Ultra high net worth individuals want to work with real estate agents of their own caliber
BEVERLY HILLS, Calif. — America’s leading luxury real estate agents recently gathered at the former William Randolph Hearst estate in Beverly Hills for Inman’s first-ever Luxury Connect. Ariana Huffington keynoted while the stellar speaker lineup shared what makes them the crème de la crème of the real estate industry.
Brad Inman opened Luxury Connect with his vision for the day: increasing real estate “intelligence” by having the industry’s smartest practitioners share their wisdom while also connecting them with the latest trends and tech innovations.
Agents break for lunch at the William Randolph Hearst estate in Beverly Hills during Luxury Connect. Photo: Linda “Freddi” Fredrickson.
Dottie Herman, CEO of Douglas Elliman, summed up the value of Luxury Connect when she encouraged the group to “follow the winners, not the whiners” and to remember, “Successful people are always willing to share.”
Ladies and gentlemen serving ladies and gentlemen
Michelle Serro used the Ritz-Carlton motto to describe the vibe at Luxury Connect: “ladies and gentlemen serving ladies and gentlemen.”
Probably no one better exemplifies this than Joyce Rey of Coldwell Banker Previews International. Rey, who has a 40-year history of representing Beverly Hills’ most elite clientele, shared her simple approach to success: “Be kind to everyone and always do the right thing.”
Real estate’s finest agents have always understood this, especially those who serve the world’s leading luxury markets. The world’s wealth wants the absolute best and they are willing to pay for it. They want someone of their own caliber representing them on their sale or purchase.
Glamorous and sexy
Reality television is creating a sea change in how real estate agents are perceived. While the “lower-than-a-used-car-salesperson” reputation still persists, Realtors such as Josh Altman, Christophe Choo, Madison Hildebrand and Mauricio Umansky have glamorized the real estate business and made it “sexy.” This has resulted in more members of Gen X and Gen Y pursuing real estate as their profession of choice.
UHNWI: Key trends
If you’re not familiar with “UHNWI,” it’s an acronym for “ultra high net worth individuals.” These are people who have a net worth of $30 million or more. The most elite subgroup are the 2,800 members of the “Billionaire’s Club.”
Zillow’s Greg Schwartz shared a surprising statistic based upon Zillow’s survey of high net worth individuals. When asked whether they prefer the stock market or real estate as their “safe haven” for investment, 72 percent said “real estate.” This is a 30 percent increase from five years ago.
For the UHNWI, especially for those outside the U.S., there are four primary destination markets: New York, Los Angeles, Miami and San Francisco. Foreign-born clients normally make their first purchase U.S. in one of these four areas. These primary markets then “feed” other markets in the U.S.
Conversely, many U.S. “secondary” markets are now feeding the four primary markets. For example, a number of agents reported that they’re seeing large numbers of all-cash buyers from Texas. Texans are purchasing apartments in New York or beachfront properties in California as second homes and/or for retirement.
What’s hot with UHNWI
In terms of what UHNWI want and expect, in Beverly Hills it’s all about the view, preferably from the downtown Los Angeles skyline to the ocean.
Zillow’s research showed that this group is also seeking “a garden oasis, outdoor fireplace/kitchen, and a separate guest house or other quarters for visitors/in-laws.”
They are also eager to acquire properties before they come on the market and are willing to pay more if need be. As Josh Altman observed, “What’s really hot is the off-market property.”
Laura Brady of Concierge Auctions described UHNWI buyers as being “opportunistic.” They may not be in the market to buy something until they see a print ad, video or hear about a property through their personal network. It really is a matter of what captures their whim at a particular moment in time.
In terms of marketing their listings, Altman described UHNWI sellers’ expectations in the following way:
“Today’s sellers expect it all. The opening event has to be something extraordinary. At my most recent opening event, we unveiled the newest Porsche.”
The No. 1 issue for UHNWI
The most important issue for UHNWI clients is privacy. Sean O’Toole of Property Radar shared how agents who represent UHNWI clientele can help their clients protect their privacy.
First, you cannot afford to make a single slip. Where the news generally leaks is when the client tells a friend about their pending purchase. The friend then tells someone else and the secret is out. Once the word slips out as to who the owner actually is, anyone can search the public records to see how the client took title. In most cases, it is a trust or LLC.
The challenge is that many UHNWI will use the same trust or LLC to acquire all their properties. The address of that LLC is normally their office. This means that once someone knows the name of the LLC, anyone researching the records could uncover all of their clients’ holdings.
To better protect your clients’ privacy, advise them to set up separate LLCs for each property. To maintain additional privacy, it’s also smart to make sure that each LLC has a separate address as well.