Andrea Coombes, CBS.MarketWatch.com
Last Update: 12:01 AM ET June 20, 2003
SAN FRANCISCO (CBS.MW) -- Last
time you went house hunting, did your real estate agent's
chauffeured Bentley pick you up?
If not, you probably weren't shopping for a luxury home in
Manhattan, where high-end condos and townhouses run $10 million,
and up. Prospective buyers at any income level need to be treated
well, real-estate agents say, but sealing a high-end deal often
requires special treatment.
"You have to deliver them to the property in high style," said
Barbara Corcoran, chairwoman of The Corcoran Group, a New York
City-based real estate firm. "In New York, that's not a taxi. It's
a Bentley or a Rolls Royce, if you can afford it, with a private
driver," she said. "That's very flattering to the buyer.
"Then, of course, you use your car and driver to drop off a
thank-you note to the person, and have your chauffeur hand deliver
the note. It's a home-run," she said, noting that her firm has
found homes for the likes of Richard Gere, Courtney Cox Arquette,
Sting, and Bianca Jagger.
The firm's current listings include a $35.3 million, 7-bedroom,
7-bath, 10,000 square-foot condominium overlooking Central Park,
but a more average example might be the $12.9 million condo with 2
bedrooms, 2.5 baths and about 5,000 square feet.
Of course, the sphere of New York City luxury homes is a world
unto itself. "If you have a property worth $1.5 million, by any
other standard that's a luxury property, but in New York that's
middle class," Corcoran said. In her city, luxury starts at $3
While New York City may be the only high-end market where
agents use chauffeurs, well-heeled buyers everywhere require a
level of expertise that a midlevel buyer might not, agents said.
"To deal with high-net-worth people, you have to be perceived
as an expert," said John Cotton, president of Cotton Real Estate
in Cape Cod, Mass., where waterfront homes start at $2 million --
for a teardown.
"They deal with experts in all areas of their lives. When they
want to deal in real estate, they want an expert in real estate"
and market values, he said.
With high-end homes "just looking at square footage and number
of bedrooms doesn't give a clear indication of how much a home
might be worth to a buyer," said Peter Toner, a real-estate agent
with Prudential California Realty in La Jolla, Calif., where he
sells both luxury and mid price homes.
Instead, high-end property agents need to be able to interpret
the raw data on comparables, he said. The view, the size of the
lot, the way the house faces and amenities are among the factors
that play a part in a high-end buyer's decision.
Softer market, harder sale
A softer top-end market doesn't make an agent's job any easier.
"None of the super-rich people ever really have to sell, and so
they pick and choose what offers they want to entertain," Corcoran
said. "And right now, very rich people aren't making incredibly
high offers on these properties, so we have a little standoff
going on, so we have more of those properties on the market than
we've had recently."
That means agents must spend more money on advertising, and
work harder to maintain their relationships with unhappy sellers.
In a soft market, agents "promote (the property) a lot longer than
expected, and that's going to cost them a lot more money,"
Also, "they're going to have a trophy-property owner who's not
going to be happy, and the maintenance of the relationship is more
of a challenge. Sellers often hope a real-estate agent can make
the market for their property, but they can only deliver the
"If it ain't there, it ain't there. It's rough. There are a lot
more top agents in New York dropping very expensive listings
(because sellers) won't adjust their sales price, because it's
just too darn exhausting to hold onto it."
That's less of a problem in La Jolla,
Toner said. "We're
actually seeing more sales on the top end than we did last year,"
he said. Two notable recent sales: A home that fetched $11.25
million, with 5 bedrooms, 7.5 baths, nearly 11,000 square feet, a
pool, an ocean view, and a dining room with retracting roof; and a
new beachfront home that sold for $3.9 million, with 5 beds, 7
bathrooms, and 5,700 square feet.
Ads work on sellers, not buyers
The right advertisement is key in securing high-end real estate
sales, experts said, but not because a buyer will purchase the
house advertised: Sellers will list houses with agents who have
"Ninety-eight percent of every marketing budget for real estate
in America is still spent on print advertising, which makes every
seller feel happy because they feel flattered, but it gives every
broker a headache because it's expensive and it never sells
property," Corcoran said.
Agents place ads to keep sellers happy, and as enticement to
bring in buyers. But while agents in the midlevel home market will
settle for point-and-shoot photos, professional photographers are
called in at the high end. "When we photograph, it can take three
or four hours to get one shot done" to get the lighting just
right, Cotton said.
Another difference in the high-end market: Sales take longer.
"The operative word is patience, because you have to wait, some
times a long time, for the right property to become available,"
"We know one person who really wants a large property on the
ocean. He spent more than $6 million for an interim house, so he
can be on the scene and wait for the perfect property to come on
the market," he said.
Toner said he worked about 11 months on one recent sale, a $2.9
million home -- complete with orange grove, tennis court and pool
--opposite the Rancho Santa Fe Golf Club near San Diego.
Like all sales work, high-end luxury real estate requires an
extensive network of contacts.
"High-end people stick together. You know how fish travel in
schools? I won't say high-end people are like fish, but they want
to be with people who have similar backgrounds, similar
achievements, similar aspirations, so once you start to do a good
job with someone in that group, they will refer others," Cotton
"No matter what kind of business you're in, (if you work with)
high net worth individuals, you don't break into it over time. It
takes time to establish trust."
And to massage egos, some said.
"They don't want to know you have another client. They want to
believe they're the only ones in the world," Corcoran said. "You
have to treat their time, their constraints and the enormous
pressure they have on their plate, with great respect and
Andrea Coombes is a reporter for
CBS.MarketWatch.com in San Francisco.
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