luxury real estate to affluent customers? The first challenge is the size of the group of potential buyers. The more luxurious the property, the more it costs. This means there are fewer people who can afford it. Which, in turn, means that mass-marketing techniques will not work for luxury real estate.
Usually, mass-market real estate agents try to appeal to customers who already exist. If they do not already exist, the agent tries to create a market for the property. With luxury properties, however, the agent must “go where the market is.” This allows the agent to connect with people who are actively looking for million dollar homes.
The simplest method to connecting with wealthy real estate seekers is by listing the property on luxury real estate websites. These websites already attract individuals in the market for expensive properties. One tip to remember when going this route is to be sure the listing site is international in scope. Think globally, because rich investors do not limit themselves geographically.
Other marketing techniques include setting up booths at air shows or boat shows. Distribute brochures to the wealthy potential clients in attendance. Many wealthy customers begin their research by reading the advertisements in the Wall Street Journal, The New York Times, the San Francisco Chronicle, and other niche publications. For example, Unique Homes has both a magazine and website tailored to the luxury market. For the most part, the listings in Unique Homes offer as much detail as possible, so that if a potential client is interested, they may contact the agent.
Marketing Luxury Homes, an online specialty consulting firm, offers the following advice for selling luxury real estate properties:
~The luxury home market is defined as homes costing more than $500,000.
~Each property requires its own marketing plan.
~More often than not, buyers will be from out-of-town or out-of-state. It is not unusual for buyers to be located more than 500 miles from the property.
~Most luxury properties have been customized to the needs and tastes of the current owner. These special features make the property unique, but not necessarily attractive to another buyer. This means the unique features must be presented as desirable highlights.
~Listing a luxury property online instantly extends the broker’s potential market by thousands of miles.
~Virtual tours of available luxury properties are vital to successful marketing. This allows potential buyers to preview the property and can create avid interest.
~Do not neglect using Craigslist.org. Because of its scope, the site should be used. It covers all 50 states in the U.S., over 50 foreign countries, and gets billions of page views per month.
~Houselist.com provides different levels of listings, and can be searched by state, city, and country.
~HighEndCrazy.com is a website that lists luxury properties. People who use the site are high-net worth individuals in the market for second or third home.
~Online listings revolve around the “six degrees of separation” theory.
A new and growing segment of high-end luxury property buyers is being attracted by what are called Fractionals. Fractional ownership of a property means the division of the asset into portions. If the asset is a house, the title or deed is legally divided into fractions. It sounds like a time-share, but is not. When buying a time-share one buys the right to a piece of time in the property. While on the contrary, when buying a fractional, one receives a percentage of ownership in the property. Fractional owners both use the property and hold a real estate deed for the property. The deed can be bought, sold, or inherited.
The marketing of fractionals identifies and targets wealthy people, who are extremely busy and, because of their work schedules, have limited vacation time. When they do vacation, they want to travel to their own property, but do not want the headaches associated with normal second or third-home ownership.
The high-end of the fractional markets go by the name of “private residence clubs.” These “clubs” provide services and amenities akin to any five-star hotel. For example, Calistoga Ranch, which is located 90 miles from San Francisco, offers fractional ownership of 22 lodges. For $475,000 each owner receives a one-tenth share for five weeks per year. Annual membership dues add another $12,600 to the total.
The 2,500 square foot lodges have two bedrooms and two bathrooms, a hot tub, an outdoor shower, a stone fireplace, and Viking appliances in the kitchen. Along with the lodge, each fractional owner has full access to the resort’s fitness center, private restaurant on the lake, wine cave, and a thermal spring-fed bathhouse, which offers spa treatments, yoga deck, and a swimming pool. The resort has a private vineyard, and 140 acres of land dedicated to outdoor activities, such as hiking and biking.
Fractionals are growing in popularity because they offer wealthy customers ease and convenience. Fractionals represent what is called in marketing a paradigm shift, which is nothing more than a change in the way real estate is owned. The shift took place because of the way affluent customers’ needs and lifestyles changed.
Once the affluent customer purchases a second, third or fourth home, they buy luxury goods to put in it. They remodel and renovate. The Luxury Brand Status Index (LBSI) estimates that 80% of the wealthy will purchase new luxury furnishings for their homes in 2013, and 2014. These purchases will include dishware, bedding, beds, major appliances, home electronics, towels, lamps, and fine furniture. Thirty percent will purchase antiques and fine art to decorate their homes. Many of them, 66%, will decide to remodel their kitchens, while another 58% will elect to remodel one or more bathrooms in each house they own. Last but not least, 22% of them will contemplate purchasing yet another home.
These numbers presage an overwhelming demand for luxury products and services. This indicates luxury sellers should begin carefully identifying, targeting, and marketing to affluent customers.