Higher Prices Bring Higher Commissions:
There's certainly something to be said for average transaction amounts in the high six figures, or even $1 million and up. It increases your commission revenues. As there is usually about the same number of tasks associated with a $1 million sale as there is a $100,000 sale, it's also efficient use of your time and talents.
Higher Commissions Come With More Demanding Clients:
While the listing broker with listed homes averaging $200,000 can usually slap a lockbox on them and not be around for showings, many sellers in the higher price ranges want their real estate broker or agent to be present at all showings. They also can demand more menial services, believing that the large commission you'll be getting entitles them to have you monitor mowing of the grass or check on the home's cleanliness frequently.
Higher Marketing Costs Bring Lower Margins:
While commission gross dollars are higher, marketing high priced luxury homes usually involves a lot of expensive print advertising, as well as higher costs in other areas of the marketing process. The listing broker can seldom get away with only a substantial Internet marketing presence. Sellers want to see their homes in upscale magazines and in color print ads. Many luxury home brokers use professional photographers and ad copywriters for these homes, an expensive practice as well.
Taking the High Road Requires a Better Vehicle:
Just like driving up a high mountain pass on a rough road requires a four-wheel drive rugged vehicle, taking the high price road with luxury homes requires a more fine-tuned and expensive business. Just getting to the listing presentation requires higher cost image marketing. Once the listing is acquired, you then spend more in all phases of the marketing process. For those successful in the luxury home real estate niche, they'll tell you that it's well worth it.
Before adopting this niche, learn how successful real estate professionals are making it work for them. Study their methods and marketing, getting a firm grip on their costs of operation. If you decide the luxury homes real estate niche is for you, then attack it with the right weapons.
