Luxury Insights

Facebook woes - and changes to our Facebook presence

After some real hassles with Facebook, we are converting our ILHM Facebook GROUP to a PAGE.

If you are a member of our Facebook Group, here's what this means for you: 

1. We'll have a Page instead of a Group.  Like the group you can still post messages to the Wall and message boards and connect with other members.
2. You'll want to visit our ILHM Facebook Page and click the link to become a "Fan."  Once you do, you'll see the Institute logo on the Info tab of your Facebook profile and you'll be listed on the ILHM Page.  You will be able to make public posts to the "Wall" on the ILHM Page as well as view and communicate with other ILHM "Fans" (both members and non-members).
3. On Friday June 26th we will delete the ILHM Group on Facebook.  We will no longer have a private, "members-only" area on Facebook.  The ILHM Page is open to everyone--members and non-members of The Institute.  (Of course, we will still have our members-only group on Linkedin).

Why are we doing this?

Facebook made it impossible for us to effectively manage our private group.  For weeks now, Facebook has been blocking our accounts when we try to send individual messages to individual group members, and has never responded to our or inquires or requests for assistance.  

With recent changes in the Facebook platform and policies, Facebook seems to be pushing  businesses to use Pages instead of Groups. 

As you may know, it is very difficult to get through to an actual human at Facebook support.  Our messages sent to Facebook yield either no response whatsoever or generic auto-responses pointing to their help files.

As you can see, their help files are not much help when it comes to understanding why we are being blocked or how to avoid the issue:

It is interesting to note that we were not sending messages with great frequency, nor were we receiving warnings about the rate at which we were sending messages prior to them enacting the blocks on our accounts.  

Not being able to communicate with our own members for days is obviously unacceptable.  Facebook may want to remove any notion of human contact from it's member experiences, but we do not.

In the past, Facebook would apparently help businesses "convert" their Groups to Pages.  We thought they were going to do this for us.  In fact my follow-up inquiry yesterday was again met with this auto-response email with these instructions:

 

We did this and never received a reply or any action from Facebook.  So, I did another Google search and found this blog post, which pointed to this Facebook help page, which contained this message:

Obviously this directly contradicts the email that Facebook sent me yesterday.  Ah, Facebook!

Hopefully our move to a public Page will eliminate the problems we were having with the private group.  It will certainly continue to give you a way to show your interest/affiliation with The Institute and an easy way to connect and interact with others like you. 

And of course, there is always our members-only group on Linkedin.

Recent record breaking sales

Back in march Ron & Alexandra Seigel of Napa Consultants -- joined us on a member conference call to discuss effective agent marketing and positioning (listen here).  Ron & Alexandra help agents postion themselves for market dominance. 

Well, recently two of their very successful agent clients have broken price records for sales in their markets -- the highest priced sale YTD in Las Vegas ($9.5M)  and the highest priced sale YTD in Sonoma County ($3.8M). 

Congratulations!

And here in our backyard, it would appear that there may be a new Dallas record, with the sale of 5323 Park lane (map). 

The home hit the market last year at $45,000,000 and is rumored to have sold at about $30M.  More details here and here.

The rich are with us still

If you are feeling blue due to the slowdown in purchases of luxury products and services, especially the decline in the luxury home market, have a seat, and remember that the wealthy are with us still, as evidenced by what has been touted as "the auction of the century." 

Billed officially by Christie's auction house as the "Collection Yves Saint Laurent et Pierre Berge," the event, held earlier this year, had more than 30,000 visitors lining up in Paris at the three-day pre-sale event to get a peek at the treasures to be auctioned.  But the real excitement started when the bidding began and the wealthy competed in person and by phone to own something that came with a dollop of YSL mystique.

Bids were in the atmospheric range and seven world record prices were set in the first day of the three day sale, including those for the works of Matisse (a painting at $46 million), Brancusi (sculpture at $37.6million), Mondrian (painting for $27.1 million), and deChirico (painting for $14.2 million). 

An Eileen Gray chair (pictured) went for more than $28 million. 

Total proceeds of the auction reached almost half-a-billion dollars, breaking Christie's previous $76 million dollar record for a previous private sale in Paris. 

So don't despair.  The wealthy are still out there, standing on the sidelines.  Right now it may take the excitement of a collection of art and bibelots assembled over 50-years by a global taste-maker, but tomorrow, when the economic storm clouds have moved on, the rich will be back to explore and buy what's new and exciting and beautiful in the residential housing market.  We can hardly wait!

Raising the Roof

At the end of last month, the New York Time / International Herald Tribune quietly killed their international property blog "Raising the Roof," penned by Kevin Brass. 

A casualty of the faltering newspaper industry I suppose, it is a real shame as it offered a unique and valuable view of the market happenings around the world. 

If you've attended our past Leaders in Luxury events, you probably know Kevin.  He's been a favorite speaker for a number of years.  Of course if you've read about real estate in International Herald Tribune, The New York Times, Los Angeles Times, People, NWA World Traveler or bunch of other publications, you've probably read his stories and features. 

I hope you'll take a minute to go to Raising the Roof and give Kevin a quick thank you by posting a brief comment or even asking The Times to bring him back!  We'll miss his blog...

UPDATE:
It looks like they have stopped processing comments to the blog, so a quick note to the PUBLIC EDITOR, who represents the readers might be in order.

Clark Hoyt
public@nytimes.com
(212) 556-7652

Understanding the Market: Price Reductions

Knowing the trends in price reductions of active listings can be quite telling.  Not only does it give you a hint as to how effectively other agents are pricing and marketing comparable properties, it can also give you a sense of overall market trends (see our recent press release) and timing and help you find meaning other market stats.

As you probably know, one of the measures in our ILHM National Luxury Market Report is "Percent of Properties with Price Decrease."  It is a measure of the percentage of active listings in the national data that have experienced a price reduction in the last 90 days.  While this is useful in interpreting the national trend and for the sake of comparison, we all know that the important stats are ones where the rubber meets the road--from your local market.  So, many of you will be happy to know that we have added "Percent of Properties with Price Decrease" charts for all of the 31 metro areas covered in the members-only verson of our ILHM Luxury Market Report.  

Let's look a little more closely at this measure.  Here's the national trend in "Percent of Properties with Price Decreases":

As you might expect, this mirrors fairly closely the inventory trend for the same period:

 

As inventories rise, so does the pressure to reduce price.  Knowing the direction and strength of the trends can be important information to consider in your pricing discussions with sellers.  Note the magnitude of the change on the left vertical axis of the chart above.  While the trends are clear, and track inventory trends quite closely, the range of change has only been about four percentage points--between about 38.5% and 43%.

When we look at local markets compared to the national composite, we often see more volatility--bigger moves.  For example here is Charlotte compared to National.  We see that Charlotte tracks closely the national trend, but with slightly bigger peaks and lower valleys:

 

Austin, which has been a strong market, nonetheless shows a relatively rapid increase in price reductions at the end of 2008 after which is tracks the national trend fairly closely, but with a slightly higher rate of price reductions:

Boston, which has managed a consistently lower rate of price reductions than our national composite shows twice the volatility moving between 30% and 40% within the period--a range of 10% :

At the local level too, you'll see changes in inventory driving trends in price reductions, as you can see in the Charlotte and Dallas graphs respectively:

 

As Scott from Altos Research noted in our webinar last month, "How's the market?" and "What's my home worth?" are questions that agents hear all the time.  Your business depends on your answer--and don't forget that they want the answers to these questions not just when clients and potential clients are in front of you--but also when they are exploring your website, and looking at your marketing pieces too..

Media visibility has value

One newspaper article =
an entire community listing for one agent
and a $40,000 check for another!

Back in October of 2008, reporter Jean Murphy of The Daily Herald, a suburban Chicago (IL) newspaper, called Laurie with some questions about the luxury market.  Laurie suggested to Jean that she might give the story an even stronger local twist by interviewing some of our Institute members.  Jean contacted several and ended up quoting Institute member Valerie Zelinski of Century 21 Roberts & Andrews in Crystal Lake and Carol Best of Hunter's Fairway | Sotheby's International Realty in Barrington. Carol, a Certified Luxury Home Marketing Specialist (CLHMS) shared lots of information about lifestyle marketing and the concept of targeting the best prospects for your listings -- information which Jean included in the article.  The article ran on November 1, and as a result, business was generated from Illinois to California.

Here’s what Carol had to say in early January:

I am in the process of obtaining signatures for listing a new green, self-sustaining community outside Chicago. The homes will be between $1 to $3 million dollars, on 400+ acres, with approximately 125 home sites and an equestrian facility as part of the community.  It is very unique and ahead of the curve.  My developer is from San Diego. Here is the good news for you... it is ALL because of the article the Daily Herald reporter did on me and luxury agents.

A woman in Chicago read the article and apparently decided that an Institute member could best help her sell a home she owned in California.  So, she called Institute member Sam Smith of Beach Cities Luxury Homes in San Clemente. (Sam is a CLHMS and member of The Million Dollar Guild.)    Sam listed the home and has sent us a follow-up email. 

Here’s what Sam had to say:

Just wanted to say thank you again.  As you recall, I picked up a listing from a client in Chicago who decided to call me after seeing an article in the Chicago paper regarding the Institute.  We just sold her California home to an all cash buyer, full asking price, with a 14 day close!   My affiliation with (The Institute) will gross me over $40,000 on just this one transaction. Thank you again!

All of this illustrates the power of the media and how important it is to become a resource for reporters and editors.  When you are quoted, it helps position you as an expert, gives you credibility and, as Carol discovered, can generate business.  The fastest way to get on their list of agents to call is to send them regular luxury market statistics and offer to be a resource when they are working on a story.

We are working at building The Institute’s presence in the media, with the goal of creating visibility for members and hopefully, creating a preference for our members in the minds’ of consumers.  In Sam’s case, our efforts paid off, he benefited to the tune of $40,000! 

Remember that you should be working locally to connect with your local media. They often need statistics, quotes, and someone to introduce them to buyers and sellers who are willing to be interviewed.  This is especially true in today's market and especially so in markets where there are luxury segments moving counter to the broader market trends of the area.

(See pages 112-116 in Laurie’s updated book Rich Buyer, Rich Seller! The Real Estate Agents’ Updated Guide to Marketing Homes for specific tips on “farming’ the media effectively).

CLHMS training now available online!

 and save $100
(now through July 4th, 2009)

Our Certified Luxury Home Marketing Specialist™ (CLHMS) training is NOW available online!

• This is the same course we offer live around the U.S. and Canada.
• The same great content presented online in a self-paced multimedia format.
• Enrollment is open -- REALTORS® and other real estate professionals around the world can register anytime.
• Work at your own pace, on your own schedule.

Just like our live training, upon completion of the course, you become a Member of The Institute and are eligible to earn the CLHMS designation, and enjoy all the benefits of membership. 

The First and the Best

Long recognized as the best luxury training available, more than 8,000 luxury agents have completed the CLHMS training.  The CLHMS designation is the official designation of the following luxury programs:

• The RE/MAX Collection
• Luxury Homes by Keller Williams
• Royal LePage Carriage Trade
• and more...

Tap into this growing international network of luxury agents and grow your business.

Save $100

Standard pricing for the CLHMS online training is $495.
Register now through July 4th for only $395 -- save $100!

Real Estate Marketing with Stats: Why Market Data Matters Now More Than Ever

In today's market, understanding market trends is more important than ever.  Buyers and Sellers are looking for transparency and insights. 

The quality of your answers to these common questions:

• What's my home worth?
• What's for sale (and is it a good value)?
• How's the market?

will define your level of success. 

Confused people don't buy, and your ability to demonstrate your expertise and lift the fog of confusion with simple and accurate answers based on trustworthy data is the key to successful differentiation. 

Yesterday Scott Sambucci and the the team at Altos Research discussed success strategies for doing just this in our May Webinar for members. 

In case you missed it, the slides from the presentation are below, and in the next couple of days we'll be posting we've posted a recording of the full webinar (along with a special freebie for you from Altos Research) here in the Members Only section of our website.

Ilhm Webinar 2009.05.28

We work with Altos Research to produce our weekly ILHM National Luxury Market Report (members have free access to the more detailed version here) which is the only real-time report looking exclusively at the luxury market nation-wide.

Don't forget too that they are offering discounts to members on all of their fantastic products.  So whether you want to supercharge your website and blog with market trend charts that update automatically, or create a custom market reports that is automatically updated and distributed every week, they've got you covered!  They even have a tool that allows you to do instant market trend analysis on your mobile phone--a great tool when you are face-to-face with clients.

Many thanks to Scott, Michael, Ricky and the rest of the Altos team for hosting the webinar and sharing their insights.  

Luxury Home Short Sales Grow in Importance

The luxury market is facing increasing pressure, aggravated by credit market difficulties in the jumbo mortgage market. As a result, The National Association of Realtors reported that the share of home sales above $750,000 has fallen from 4.4% of total home sales in 2007 to a projected 2.3% of total sales in 2009 (NAR Projection based on partial year statistics). 

Limited loan availability, higher than usual interest rates for jumbo loans (from 150 to 200 basis points higher than conforming loan rates), and stringent loan qualifying requirements have slowed sales of luxury properties.  This has caused the national inventory level of homes priced above $750,000 to rise from 18 months worth in 2007 to more than 40 months worth as of the second quarter of 2009.

The lack of refinancing opportunities, fewer qualified buyers for luxury homes, a growing inventory of unsold luxury homes, and an economy in recession are all creating the “perfect storm” for luxury homeowners who need to sell and can’t.  NAR also reported that as of October 2008, the foreclosure rate on jumbo loans was more than double the rate on conforming loans. 

You can expect to see growing numbers of luxury homeowners in default.  These consumers not only need your help.  They represent an important opportunity.

Some of these homeowners will qualify for short sales and debt relief under the government’s new programs (see Making Home Affordable Fact Sheet: Foreclosure Alternatives and Home Price Decline Protection Incentives PDF 50k), others will have high mortgage balances, which will exclude them.   However, the chances are good that servicers doing Short Sales outside of the new government programs will follow the same basic process and paperwork  utilized in government programs.  Knowledge about these programs will be necessary for some luxury Short Sales and to your advantage in others. 

Watch this blog for more info on how The Institute can help you successfully target the growing Luxury Short Sale niche.

Sample Script for Extending the Listing Term

Recently an Institute member approached Laurie with a question about how to deal with the owner of a $6+ million home who listed with her for just a few months and has been  renewing for just a month or two at a time.  The agent was eager to get a longer term listing, but unsure how to accomplish this.  

We thought other members might find Laurie’s suggested strategy and scripts useful.  Here’s Laurie’s response about the situation (with sample scripts)…

Your seller is used to being able to extend for a month or two at a time. Shifting his attitude about renewing will be tough.  You’ve invested in marketing, have buyer prospects, and don’t want to lose the listing.  At the same time, with short term renewals, it is hard to justify doing more marketing.  The questions become -- can you create a “WIN” for him with a longer term renewal and how tough are you willing to be?

I don’t know his personality, but I’m guessing he is tough and needs to feel that he a winner in any negotiation with you.  With what limited information I have, here is one possible approach …

First, analyze the price range this property falls into.  Pull the statistics. 

• How many homes are on the market in the $6 million to $7million price range? 
• How many sales (REAL BUYERS) have there been in the last 12 months? 
• What is the median days on market statistic for solds in this price range? 
• The days on market range (from ___ to ____ days) ? 
• How many months of inventory now exist? 
• What percent of the list price did the sold properties sell for? 
• Are there any sales pending?  

I’m guessing that your listing term to date will be less than the median days on market – that means you haven’t had a fair chance to sell the home.  If that’s true, make some charts to share the reality of the market with him.  Even if you’ve done this already, do it again, unless it been fewer than 30 days. 

Send him the market update. Then, sit down with him and say, “You and I have the same goal – to sell your home as quickly as possible for the highest price the market will pay.  I have spent thousands of dollars toward that goal and my team has spent countless hours working for you.  We are committed to continue until the job is done.  We have a number of good buyer prospects with whom we are aggressively working and we will sell your home. Hopefully we are close to the right deal.  It is listing renewal time, so let’s discuss three options.

Option one:  You can start all over with another agent, but you will lose ground by starting over. This is dangerous in a declining market and you won’t find anyone more motivated to sell your home than my team and I are.  In fact, please know if you decide to do this, my commitment to you is that we will take your listing in the future if and when you decide to change real estate professionals again. “

It is important to START with this option so he knows you understand it is an option.  You have the advantage by putting it on the table first. 

“Option two:  You can renew for the short term.  However, please understand that if you do that, you are shifting all the risk to me and this also is a negative for you.  Here’s why --You are asking me to continue to invest more time and more money in a month-by-month marketing plan.   In your business would you be willing to make a significant long term investment for a client who renews their contract with you month by month?  Probably not.  If you want to continue to renew every couple of months, we can do that.  I will commit to implement the marketing plan which we agree is most likely to accomplish your objectives, and we can agree upon the budget. We’ll just shift to a standard seller-funded marketing model.”  (At this point, you may need to say, “Wait, hear me out on all three options here – there will be one you’ll like.”)  “With the short term listing and seller-funded marketing arrangement, I’ll agree to refund ___% of the marketing costs at closing." (This of course assumes that you are the closing agent!)

“Option three:  The last option (unless you have another to propose) is that we continue to work together with a listing term that reflects the reality of today’s market, and gives my team and me a FAIR chance to sell it, so that I can invest in the marketing of your home and have the necessary time to work the active buyer prospects we have.  I’ve written 12 months in the listing extension agreement.  That seems fair to both of us."
(Be sure to give yourself adequate time based on the market conditions.)

 “What would you like to do?”

 Obviously there is some risk of losing the listing, but it seems to me the higher risk is spending lots more money and still losing the listing.  It’s time for him to get serious about selling his house.  If he expects an agent to upfront the marketing time and dollars without a fair chance of getting the home sold, he is really not going to get anyone’s best effort – the risk for the agent is too high.  He needs to understand this and recognize that he wins with an agent who can afford to make the investment of time and dollars in selling his home. 

If you are interested in more scripts, be sure to participate in our June webinar for members.  Top agents will share the specific scripts and strategies they are using to stay successful in today’s market.  Watch your email for more information.