If you think you know your luxury buyer, think again.
New findings by Luxury Portfolio International, the luxury division of Leading Real Estate Companies of the World (LeadingRE) and its research partner, YouGov, separated luxury buyers into three tiers in the report, The Affluent Homebuyer: A Quest For Meaning.
And it showed that each group differed in their approach to the real estate purchase and in the support they needed from their agent.
“For today’s real estate agent, it’s critical to understand the mindset of the affluent consumer,” said Paul Boomsma, president of Luxury Portfolio International. “The research shows it’s clear that not all consumers are the same, and part of speaking their language is understanding their deepest motivations.”
1. The Practical Explorers
The first tier, the largest group, they named the Practical Explorers, buyers in the $1 million to $2 million range who also had an average of $4.2 million in assets.
These clients are looking for trusted experience in their real estate purchase, and 80 percent prefer to work with a real estate agent on their transactions.
Stephanie Pfeffer Anton, executive vice president at Luxury Portfolio International, said: “The Practical Explorer needs more support in the process than those in the other tiers. They are looking for fulfillment and are not as focused on luxury.”
A great backyard or a swimming pool might be what makes this group — which is well-connected with the community and schools — happy.
Source: Luxury Portfolio International, The Affluent Homebuyer: A Quest For Meaning report
2. The Meaning Seekers
Tier two of affluent homebuyers in the research, who fell in the $2 million to $5 million range, were named the Meaning Seekers.
These people are luxury lovers who proudly assert that once you experience true luxury, it’s hard to go back (71 percent).
More than half of this group have a second home valued at $1.6 million on average. These committed luxury consumers also value sustainability (74 percent) and want their purchases to mean something.
When they purchase a house, they want to know: “Does this home help me live the best version of my life?”
Source: Luxury Portfolio International, The Affluent Homebuyer: A Quest For Meaning report
3. The Power Players
The smallest group of the three, the Power Players, are buying in the $5 million-plus range, and their current primary home is valued at just under $10 million.
They like to acquire the finest, most premier properties and are willing to pay to get them.
In this tier, 83 percent of those surveyed said that they choose the best and expect the price to reflect this. They are motivated by a desire to have it all and want to feel confident that what they have purchased is unrivaled excellence.
The key question they want to know in their real estate purchase is: Is this house going to impress?
Pocket listings would suit them, you could argue.
According to the research, they want to feel like what they are buying is exclusive, customized and comes at a premium price, which helps them feel confident that their purchase is worth more.
This group is the most confident homebuyer, and though they will use an agent because they are too busy not to, they would feel comfortable purchasing without an agent because they understand the process and have done it a number of times before, said Pfeffer Anton.
Source: Luxury Portfolio International, The Affluent Homebuyer: A Quest For Meaning report
Renovation junkies or turnkey seekers?
The report also pointed to a couple of key trends, one being a certain amount of luxury “fatigue” for affluent buyers — meaning that while their last luxury property may have been a certain style, that may not be what they are looking for in their next real estate experience.
Stephanie Pfeffer Anton
Another message was that millionaire consumers are not interested in doing any major renovations on the home they buy.
Just 5 percent of luxury buyers would seek a home that they need to renovate completely, and only 15 percent are seeking an older renovated home.
Presenting the report to luxury agents gathered last week in Miami at LeadingRE’s Luxury Portfolio Summit, Pfeffer Anton said agents selling property over $10 million told her that their clients want contemporary property — new builds, that is — and are attracted to the idea of creating something themselves.
The No. 1 trait luxury clients seek in their agent
For the million-plus homebuyer, meanwhile, the top trait they seek in their agent is trustworthiness, she told the audience.
The second and third most important qualities are knowing the “details that distinguish the best” and “taking the time to understand my needs.”
A successful relationship with a real estate professional at this level is marked by a personal connection and deeper, more intimate relationships, as much as it is by expertise and high levels of service.
Pfeffer Anton added that, at the summit, a question was raised about how you can establish your trustworthiness as an agent.
The conclusion? The big power remains in the the little things, like asking for permission from clients before you tell a certain personal story about their house, proving that you are fighting for every dollar for your client even though they can afford it if you don’t, and doing things for your client with no immediate expectation of payback.
“When working with clients at this level, it’s important to show that you are there to help in the long run, and someday it’ll come back to you. If they think you expect something in return, it is not going to engender a great connection,” she said.
