How to effectively sell luxury real estate in the international market?

Elite Estate Conference in St. Petersburg

In May 2023, an international conference called Elite Estate will take place in St. Petersburg, where the renowned speaker Arthur Pavlovich will present his ideas. In his speech, he will focus on luxury real estate, particularly the secondary market, examining residential and recreational properties.

During the presentation, the expert will address a number of important topics related to the nuances of real estate agents' work in the luxury property segment. This market is characterized by a high degree of complexity and unique subtleties. Drawing on personal observations and knowledge gained from specialists in various countries, Pavlovich will offer specific recommendations to help optimize the transaction process for such properties.

Understanding luxury real estate

Before delving into the specifics of agreements concerning luxury residential properties, it is essential to clearly define what is meant by the term "luxury real estate." Each property has its own individuality. Even if two apartments in the same building are absolutely identical in their parameters and layout, they can differ significantly in many criteria, such as:

• View from the window;
• Environment;
• Apartment number in the building.

For example, apartment number 66 may evoke negative associations for some people due to superstitions, while for others it will represent an interesting characteristic. Therefore, the exclusivity of truly elite real estate is comparable to very high standards, and it is this, rather than the price, that sets such properties apart from the rest.

Valuation of prestigious real estate

For buyers with significant wealth, the individuality of the offer is more important than its cost. It is noteworthy that financially secure individuals can sometimes surprise with their flexibility in assessments. The valuation of elite real estate will always be relative and subjective, making the process comparable to the evaluation of works of art.

The possible error in determining the cost can reach25-30%And above. Ultimately, the price of elite real estate is determined not only by the building materials and finishing costs but also by the intentions and desires of both the seller and the buyer. The seller aims to present not just square meters, but something more — a dream of a magnificent life, for which they usually want to receive the maximum amount of money.

At the same time, the buyer is looking for a way to realize their dreams by choosing the best option while trying to avoid unnecessary expenses.

The role of a realtor in luxury real estate

Thus, the realtor finds themselves in a rather challenging situation, balancing between two sides like an acrobat on a tightrope. In the luxury real estate sector, finding a compromise between the interests of the seller and the buyer is a much more complex task than in more accessible market segments, such as economy and business-class housing.

This is largely due to the fact that clients in the elite segment are typically ambitious and demanding individuals, which adds tension and complexity to the deal negotiation process.

Agent representation

I do not consider the possibility of an agent representing both sides simultaneously, as this can lead to a conflict of interest. Expecting commissions from both parties can result in unpleasant consequences. A realtor is required to have a high degree of professionalism and negotiation skills, as well as the ability to protect the interests of the client who is paying for the services, without harming the other party.

Alternative solutions

Are there alternative solutions for conflicts of interest? Changing the approach to how realtors interact with VIP clients could be an optimal way out of the current situation. One of the most modern and successful practices in selling expensive real estate is considered to be open auctions organized by the agent among interested buyers. During such events, the person ultimately buying the apartment or house realizes that the high price they are willing to pay is based on genuine interest in the property, rather than an arbitrarily set price by the seller. The seller, in turn, has the opportunity to sell their property at the highest price. Thus, both parties are satisfied with the deal.

Definition of fair value

In fact, the only valid method for determining the appropriate value of a luxury property, aside from open bidding, is the use of this tool. Such practices are also applied at art and antique auctions.

The participation of wealthy individuals in auctions

Some may wonder who among the wealthy would dare to participate in auctions. In fact, it is possible if the item is presented professionally and attractively, without unnecessary disappointments like an inflated starting price. If each potential buyer feels that the realtor is giving maximum attention to their purchase, it will significantly increase the chances of a successful deal. However, the final amount will be determined by the actual relationship between supply and demand.

Preparation for sale

When selling luxury real estate through auctions, it is important to remember one key fact: the property being offered to potential buyers must be fully prepared for sale. The presence of legal encumbrances or the absence of necessary documents can make this method of operation ineffective.

Workshops and nuances

Nevertheless, there are many nuances in this process that I discuss in detail during my two-day workshops. I want to emphasize that open auctions are indeed a powerful tool for successfully selling real estate, but they need to be mastered down to the smallest detail. An incorrect approach will undoubtedly lead to negative consequences, and both parties may blame such an agent for insufficient qualifications and inappropriate behavior.

Examples of successful auctions

Can I demonstrate the effectiveness of auctions with specific examples? Certainly. Just recently, I worked with a prestigious property—a three-story house located in the central part of Kyiv. This experience confirmed how important the right strategy and skills are in the luxury real estate market. Successful auctions can bring significant advantages to both buyers and sellers if they are organized with maximum efficiency and an understanding of all stages of the process. This serves as proof that open bidding has become a modern and sought-after method for selling exclusive real estate.

The property was put up for auction starting at a price of 6.5 million dollars, which undoubtedly served as a significant incentive to attract the interest of potential buyers. Over the course of a month, more than fifty people showed interest in the property, and numerous viewings were conducted, resulting in five wealthy buyers agreeing to make a deposit by the end of the auction. During the phone auction, the price of the property sharply increased to 8.5 million dollars.

A new opportunity in the luxury real estate market

Recently, an eccentric real estate agent informed the professional community with concern about the emergence of a new property on the market, which is already available for sale and has unique features. All realtors representing potential buyers to this seller can expect fair compensation for their efforts.

This innovation will help speed up the buying and selling processes in the real estate sector. Thus, the specialists representing the parties in the transaction will be partners rather than competitors, joining forces for the successful sale of a high-quality property, the price of which already includes all commissions. This is quite a common practice in our industry, isn't it? Typically, we leave tips separately from the main amount as a token of appreciation for quality service.

While some realtors are tempted to work for small commissions, this does not reflect the level of professionalism that implies quality services should cost at least 5% of the total property value! We discussed new technologies that could be implemented in the real estate services market. What approaches to working with luxury housing do you consider the best?

Team approach in working with luxury real estate

First of all, it is important to emphasize that working with luxury class objects requires not just one, but a team approach consisting of two to three high-class specialists.

Transactions involving such real estate can take a long time, as buyers are not just looking for housing, but are specifically searching for a property that matches their position and status. If the agent does not have quality support from colleagues, they will find themselves in a difficult situation during illness or vacation.

Moreover, teamwork helps to reduce risks. Earning from luxury real estate is a labor-intensive process. It was previously mentioned that clients take a considerable amount of time to make decisions, and there aren't many offers on the market. By working as a team, realtors can focus on both the luxury real estate segment and the more mainstream market.

Qualities of an agent for working with VIP clients

What qualities should an agent working with VIP clients possess? First and foremost, such a specialist must be a true expert in their field and have a detailed understanding of the intricacies of the luxury real estate market. However, sometimes that alone is not enough.

Interacting with VIP clients requires the following skills:

• Charismaand a high level of self-confidence.
• The ability to be associated with luxury and prestige.
• The ability to put oneself in the shoes of a client with unlimited financial resources.
• The ability to meet customer requests by offering the most relevant solutions.

Working with such clientele requires complete dedication and a willingness to accommodate even the most unusual requests.

Building trustful relationships

Establishing trustful and partnership relationships with each customer becomes fundamental, as successful business deals are built on such connections.

Considering all of the above, it can be stated that the approach to selling luxury real estate requires a comprehensive, serious, and responsible attitude towards the process, which ultimately leads to successful results.

Conclusion

In concluding our discussion on the specifics of working with luxury real estate, I would like to summarize and highlight the important aspects that I touched upon in my article. We live in a world where the demand for unique real estate properties is steadily increasing, and therefore the market situation requires realtors not only to have knowledge and skills but also to be flexible in their approaches to each transaction.

The complexity of working with luxury real estate

The challenge in selling luxury real estate lies not only in the price of the property itself but also in the uniqueness of each offering. As I noted, true value cannot always be measured in numbers; it is often defined by the emotions associated with purchasing a particular home, which becomes a dream for its new owner. This makes our work especially responsible.

Advantages of open trading

The transition to open auctions as an alternative to traditional sales methods represents a step towards a more transparent and fair practice in the luxury real estate sector. This approach not only satisfies both parties involved in the transaction but also creates a competitive environment where each party understands the true value of the property.

The necessity of preparation

However, it is important to remember that implementing such trades requires thorough preparation and knowledge of all the nuances. The success of the entire operation depends on everything from how well-prepared the property is to the quality of the marketing. That’s why my masterclasses, where I share my knowledge and experience working with VIP clients, are aimed not only at education but also at raising the overall culture of the luxury real estate market.

Final thoughts

In conclusion, I want to emphasize that working in the luxury real estate sector is not just about selling square meters. It's about creating a unique experience for clients that they will remember for a lifetime.

Let's strive for every sold item to bring joy and satisfaction to both sellers and buyers.