Baller Secrets To Selling Awfully Expensive Real Estate

Megan K at GoodPlaceHQ

Today’s GoodPlace homebuyer guide is written for those who are in the business of selling luxury properties. Now if you’ve been following our rather rollercoaster-y trajectory from our early days as a property blog to our present day incarnation as a fully fledged property portal, you’ll know that GoodPlace is somewhat partial towards upmarket properties – KLCC condos, Bangsar bungalows, Damansara Heights mansions and the like. As such, those in the business of flipping Menglembu low cost flats, for example, should probably plow their trade elsewhere.

And as my ex-boss Mark Chang once told me, money can act as a customer “filter” of sorts, and when you price your product upwards enough you’ll attract customers who are, well, less of a pain in the proverbial arse. In short, it’s a wise business decision to price yourself out of reach for cheapskates, jerks and tire kickers who will just leech on you like someone you met at a party who turned out to be an insurance salesman during the day and multi-level marketing dabbler after dark.

I have found this maxim to be especially true in property – when you’re dealing with sufficiently upmarket properties, you’ll end up dealing with a smaller number of prospects (albeit of higher quality). Of course, there will always be that faker pretending to be interested in that Binjai On The Park penthouse so that he can get a free tour in the hope of catching a glimpse of Ananda Krishnan hanging out in his PJ’s at the balcony savoring a fine Cohiba.

However, it’s quite trivial to spot a faker if you’re in the business long enough – you’ll understand and appreciate the importance of qualifying your leads before you start doing the tedious co-broking legwork. Ask enough qualifying questions and these cheapskate types will naturally find you to be repulsive as if you’ve contracted the Zika virus.

What Makes Upmarket Properties Different From The Mass Market

Elizabeth has been an agent in the luxury property niche for more than 15 years, and is somewhat famed in the negotiator circle for closing multiple deals in upmarket Mont Kiara even when as market halted to a complete standstill last year (think MK10, Seni Mont Kiara, Sunway Vivaldi). When probed about her secret sauce, this was what she told me:

“Many negotiators mistakenly think that they can transition from mass market to the upmarket by spending a little bit more on advertising. They think that they should just buy more ads, or bump their ads up the search results at property portals more frequently, but it’s really not that simple!”

I nodded. “Pardon the pun, but cookie cutter marketing really doesn’t cut it when it comes to selling awfully expensive properties.”

“Yes,” said Elizabeth. “What the typical sellers and their agents fail to understand is that rich folks buy property for entirely different reasons than the usual Joe Blow.”

“How so, exactly?” I inquired.

“The typical Joe Blow home buyer is concerned about stuff like leasehold vs freehold, commercial vs residential status, monthly payments and so on. For the rich, on the other hand, the intangibles become more important.”

Nobody Buys A Ferrari For Its Horsepower

I once knew of a Ferrari salesman who told me that he would look forward to whenever a new model comes out.

“So here’s the deal,” he told me. “Whenever a new model is gonna come out, like a California T or whatever, I know that I’ll make shitloads of money. There’s no negotiation, no begging, no selling needed. The demand for these machines are just so darn high. I just have to stand in the showroom and take orders.”

“It can’t be that easy,” I said. “At the very least the buyer would surely ask about its specs, like, the size of the engine?”

“Khai Yin, my man,” he smiled. “Nobody buys a Ferrari for its horsepower.

Nobody Buys Four Seasons For Rental Yield

“Here’s what you need to understand,” explained Elizabeth. “The awfully rich buy awfully expensive properties not for yield and capital returns.”

“So this is where the run-off-the-mill negotiator or seller fails,” I offered. “Their cookie cutter pitch is usually around how much rental the property will fetch, or how much the buyer can expect to make when she sells it. You’re saying that these don’t matter to the affluent buyer.”

Elizabeth nodded. “Yes, they really don’t matter that much in the grander scheme of things. There are other more important stuff. In order to close a sale with these affluent buyers, you’ll need to get into their minds and know what’s important to them…. and what makes them tick.”

The Affluence Concept of Return On Investment

According to Elizabeth, to the affluent buyer, the concept of Return On Investment (ROI) takes a slight twist. “To the mass market buyer, ROI is wholly financial. To the rich, on the other hand, ROI is emotional. Just like the rich dude who buys a sports car because it makes him feel young and sexy, the property ROI for the rich is all about the emotional return of investment.”

Emotional ROI. That’s novel!” I chuckled.

Elizabeth smiled. “So here’s the deal. Experienced upmarket property agents work the emotional ROI angle. Rookie agents forever blab about financial ROI and wonder why they screw up.

Here’s one idea that I truly believe but is not (yet) accepted to be true by most people:- upmarket properties have very little to do with price. If a rich person really wants a piece of luxury property, he or she will pay almost anything for it. When buying upmarket homes, the returns are emotional, not financial.

Emotions First, Numbers Second

Of course, rich folks still do the same number-crunching like the rest of us when it comes to evaluating property investments. In fact, most affluent people are careful not to overpay for a piece of property – that’s how they have gotten rich in the first place. It’s just that since budget is not the primary factor which drives their purchase decisions, they can afford to relax their “cold number” requirements like (financial) ROI a little more.

Property is often an emotional buy (even for Joe Blows), but more noticeably so among the affluent. When you sell to the affluent, work on their emotional hot buttons, and go easy on the “hard” aspects like yield, financing options or even Walkability. Remember, nobody buys a Ferrari for its horsepower.

About Khai Yin

When I am not writing for GoodPlace.my and helping my readers find properties though the DealMatcher service, I spend time doting on my three kids: Wenyi, Qinyi and Eian. My personal stuff, some published essays and contact details can be found at khaiyin.com

Comments

  1. Well heeled clients sometimes buy based on your assessment of the property. They are too busy to view and inspect the property. So be super honest. Integrity is more important than making the sale.

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