Cover Feature: Meet consumers¿ expectations

COVER FEATURE: Meet consumers’ expectations . . . and then some

BY BARBARA BALLINGER

You go to a family-style restaurant and are content if you don’t have to wait in a long line, the menu includes your favorite house specialties, and you get out without spending the entire evening there or handing over your weekly paycheck.

But enter your city’s latest Zagat Survey Top Restaurant pick—for a meal that you booked weeks in advance—and expectations rise proportionate to the bill. You expect to be wowed by the food, wine, decor—and service.

In the real estate arena, consumers’ expectations differ, too. Luxury buyers expect you to understand what they mean when they say they want a gourmet kitchen or spa bathroom. People selling their resort condo expect you to put a premium on their ski-in, ski-out location.

Salespeople with a specialty are often best able to drill down faster to meet the demands of their target market. But focusing exclusively on a specialty makes sense only if you’re passionate about the market and have enough customers in that segment to warrant the focus, says Brendan J. Cunningham, associate broker with Hunt Real Estate ERA in Orchard Park, N.Y., and author of Tricks of the Trade: A Real Estate Broker’s Inside Advice on Buying or Selling a Home (Adams Media, 2004).

For most salespeople, maximum earning potential comes from being able to meet the needs of a variety of consumer groups—just as a talented chef can segue between flipping a burger and whipping egg whites for a soufflé. Your goal should be to develop clients for life, says Pat Kaplan, CRB, GRI, head of Kaplan Real Estate Group in Portland, Ore.

Although there are countless markets to consider, the following four represent segments worth pursuing due to demographic trends.

LUXURY

Expectations

Financial information: Less concerned about price, more concerned about taxes and fees.
Referrals: Some brokers and salespeople cater to the luxury crowd with concierge-type service, providing names of top contractors, decorators, architects, and financial planners.
Time frame to buy: They’re picky, so when the right opportunity comes along they might buy on a moment’s notice—or they may wait 10 years.
Time frame to sell: They’ll move on their own schedule, unless transferred.
Communication: Convey updates with brief e-mail or voice mail messages that get right to the point; luxury clients typically trust the pros they hire to do the job in the same way they expect to be trusted.

Reach them through
Marketing: High-quality brochures with color photographs and floor plans; Web site with virtual tours; ads in upscale publications; professional newsletters; digital photos; special-interest groups, such as alumni associations; and social networks.
Office location: High-end office with location and decor that connote success. Also a plus: luxury auto when scouting.

Biggest challenges
Educating buyers that big bucks may not buy all amenities and a specific location.
Educating sellers that personalized decorating won’t always appeal.
Fickleness about buying and selling because most transactions aren’t need-based.

Resources
NAR’s Field Guide to Listing and Selling Luxury Properties.
Scout luxury properties at REALTOR.com or www.luxuryrealestate.com,where available listings average $2.5 million to $2.65 million.

Households that earn at least $100,000 now represent 14 percent of the population, and the number is expected to hit 17 percent by 2010, according to The Road to Affluence 2010: A Demographic Profile from The Conference Board, a New York-based nonprofit research organization.

But even most luxury buyers need an education on their limitations, says Elizabeth Ballis, ABR®, CRS®, a salesperson with Coldwell Banker in Chicago. Factors such as location, lot size, square footage, amenities, and finishes can often make or break a luxury sale.

In the South Florida market, buyers are learning, for instance, that in certain neighborhoods $1 million will buy a nice house but on a zero-lot line and without a pool, says Bill Sohl, a salesperson with RE/MAX Parkcreek in Coconut Creek, Fla.

Recent Parkland, Fla., buyers Dean and Andrea Chung say Sohl helped them find a $875,000 house on a half acre with the Mediterranean detailing they dreamed about, Dean says, but they had to give up a golf-course view. “He understood quickly what we wanted and didn’t waste our time,” Dean says.

One amenity many buyers in this market insist on is security, which may mean a suburban gated community or a high-rise with a doorman, says Mike Brodie, CRB, CRS®, broker-owner with Keller Williams Realty in Plano, Texas.

Many also want to work with practitioners who travel in their circles, Brodie says. “You’ve got to be able to converse about their interests, which is why I live in a golf community,” he says.

When it comes to sellers, many expect to recoup funds they put into personalizing their home, which often doesn’t happen, says Jeri Dry with Coldwell Banker’s Gold Coast Chicago office. “Neutral is better, turnkey the best,” she says. And the expectation of privacy and security means you always prequalify prospects before allowing a showing.

FIRST-TIMER

Expectations

Financial information: Mortgage options, as well as closing, moving, and insurance costs.
Referrals: Names of mortgage lenders, inspectors, painters—it’s all new territory for first-timers.
Time: At least six months to get educated and close.
Communication: Frequent e-mail or phone calls.

Reach them through
Marketing: Homebuying seminars, direct mailings, print advertising, Web site.
Office location: Highly visible spot in an affordable neighborhood. A recognizable company or franchise name is also a plus.

Biggest challenges
Helping them understand what they can afford, including tax ramifications.
Educating them on owning versus renting.
Holding their hand until a deal is done.
Fickle tastes and lack of loyalty.

Resources
Visit NAR’s Field Guide on Working with First-time Buyers .

They’ve often scrimped and saved, read heaps of books and magazine articles about how to make a smart purchase, are tempted by low interest rates, and have fantasies of what their first home will look like. Plus, there are lots of them, prodded by the continuing American dream of owning a house and initiatives such as President George W. Bush’s American Dream Downpayment Act.

What most new buyers fail to understand is the importance of sitting down with someone who can crunch numbers and analyze what they can afford, says Stephen Loew, a salesperson with RE/MAX Realty Services in the Washington, D.C., area. Loew hooks up rookie buyers with experienced lenders from the get-go. “That way they don’t fall in love with a house they can’t afford to buy,” he says.

Loew estimates the average annual income of first-time buyers in his area at around $70,000—a good sum but limiting in the pricey D.C. market. If buyers want to stay in the district, they can afford a one-bedroom, 700-square-foot condo, Loew says. But they’ll have to move 35 miles outside the city for a 2,000-square-foot, three-bedroom single-family home. In either case, they may have to forego amenities.

To help keep their expectations in check, Loew shows buyers recent comps and articles. “All the information may not sink in right away, but it eventually does,” he says. “I try to gain their trust by being patient, not pushing, and educating them.”

Loew also coaches them on the realities of the hot market. When they find something they like and can afford, they have to move quickly, since houses often go under contract just after listing and for more than the asking price, he says.

Buyer Scot Holliday, a university researcher new to the area, appreciated Loew’s approach. “I had set price and geography limits, but he helped me broaden those. I raised my price to $300,000 from $200,000 for a city condo and had to give up a balcony and take a basement unit,” he says.

A new homeowner’s thirst for information doesn’t stop with an accepted contract. Many need their salespeople to supply names of attorneys, moving companies, insurance brokers, and contractors, Loew says.
First-time sellers are also hungry for help, Loew says. Their chief concern, he finds, is having a practitioner who can smooth a move from one home to another so they don’t have to store furnishings or worry where they’ll sleep between closings, he says.

RESORT

Expectations

Financial information: Little since they’ve bought before and may pay cash.
Referrals: Names of attorneys, if they live far away.
Time: Most rent before purchasing and take time learning the area—but when they decide to buy, they want to move quickly.
Communication: Long-distance communication is often best done via e-mail, since verbal conversations can result in misunderstandings.
Special request: Being catered to since they may not know the area well and come infrequently; high-end resort buyers like being wined and dined by their salesperson.

Reach them through
Marketing: Web site with virtual tours of listings and detailed information on room layouts, view, prices, taxes, condo fees, and area amenities.
Office location: Center of area or near area’s main attraction.

Biggest challenges
Educating buyers about inventory, pricing, amenities, and what it’s like to own versus rent a vacation property.
Educating sellers about the difficulty of showing rented listings.
Arranging showings around renters.

Resources
Visit NAR’s Resort area and second home Web site
For NAR’s Field Guide to Vacation Homes .

Expectations are high when you’re the conduit to a fantasy life. First assignment: Find buyers a turnkey home so they can spend time doing what they dream about most, says Gina Fucci, GRI, broker at ERA Mountain Real Estate in Killington, Vt.

Second assignment: Make it easy for them to buy or sell from afar since most live at a distance and may not know what’s most important in your locale, says Douglas R. Payson, GRI, a salesperson with Kinlin Grover, GMAC Real Estate Orleans in Orleans, Mass., on Cape Cod.

Resort buyers’ ideal property is typically as convenient as possible to the reason they find the area appealing—near beach access, for example, or in the middle of nowhere. Resort buyers, unless they’ve been looking a long time, expect a crash course in pricing. They also want you to know which properties can be rented, the best investment in your area, and the value of low maintenance.

Often, you need to be their local connection—someone who can find caretakers, potential renters, and maintenance workers. The last is a challenge, says Payson. “Prices have skyrocketed, and there’s often a limited workforce. When the average listing price on Nantucket is more than $1 million, a carpenter isn’t going to live there,” says Payson, who sees the Cape’s municipal airport fill at 7 a.m. with workers getting ready to board planes to Nantucket.

Often, a second home must meet multiple needs—a place to gather with family, realize appreciation, and retire. Bostonians David and Joanne Alinsky bought a house on the Cape for two of those reasons—to sock away funds in real estate rather than the stock market and have a place to escape with their kids.

Sellers who live in hot markets or with the area’s prime amenities expect to be able to sell close to the listing price. “Ski-in, ski-out condos go under contract as soon as they come on the market,” Fucci says.

SENIOR

Expectations

Financial information: What they can afford without adding debt, due to fixed incomes.
Referrals: Buyers may need information about nearby medical facilities, shopping, local activities; access to public transportation since many no longer drive; prepared meal options.
Time: Enough to build a trusting relationship, possibly six months to a year unless they’re ill.
Communication: Deal with them directly, not with their grown children, unless they’ve given their permission or are ill.

Reach them through
Marketing: Web sites to reach seniors or their grown children, who may negotiate their parents’ move; ads in local, often free newspapers geared to seniors such as The Over 55 Senior Advocate in Worcester, Mass.
Office location: Not a big factor, since seniors expect salespeople to come to them.

Biggest challenges
Building trust with seniors who haven’t bought or sold in a long time.
Educating seniors about the sres® designation or other steps you’ve taken to better serve them.
Finding low-maintenance property or a home that can be adapted for handicap access.

Resources
NAR's Field Guide to Targeting Over-55 Clients
For information on the SRES® designation, visit the Senior Advantage Real Estate Council’s Web site, www.seniorsrealestate.com.

By 2030, there’ll be about 71.5 million Americans over age 65, more than twice the number in 2000, according to A Profile of Older Americans: 2003 from the Administration on Aging, U.S. Department of Health and Human Services. Many of these will look to leave long-time homes due to finances, upkeep, or health.

Many seniors have lived in their homes for decades and are hesitant to relocate, says Jennifer Dodge, vice president and managing director of The Senior Advantage Real Estate Council in Los Angeles, a subsidiary of the California Association of REALTORS®’ Real Estate Business Services Inc. SAREC offers the Seniors Real Estate Specialist designation.

Whether they’re buying or selling, seniors may be making a difficult transition. They expect compassion and patience—and they typically don’t want to assume much debt, says Deborah Zych, SRES®, associate broker with Hunt Real Estate ERA in Williamsville, N.Y.

They also may rely on you to be a go-to person for their questions on such topics as housing alternatives for older persons, nearby medical facilities, and estate taxes. “This is a relationship business; you’re counseling besides selling,” Dodge says.

Unless you’re a qualified financial planner, don’t offer specific financial advice. Instead, partner with qualified financial counselors so you have referrals ready when questions arise.

A savvy salesperson recognizes that to cater to the senior market, you really need to cater to two markets, says Nelson Zide, CRS®, SRES®, broker-owner of ERA Key Realty Services in Framingham, Mass. “Older seniors—from 70 on up—may need to relocate to retirement or assisted-living communities, sometimes at the urging of grown children. Active adults, typically ranging in age from 55 to their late 60s, may still work and are often seeking to fulfill lifestyle dreams. Although some downsize to a smaller home or condo, others go bigger,” says Zide.

MORE RESOURCES
2003 NAR Profile of Home Buyers and Sellers (Item #186-45-03)

2002 NAR Profile of Second Home Owners (Item #186-55-02)

REALTOR® Magazine Online's Working With Buyers section