Now let’s talk about the Luxury Market versus the A verage Detached Homes Market. There are Pros and Cons to luxury real estate. 

The luxury market has some considerations. It’s not something to automatically target with your prospecting. The market value of luxury homes is higher and it is attached to higher paychecks. However, it is not an ideal target market for new agents without resources in the game. 

Luxury homes have larger paychecks but often take longer to sell because the buyer pool is smaller. Once you pass the $5,000,000 mark, more days on the market is not uncommon. This isn’t because something is wrong with the home. It’s because, as you go up the hierarchy in luxury properties, homes become extra custom and there are fewer buyers.

The more custom a home is, the more effort and energy it can take to locate or attract the right buyer with your marketing. Attracting buyers to these luxury properties costs money. Your marketing materials and efforts must match the property’s level. An MLS listing and ads in real estate storefronts will not suffice. Additionally, clients for properties above 5 million likely expect you to market internationally to access more potential buyers within an already smaller buyer pool. 

Average-priced homes are homes that sit in the median of available market supply. It doesn’t mean the homes are “average.”  Average-priced homes have lower agent paychecks. However, and this is a VERY important point, they require less of your resources to market and turnover. You can move on to your next sale much faster. You’ll likely turn over more average-priced homes in the same period that you were holding the luxury property. This is especially true when starting out.

Multiple average market value properties turn in the time it takes to turn one luxury home. Those smaller paychecks add up quickly. Although it may take four or five homes to add up to a luxury listing, it still makes sense to have smaller paycheck listings if they are turning over more quickly and have less overhead than bigger luxury listings. 

It doesn’t make sense for new agents to spend time, energy, and money on holding three or four luxury listings. It’s too expensive to maintain them. It’s not uncommon for high-end listings to take a year or more to turnover while requiring you to follow up with them each week. Showings and open houses alone take hours. During luxury showings, people can spend an hour in the home. They go slow. It's not like when someone goes to a regular home and is in and out in 15 minutes. When you divert your energy to keeping up these luxury listings, you have no money coming in right now. This is time you could use to follow up on or find new leads that will turn into dollars. When you are a new agent, the time lost is not worth the wait for the luxury paycheck.

As a newer agent, don’t make the mistake of pouring all of your resources into turning over luxury listings. Instead, prospect and service easier-to-turn listings. It’s a different story if you’re already established in real estate.
Once you’ve advanced in the game and have resources to add luxury listings into the mix, you can diversify your listings and mix short turnover listings with longer turnovers and higher paychecks. Later in your game, the maintenance required for a luxury listing won’t sabotage your game resources the same way it does for a rookie agent.  

If you decide to knock in luxury areas, I have recommendations about how to approach it. 

Wait until you are advanced in your game to knock at luxury properties. That’s mainly because you’ll have more time, energy and money to spare at that point. You won’t be relying on the listings to build your resources. 

Once you decide to target these homes, don’t be intimidated just because they are higher end listings! All door knocking requires that you face rejection. The difference is when you do get a YES at the door, your paycheck is exponentially higher than in other areas. Your hourly rate in luxury areas also works out to be way higher in these communities. 

A major benefit of knocking on luxury homes is that these doors rarely get knocked on by other agents. Few agents have the courage to visit these areas. They are intimidated by the homes and the homeowners, who they think are “in a class above.” But there is no reason to be shy! There’s a direct correlation between how often a home is knocked on and how friendly the response is. Homeowners in areas that see agents out knocking often get more annoyed than homeowners who rarely see them.

When a highly presentable agent arrives at a door in a rarely knocked community, homeowners are usually very receptive. In fact, they often find it extra intriguing when they see someone at their door. It’s also very common for a luxury homeowner to tell you ‘good luck’ or ‘I remember when I used to work like that.’ It’s even common for them to thank you for coming by! These homeowners have usually worked hard to afford their homes. They are not strangers to hustling. They appreciate it when they see it in others. They know what it takes to make it in life, and they respect hard work.

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