Last time, we talked about seven things that luxury home buyers don't want. Today and next time, we’re going to talk about7 things that they do want. This is Part I.

1. People in the high end want to be respected and honored for the level of success they have achieved. Surprisingly, a lot of people don't listen to them, especially those in their own families. We need to be the person who does listen. That's a great way to learn, by the way. High achievers have a wealth of knowledge you can tap into. Be careful not to be seen as trying to compete with them. Even if you are as wealthy and accomplished as your client, they are the star. Treat them as such.

 

2. People in the high end understand that success comes from professionalism and competence and they demand the same from the people who serve them. In most cases, high net worth individuals, worked incredibly hard to attain the level of success that they have. They really like dealing with businesses or professionals who work as hard as they do. As a luxury real estate expert, you probably feel that same way: You work incredibly hard and have little patience with those who are lackadaisical, don't care, and provide a low level of service.

 

3. People in the high end want you to be above board and true. They can't stand being deceived or manipulated. They're very smart and have great B.S. detectors. In addition, they want you to know that they're smart. The way to let them know you know they are smart is by not trying to manipulate or play them.

 

In conclusion, listen carefully to all of your clients, high net worth and otherwise. Avoid the temptation to speak down to or seem to compete with them as a technique to cover your nervousness in dealing with affluent people.

We'll cover points four through seven in our next video.

Until next time, make it a great week, and don't forget if you bought my book, Selling Luxury Homes, you can fill out the form and get a free 20-minute consultation with me via telephone. I look forward to answering your questions.

Today, we're going to discuss seven things that will totally turn off luxury home buyers and sellers. I know we shouldn't deal in the negative, but it’s important to recognize these mistakes so we don’t make them. Next time, we'll talk about what they DO want. 

1. Poor Service. In most cases, wealthy people became so by giving great service in their own businesses and professions. As a result, they have high expectations, and they want them met. They find poor service annoying and have little tolerance for it.
2. Low Passion, Low Energy. I hope you care about your profession as a luxury real estate expert.  It needs to be a vocation and not an avocation.  Repeat the thoughts and ideas of your luxury clients so that you can be sure they know you understand, that you're on the same page and have passion for what you do. 
3. Inconvenience. Wealthy people are busy; their time is valuable.  We need to respect that and be easy to do business with. They hate to hear, "Oh, that's not company policy.  We can't do that."  I'm not suggesting anything illegal, immoral or unethical. At the same time, find a way to get it done.  Be a problem solver, not a problem creator.
4. Manipulation. Your wealthy clients tend to be smart people.  Many times it's how they became wealthy.  Some of their success can be attributed to finely tuned B.S. detectors. Be 100% above board, straightforward, and honest in all your dealings with the affluent, (and everyone else for that matter).
5. Not Being Heard. It’s one thing to hear, it’s another to listen. Your affluent clients don’t want to repeat what they've said to you. They want to know that you get it. They don't have time to spell things out, so make sure you're listening and tuned in.
6. Unnecessary Complexity. Some agents get nervous when they're dealing with people in the high end. They feel the need to impress with their knowledge, expertise and technical ability. Some agents will use jargon or words that don't have a lot of use and commonality.  Don't try to over-impress. Be secure in who you are. Don't compensate for insecurity by talking down to wealthy people. They can’t stand it.
7. Cold Fish. Some advise that in business you should not “take it personal” or that “it’s just business”. Not true in the high end. Everything is personal to the luxury client and it had better be for you.  Be careful of what you delegate. When you delegate, make sure you're visible and on the front lines so that the wealthy person can see that you're fully engaged. Think about the maître d' at a restaurant or an orchestra conductor. They may not be doing the actual work, but they're on top of and watching everything. Nothing falls through the cracks.    

In conclusion, understand that people of means have high expectations. To be successful, meeting them is not enough, we must exceed them.

If you have ordered Selling Luxury Homes don't forget you get a 20-minute consulting call via telephone. Fill out the form and fax it to me. You can email your questions to me at jack@jackcotton.com.

Until next time, make it a great week.

We all know that luxury homes can be difficult to price. Luxury homes can be unique, different and one of a kind. Using pricing benchmarks can make it a little easier. A benchmark is a baseline derived from an element of comparison. Using a baseline affords us a method to compare a luxury property to an element of the market.

An element could be front feet on the water whether it be ocean, lake or river. We can talk about acreage, square footage of living space or percentages of assessment. That's one of my favorites because a lot of buyers put credence in assessed valuation.  Here’s an example: You have a house that sold for a million one that was assessed for a million. That means it sold for 110% of assessment.  If you look at a collection of luxury sales compared to their assessed valuation in a given area, you can establish a benchmark for an area such as the 110% just mentioned.

Another benchmark is the cost to replace or reproduce a particular property. Before we go too far, it is important to understand the difference between replacing and reproducing a property.

For example, if you crack up a brand new car and the body shop provides you with another car that has four doors, four tires and leather seats, they replaced the utility or usability of your car. You will get from point B to point A, but it's not a reproduction of your new car.

Reproduction on the other hand, is an exact replica of your new car prior to the crash. Every detail, finish and feature is the same as you had before. Similarly, reproduction of a house would include every luxury item whether its platinum faucets or decking that was recovered from the Titanic. Everything is exactly the same.  Reproduction cost is higher than replacement cost.

The question with reproduction cost is “would you”? If you were starting over from scratch, would you use the same design? Would you use those same exotic materials or would you do things a little bit differently? So when using reproduction costs as your benchmark you need to be careful and ask youself if a typical luxury buyer would want the exotic features found in the property you are pricing.

When you're estimating the range of prices to advise a seller of an offering price of their luxury home, reproduction costs typically will set the high-limit of value. The only exception to this would be if there is something with the land that’s unusual or scarce like enormous acreage or a rare promontory on an exclusive gated island. In that case someone may pay more than reproduction cost because the location is irreplaceable. In most cases, however, reproduction cost can establish a baseline to which you add potential emotional component. In most cases, it’s rare for a high-end property to sell for more than reproduction cost. 

One last thought about pricing and benchmarks: Never use averages to arrive at a price range for a listing. You are a luxury real estate professional. A computer can average. You can teach animals in the zoo to do averages.  You can talk about average price per foot or average assessment ratios, but you never average other prices to arrive at one for your listing.

The word that describes what the luxury real estate expert does is reconcile. You reconcile the data available to you to recommend a price range based upon your experience and knowledge. This is a subtle but important point. 

As always I look forward to your questions. Send them to me at Jack@jackcotton.com. Don't forget that if you bought my book you have a 20 minute one on one phone consultation. Fill out the form, fax it to me, and we'll schedule our time. 

Until next time, make it a great week!

We're finishing our discussion this week about how to make a beachhead in your luxury market; especially when you're competing with somebody who's has a firm grip on the high-end market.

Last week, we talked about finding a "maverick" and before that, we talked about the need to get known in our marketplace. Here are three ways to accomplish this:

1. Direct mail. If you do random mailings you are likely to have limited results. On the other hand, mail to gatekeepers like trust officers at banks, attorneys who specialize in tax and estate work and CPA’s for a more effective response. When your mailings introduce and reinforce your expertise in pricing the luxury market, you are bringing value to the gatekeepers.

2. Expired occur in all price ranges, even the high-end also. Monitor expireds in your market, they are often the maverick.

3. Headhunters need to be added to your list of gatekeepers either in your exact location or in regions nearby. For example, I'm on Cape Cod, Massachusetts, not too far from Boston where a lot of headhunters are based. Their highly compensated executives oftentimes want summer homes on the Cape.

Lastly, a bonus tip: Get a dog!

You're going to think I'm crazy, but I was talking to an agent who told me how her dog gets her high end listings. This reminded me of a story of an agent who I work with here in my office. She was trying to get a particular waterfront listing, from a high end builder priced in the $3 to $5 million range. She was thinking about how to make contact with the builder and noticed he was on the property as she was out walking her dog. Somehow her dog got loose and took off onto the property (smart dog). Of course she had to go run onto the property, catch the dog and wouldn’t you know, ran into the builder. A doggie conversation ensued and she actually got the listing.

Other agents have told me that they walk their dogs through expensive neighborhoods and they'll run into interesting people like Bill Gates. When people meet another dog on a walk, they always have a conversation. I'm really almost hesitant to talk about something as low-tech as getting a dog but whatever it takes to make that first beachhead.

Once you get your first listing in your luxury market, more will follow. Every deal you do should result in three or four more deals with both buyer and seller referrals.

Let me know what you think, especially your luxury real estate dog stories. If you have purchased Selling Luxury Homes, don't forget to fill out your for your a 20-minute consultation.

And until next time, make it a great week.

We're continuing our discussion today about how to make a beachhead in your luxury market, especially when there's a strong player that you're trying to compete with.

We've talked about all the things that are necessary to break in to the luxury market like understating the characteristics of the four categories of wealthy people and the five areas of expertise you need to succeed. Now it’s time to actually get in front of a luxury seller. We want to make the beachhead that will lead to our first listing.

Today’s message is to find the “maverick” in your market. Every luxury real estate market has at least one. A Maverick is that wealthy person who goes against the grain.

For example, I was recently at a house where they spent three-quarters of a million dollars – maybe even a million dollars – just on the garage. This garage was to die for. It had radiant heated tile floors and hand-hewn, naturally-finished wood beams. The light fixtures hanging from the ceiling were bronze with halogen bulbs. You walk through the garage and workshop area and you arrive to the car parking area. There in the middle of this huge garage, with a fresh waxed metallic green shine you can see yourself in is a Subaru Forester. That's right, a Subaru Forester.

This may be an extreme example, but the owner of this property and car qualifies as a maverick.  Mavericks don't like to do things the way everyone else.  They like to be a little bit different.  That means they are less likely to work with the number one market leader, the person really known for the high-end of that marketplace.  This is the person that you can make a beachhead with. Let’s talk about how to do that.

• Direct mail.  Both directly to them and their gatekeepers.

• Remember, you are an expert on price and value.  Even mavericks have gatekeepers and don’t like overpaying for taxes.  If you were to market to the gatekeeper your ability to provide up to the  minute market information, that is your in-road.  If anyone's going to take a chance on a new person breaking into the market, it is the maverick.

Another question I hear over and over again is:  “When I show up on a listing appointment they're going to ask me how many listings have you sold in the high-end?”  The way I would advise you to answer that question, if you don’t have a track record yet, is to say:  “I work in the high-end on a limited edition basis.  I only take one seller or two sellers – (pick the number that works for you) – at a time because I want to devote all my personal attention and energy to that property.  I want to make sure I can oversee every aspect of the marketing myself.  I want to make sure I can be present for every single showing of that property.  I want to make sure I'm elbow to elbow with the photographer when they shoot every aspect of this property so that everything is perfect.  I want to make sure I'm looking over the shoulder of the marketing person who puts the brochure together.  That’s why, Mr. and Mrs. Seller, I only take one at a time, very limited edition.  Wouldn't you like to have somebody working like that on your property?”

This is one way make the beachhead.  It works; I know it does because it worked for me many years ago.

Let me know how you make out with your maverick.  Also, don't forget to email me your questions and fill out your form to schedule your 20-minute consultation if you bought my book, Selling Luxury Homes.

Until next week, make it a great one.

We're continuing our discussion around a question I get asked repeatedly: how to break into a luxury market especially one where there's a strong, dominant competitor. We talked last week about the wrong way to break in.  Let's start the discussion this week with the first step in a better way to break in.

First of all,  SWET that dominant player or competitor. You've probably heard of a SWOT analysis but we're talking SWET:

1. Identify the leader in the marketplace you're trying to break into and identify their Strengths?  What do they do well?  How long have they have been at it?  What's their track record?  What are they known for?  What's their claim to fame, so to speak?
2. Next we want to look at their Weaknesses – what could they do better?  Where do they fall down?  What do they not do as good as they could do?  what can you do better? You can find the answers to these questions by interviewing people in your marketplace; both agents and consumers.
3. List of Everything they do in the conduct of their business.  Do they go on their own ​listing presentations?  Do they show their own properties?  Do they negotiate their own deals?  Do they do their own marketing?  What exactly do they do?  I've talked to some agents who tell me that the agent they're competing with is great at listing and buyer presentations, but that the buyer or seller never sees them again.  And while that works for them, it could be an in-road for you if you can turn that around. That brings us to step number four: Turn it around.
4. What can you Turn around do different, better and opposite of what the leader is doing. This can give you a beachhead in your luxury real estate market?  For example, if the leader never shows their own property, you could make that part of presentation that you are always personally involved with every showing that takes place of their property.  I heard about one leader that won’t climb stairs for whatever reason. They sit down and wait for the buyer to look on their own.  Your proposition to the seller can be how you personally demonstrate each and every feature of the property.

There's no right or wrong here.  You just need to know what their strengths are, what their weaknesses are and what you can do that's opposite and better to turn it around to give yourself an edge when you're competing with a market leader in your location.

Remember, and this is important, luxury does not compare itself to luxury. NEVER denigrate or criticize a competitor. As I have said before, you have never heard an ad where Rolls Royce compares itself to Bentley. Use the information gained in your SWET analysis to fine tune your approach and then just sell your approach and the value it brings.

We're going to talk in more detail about additional steps to breaking in over the coming weeks.  In the meantime, keep those questions coming.  Send me emails and don't forget to schedule your 20-minute phone consultation if you bought the book.

Until then, make it a great week.

Hello luxury Real Estate Agents. The questions keep coming in by email and during my calls with people who bought my book. As you know, a 20-minute one-on-one phone consultation comes with the purchase of my book Selling Luxury Homes. So, don't forget to fax in your application to schedule your session.

What's amazing to me is that 9.5 out of 10 times the question I get is this:  “Jack, I want to break into the luxury market in my area, but there's this one person who has the high-end sewn up.  He or she's been at it for 20 years, knows everybody and belongs to all the right clubs.  How am I going to break into my luxury market?”

Breaking in to the luxury market is a little bit of a process and it's going to take some work. It can be done however.  There is a right way and a wrong way. Today let me tell you how some agents try it; what I would call the weak way in.  Next week, I will spend time on what I recommend as the correct way. We can learn from both approaches.

1.   Overprice your first luxury listings: take them at any price the seller suggests any number you can dream up that will get the seller to sign with you.  This will work even in the high end and you will get listings.  I've seen agents list properties for $13 million that should be $5 million. Sure, they got the listing, but it's probably not going to sell. Maybe they'll get some activity but then again maybe they won't.  But what you're guaranteed to get is a loss of credibility.

2.  Establish a beachhead of their luxury market by working for a lower fee. Understand however, that luxury does not compete on price.  Have you ever seen a Porsche ad where they talk about how they are more economical than a Ferrari?  Luxury, by definition, does not discount. Further, luxury doesn't compare itself to competing luxury.  Have you ever seen a Bentley ad where they talk about how they are better than a Rolls?  You want to build your value proposition and bring value to the proposition of selling or buying real estate. You don’t to that being a fee cutter coming out of the gate.

3.  Borrow and go into huge debt to make a big splash in print and other media.  You will make a big splash, but there’s nothing to back it up.  It could work temporarily, but it's not the way to build a lasting impression in the luxury real estate business.

Next week is how we can create a plan to break into a market that is dominated by a strong player.  It's a process.  It doesn't happen overnight, but we'll start with step one on my next blog.

Don't forget to like me on Facebook and send those questions to jack@jackcotton.com and visit me at my website.

Make it a great week.

Happy new Year Luxury Agents. As we are just over the threshold of 2012, it's time to talk about business planning. Many don’t look forward to this task, but let me see if I can make it a little less painful.  Because I’m a licensed boat Captain, (up to 99 tons) and live on Cape Cod near the water, I like to compare business planning to a boat captain preparing for a voyage. 

Before leaving the dock, the captain has a goal or destination and marks it on the map (or chart in marine parlance.) Just as goals always have a deadline, the captain has a time frame for reaching his or her destination and makes a note of it in the log book.

The next step is for the captain to set the course that will be traveled to reach the destination. Based upon past experience, and other predictions, the captain will take into account, winds, weather, currents and tides and estimate their effect on the course.

It works the same with business planning.  We set a goal.  We then lay out a plan for how we're going to reach that goal and we understand that during the course of the year things can happen.  The winds and currents can change so adjustments need to be made as we progress.

While the captain sets his or her destination, course and estimated time of arrival on a nautical chart, I prefer Excel for business planning. In fact, I created a pretty simple business planning spreadsheet that I'd like to share with you. Let me first explain how it works then I'll tell you how you can get one at the end of this video. 

The next part of my plan is a situational analysis based on your past performance. You need to gather a certain amount of data based on your last year's business. If you're new to the business base the situational analysis upon your best guest estimates of what your numbers ratios are going to be. These numbers, like your income goals, are entered in the white boxes of my business plan.

The spreadsheet automatically calcualtes your batting averages:

     •   How many leads let to how many appointments with buyers to getting actual buyer contracts signed? 

     •   How many appointments did you have with sellers that resulted in listing contracts signed? 

Next is the production target tab.  This takes your goals from the front page and looks at your financial arrangements with your company and  uses your ratio of leads to appointments to calculate the number of buyers you need and the number of sellers you need to reach your goal.

Next is the prospecting target tab. Here you decide where your business will come from.  Do you want it to come from your sphere-of-influence; past clients; open houses and referrals for example? Target your goals for each category of business in the white entry boxes and then you can match it on the last page against what actually happens. 

On the final tab, you find already calculated a monthly target of exactly how many:

          •  Appointments you need with buyers every single month.

          •  How many appointments you need with sellers every single month.

          •  How many listings you need to take each month.

          •  And how many buyer contracts you need to sign each month.

As the year unfolds, you enter your actual numbers which allows you to track ratios or “batting average”.  It may sound a little bit complicated, but I've made this so simple and you can track where you are monthly as to where you are compared to where you want to be in terms of your goal.  Just dive in and try out the spreadsheet.

So you can get one by sending me an email jack@jackcotton.com  In the subject line enter request business plan.  Try it out and tell me what needs changing.  Tell me what you like about it and tell me what you don't like about it and I'll tweak it. 

Don't forget you can ask me your other real estate questions and if you bought "Selling Luxury Homes", don't forget to schedule your 20-minute one-on-one phone consultation with me by filling out the form and sending me a fax.

Until next time make it a great week. 

         1.  The real estate market will continue to improve.

•  Improve means more confidence, more activity and more sales. My definition does not include increasing prices or a return to 2005 pricing.

•  Still too much supply. Some markets still have 10 or more homes on the market for every one that sells

•  Many sellers will finally realize that, contrary to their fantasies, prices are not going to make a sudden return to 2005 levels. There will be more seller price capitulation in 2012.

•  There will be a significant increase in REO, short and distress sales in 2012, especially in the high end. The ability to “fake it” is running out for many people who have been hanging on.

 2. Real estate will be seen as the “other gold”

•  Returns in money markets, CD’s and bonds will remain near zero in 2012

•  Uncertainty in world economies will heighten

•  Many will come to real estate in rare and beautiful places as a safe haven you can use and enjoy.

       3. NEXT! Continues to be the favorite word of buyers in 2012

•  Emotion has left the real estate market and will remain missing for at least the next year or so.

•  Buyers are conditioned to wanting a deal otherwise known as a steal to purchase ANYTHING, esp. real estate.

•  Buyers will fall in love with the deal not the house.

·      4.    Second home sales will continue to do better than primary homes in 2012

•  Second home sales are demographically driven—Boomers

•  Many Boomers have been out of the second home market not because they cannot afford to buy but because it wasn’t cool to buy a second home when economic conditions were dire for so many.

•  Boomers will only deny themselves of what they want for so long. We are coming on 18 months of denial which is about the limit for most boomers.

•  See Number 2 above

·      5.    2012 may be the best year to get the best deal.

•  It’s a little different this time. In the past, real estate cycles have been about 5 years long. Depending upon who you ask, this downturn started in 2005 to 2007.

•  This downturn is more biblical both in terms of scope and duration. 7 years is probably what we are looking at so 2012 may be the best year to get the best deal as the homes with best prices in best condition will go first.

By Max & Jack Cotton

1.  Santa will give his reindeer extra food and water so they will be strong enough to pull the sleigh full of toys for the good boys and girls all around the world. Santa has special water that he keeps in red barrels that gets them ready to fly faster and higher.

 a.    Make a plan for good health and nutrition in the coming year.

2.  Next, Santa gets out special reindeer sneakers that he ties on all thirty two feet of his reindeer. These sneakers help the reindeer to stand on the roof while Santa slides down chimneys. They also help keep the reindeer feet quiet so that no children wake up when they are standing around on the roof.

a.  Have proper equipment for appointments: proper forms, measuring device, tape recorder etc.

3.  Later on, he loads up his sleigh with toys for the good kids. The elves will help load up the sleigh putting the big packages in first, the smaller ones after.

a.    Organization is critical for success. We have to do more of everything in this economy and it is easy for things go fall through the cracks. Have systems in place to work on the big things first.

4.  He will put coal under the seat for the kids on the naughty list. He hopes that there will not be too many kids getting coal this year but he has to be ready just in case.

a.    Bad things can happen, we hope they don’t, but be ready and prepared for them.

5.  The elves give Santa a manicure. He does not want to scratch his nose each time he “lays a finger aside of his nose”.

a.    People do judge us by our appearance.

b.   Be neat and well dressed, even get a manicure now and then to look like the professional you are.

6.  Santa programs his GPS. He wants to know where he is going, stay on course and not get off track.

a.    Set Goals for 2012

b.   Create an action plan to accomplish

c.    Santa knows why it’s important to reach his many destinations. Do you know why it’s important for you to reach yours?

d.   Be ready to adjust course as needed.

7.  Santa sharpens the runners on his sleigh for better, smoother take offs and landings on many roofs.

a.    As Steve Covey says, “sharpen your saw”:

                                            i.     Read

                                           ii.     Attend Seminars

                                          iii.     Find a coach or mentor

                                          iv.     Learn and grow

Have a great holiday and terrific New Year!