Grabbing a Ray of Sunshine
Alliances spread the second-home boom to practitioners all over.
BY ROBERT FREEDMAN
Savvy practitioners working far from Aspen or Maui aren’t letting themselves get locked out of the booming second-home market; they’re getting their share through referral agreements with their seaside and mountain-bound colleagues.
“Where do second-home buyers come from? They come from the cities,” says Jim Kinney, president of Rubloff Residential Properties in Chicago. “Who else is in a better position to help vacation buyers than someone they already have a relationship with?”
Kinney says he’s going beyond standard buyer-side referral agreements, in which you get a fee for referring a buyer to another practitioner, by entering into marketing agreements that let him reap a fee on the seller side of the deal as well.
Other practitioners are building their second-home business through exclusive buyer agency agreements and regionwide alliances that enable them to work with a network of associates in other areas. A few are also picking up inbound business as more baby boomers opt for an urban pied-à-terre.
Dallas giant Ebby Halliday, REALTORS®, now does 5 percent of its volume in vacation home sales, thanks in part to a referral agreement it made with a nearby Del Webb development, says Petey Parker, the company’s vice president and relocation director.
The agreement with Del Webb gave Ebby Halliday the exclusive right to refer homebuyers to the developer’s new Sun City Georgetown property, a 5,300-acre golfing and retirement community five hours from Dallas.
“Sun City came to us,” Parker says. “They felt a lot of people from Dallas would be interested in moving to the area, so we formed an alliance and worked hand in hand with them. They sent us videos and other information we could provide. It was very good for us.”
Many of the buyers were homeowners in the suburban Dallas-Fort Worth area who wanted something relatively close to the city for a quick getaway. For many of the buyers, their new second home will eventually turn into their only home, but few of the buyers plan to sell their primary home anytime soon, Parker says.
Referral networks called key
Ebby Halliday gets other referrals through its membership in RELO, the national relocation network for independent companies. Being part of a network is key to any company’s vacation home business, Parker says, and if you’re not in one, you should get into one as quickly as possible.
“If you see a trend from one city to another, you can’t wait for someone to call you,” she says. “You have to have that network in place and be ready with information and contacts in other cities.”
Suburbanites looking for a rural haven haven’t been the only engine driving Ebby Halliday’s second-home business. Another 5 percent of the company’s volume is now city-bound traffic consisting of homeowners from the suburbs who want a second home downtown so that they can be close to the nightlife and cultural attractions, Parker says. Urban redevelopment is the key ingredient, she says, because the downtown condo and town house sales won’t happen until buyers see the local government making the kind of investment that will draw developers.
Dallas has been making that kind of investment, and now downtown condos and town houses are averaging $350,000--and business has been good. “The buyers aren’t just young people,” Parker says. “These are retirement people who have the big yards. They’re keeping their big houses while they see whether they like the lifestyle.”
Tapping the seller side of deals
Rubloff salesperson Karen Strohl-- a longtime vacation-home owner in Michigan’s Harbor Country--approached Kinney in 1998 with a suggestion for developing partnerships with nearby Michigan and Indiana vacation-home brokers. Kinney began inking deals that let Rubloff handle the Chicago marketing of out-of-state vacation properties for other practitioners, even though he doesn’t own the listings. In exchange for his up-front marketing costs, he gets a seller fee in addition to his buyer referral fee if the ad generates a buyer.
The listing practitioner in return avoids the costs of marketing the property in Chicago, with its pricey media bills, and capitalizes on Rubloff’s metro experience. From the listing practitioner’s point of view, this makes a lot of sense, Kinney says, because the buyers are almost certainly going to come from Chicago.
“They satisfy their clients by saying they have marketing exposure in Chicago without its costing them anything,” Kinney says. “If the property doesn’t sell, that’s money they’d otherwise have had to swallow.”
Kinney is now taking the idea international. He has agreements with practitioners in Costa Rica, St. Martin’s, and Italy. “We had several people come to us asking, ‘How can I sell my property in a foreign country?’” he says. “They’re convinced that if it’s a vacation home, the buyer will come out of the United States, maybe Chicago. So they wanted Chicago exposure.”
The agreements have paid off. “In the year and a half we’ve been doing this, we’ve done about $50 million worth of business,” Kinney says. “It’s been working best with high-end properties in the $500,000 to $1.6 million range.”
Others in the industry are taking note. “It’s not something a lot of people are doing now, but a few are catching on,” he says.
Kinney offers a caveat. Since license rules differ in every state, practitioners wanting to do this should be sure to disclose the relationship in their ads. Some states require the company holding the listing to be named; others don’t.
Where the vacation homes are
Half of all second homes are located in rural areas, compared with 14 percent of primary residences, according to American Housing Survey data. Given the attraction of sand and sun, not surprisingly many second homes are concentrated in the South, particularly Florida and Texas (about 44 percent of all vacation homes), and in California.
The Northeast, led by New York, is another popular resort area, particularly the Catskill Mountains. Michigan is a big draw, too. It’s the most affordable of all vacation areas, with prices averaging $62,000.
