Understanding Luxury Buyer Behavior in Real Estate
July 27, 2023
Institute for Luxury Home Marketing
399 S. Spring Avenue
St. Louis, MO 63110
Whether you’re trying to break into the luxury real estate market or have been working with luxury clients for a few years, one fact remains. In order to maximize your success in the luxury market, you need to understand the psychology of luxury home buyers.
By having a better understanding of the reasons behind the decisions these buyers make (and their reasons for buying property in the first place), you can best represent them and promote your listings in a way that will be most appealing to them.
We’ve highlighted some key information to help you get started.
Luxury Property: More Than Just a Home
First and foremost, luxury real estate professionals should understand that for the affluent buyer, purchasing a property is about so much more than buying a home. There are many potential reasons why somebody may be looking to buy luxury real estate.
For example, they may be interested in buying a luxury home as an investment property (whether it be for an immediate rental income or more of a long-term investment). In some cases, affluent clients may be looking to purchase a luxury home to pass onto a child or other beneficiary down the road.
Even for those who are buying a luxury property to use as a primary residence, these places are more than just homes. They’re a symbol of status and image as well as a reflection of the client’s hard work.
This is especially true for a client who may be buying their first luxury home, as this property may symbolize to them that they’ve “made it.”
Buyer Behavior: What You Need to Know
With this in mind, there are some specific buyer behaviors that you should expect to see as you begin your work in the luxury real estate market. These behaviors and the psychology behind them should impact how to present and market your listings.
It’s All About Exclusivity
First and foremost, understand that affluent buyers are all about having things that other people don’t. If you can find a way to market the exclusive and unique features of a home that most other homes don’t have (such as the latest smart home technology or even some historical significance), you’ll have a much better chance of appealing to your buyer and making a sale.
Take time to focus on the features that make your listing stand out, especially those that may not be as obvious to potential buyers.
Luxury Buyers Do What They Want to Do
Another important thing to keep in mind when working with luxury buyers is that, at the end of the day, they will only do what they want to do. These buyers, for example, won’t be super sensitive to interest purchases—though they will keep an eye on the market and the economy.
The success of a sale will ultimately boil down to whether the buyers fall in love with a home and its features—not so much the current real estate market or other factors that would typically influence buyers in the non-luxury market.
Luxury Buyers Are Confident in Their Finances
Finally, remember that these buyers are people who are confident in their finances. While they certainly still care about value, they are less likely to be scared off by a high list price, high HOA dues, or other factors related to cost. On the other hand, this also means that they are less concerned about whether or not a home will appraise for the agreed-upon sale price. If a home doesn’t appraise, don’t assume that you have to lower the list price.
Many luxury buyers will be paying with cash or getting creative with their financing in other ways, so a low appraisal is much less likely to be an issue when compared to the non-luxury real estate market.
Find Greater Success in Luxury Real Estate
Selling luxury homes means understanding how buyers are thinking and feeling at every step of the process. This is something that will come with experience in the market, but there are proactive steps you can take to better cater to affluent buyers and, in turn, make more sales.
By keeping these tips in mind and staying up-to-date on the latest industry trends, you’ll be better positioned to take your luxury real estate career to new heights.