How to Earn a Fortune in California's Luxury Real Estate Market
The bigger the house, the bigger the check! That’s the motto of luxury real estate agents, professionals who are at the top of their industry and cater to a select clientele with a lot of money. The luxury market can be very different from mid-range homes.
Below, we break down some of the biggest differences between the average home market and the luxury end of things:
1) Financing becomes less of an issue, with many luxury homes purchased without mortgages at all. In the luxury market, it can be a lot harder to convince sellers to wait for a bidder’s financing to get approved, as they will be much more eager to take an offer in cash.
2) Clients expect the world of their real estate agent and given the money they stand to spend or gain, they have every right in the world. You don’t become a luxury real estate agent by brushing off your clients. You’re always available for them, you give them the attention they deserve, you know their wants and needs inside and out, and you deliver on their expectations.
3) You’re an expert in the details. In the luxury home market, buyers want to know every little detail about a home. They want to know what kind of stone was used in the walkway, what kind of bricks were used in the house, the materials used in the countertops and the fixtures, how old the plumbing is, what kind of trees are planted in the backyard. Know the home inside and out if you’re the selling agent, while buying agents too should brush up on the details about any house they visit.
4) Luxury real estate often plays by its own rules when it comes to broader economic trends. In some cases, like the price drop in luxury condos in Manhattan, luxury real estate can be more affected by tax code changes that effect the super-wealthy, while in other cases, like the subprime mortgage crisis, luxury real estate was insulated from the downturn. Some real estate pundits believe that the luxury market is something of a weathervane for sectors further down the market, too. With less liquidity, it can be more volatile – plus it may be more vulnerable to stock market fluctuations. A volatile stock market can dissuade some high-end buyers from moving too quickly into a purchase.
5) Luxury can mean different things in different cities and states. Across much of the United States, $1 million is the price point that defines luxury real estate, but a million dollars doesn’t really stretch that far in cities like Los Angeles or San Francisco. The California luxury market is a unique beast, featuring some of the grandest mansions in the country. Some suggest that anything in the top 10 percent of the local market might be considered luxury, since the properties (as well as the buyers and sellers) are unique compared to the rest of the market.
Luxury real estate is a great way to earn money. Real estate agents earn a commission based on the price of the home, both as the buying agent and the selling agent. When that home comes with a 7 or 8-figure price tag, the commission check reflects the superior level of knowledge and service you bring to the table.
However, you can’t expect to be able to jump into luxury real estate from Day 1. It will take some smart moves and persistence to break into luxury real estate in California. In order to break into luxury real estate, you need to adopt some smart strategies employed by the industry’s most talented professionals.
Part 1: Learn about the Luxury Market
Before you can even contemplate making the move into California’s competitive luxury market, you need to know what you’re getting into – and what you want to be doing. Selling penthouse condos in San Francisco can very different from selling mansions in Bel Air or Pacific Palisades, but both can be considered part of the luxury market in California.
Don’t make a blind leap into luxury just because you think it’s where you can earn more money. You don’t have to sell the biggest houses to earn the highest income; you will succeed most where your passions are. If you find you have a passion for commercial real estate, development, flipping houses, or any type of real estate, you’re more likely to make a fortune doing what interests you already.
That said, your income per transaction will be remarkably higher in luxury real estate. It’s worth learning what it might be like to work in a world where the social circles are smaller, the politics are different, and the marketing costs can be considerably higher. Even just meeting your new potential clients can be expensive, not to mention a long-term game. In the luxury real estate market, clients tend to have tight social circles and already know the professionals they need to get anything they want. You have to build trust to make your first connection and your first sale.
Part 2: Be Patient
Once you’ve made that first connection, you might still be a long way off from that first paycheck in the luxury world. By nature, the luxury real estate world moves a lot slower than other markets. In 2017, nearly three-quarters of luxury homes took longer than 180 days to sell. That’s six months of waiting. But there are exceptions. In San Francisco, the average time luxury homes spent on the market was only 55 days.
Some real estate agents who have established themselves in the luxury market even adjust their commissions to make sure their marketing costs are covered. You may encounter clients who aren’t truly motivated to sell, in which case you want to make sure you aren’t wasting resources.
The length of time between commission checks is often the biggest obstacle facing real estate agents in the luxury market. But if you lose patience, you may lose your client.
It can also take longer to find listings and to find clients. Just remember, in the end, the checks are bigger, and your patience will pay off.
Part 3: Work on Your Marketing
Will your brand appeal to clients in the luxury end of the market? Your image is everything, especially when you want to make headway in the luxury market. You aren’t going to look qualified to potential clients unless your marketing materials are geared toward the luxury market. You need a dynamic, top-rate website. Many luxury real estate markets eschew the classic business card for a personal brochure. Your personal brochure needs to feature high-quality photography (no stock images here) and be printed on a good quality gloss paper with a clean design. You may want to hire a professional designer to help you, or you may want to explore your software options.
Your personal brochure is how you warm up a client before a meeting. Send it prior to meetings so that it can lend you credibility. It should share your knowledge about the kind of market your prospective clients care about.
Marketing materials can be a major obstacle for a lot of real estate agents. Updating your marketing materials is expensive. You can’t fake high-end ads and brochures, so you need to be ready to make an investment. There’s also the fact that you might take on an image that alienates mid-market clientele. Jumping into the luxury market takes determination and commitment.
Getting Your California Real Estate License
Not even a real estate agent yet? It’s good to dream big, now it’s time to plan how you’re going to make those dreams a reality.
Start by signing up for real estate license courses.
There’s nowhere better to start than with the basics. Sign up for online real estate courses for California with us and get access to online audio courses for only $99. You get:
- 24/7 access to online real estate courses
- Access to RealEstateU online courses on any computer, smartphone, or tablet
- Courses you can listen to on the go, whether you’re in the car or on the subway headed to work
There’s no textbook required, just audio lessons. You can complete the courses on your own time. In total, there are 3 courses with 45 hours of material (135 hours total). The courses include Real Estate Principles, Real Estate Practice, and one elective course that you select. Each course finishes with a final exam.
File your salesperson application & write the California real estate license exam.
Once you’ve completed the courses, now it’s time to file for your salesperson application. In California, there are two ways to do this:
- File your Salesperson Examination Application
- File a Salesperson Examination/License Application, which is what we recommend
The second option simply makes getting your California real estate license faster and more convenient once you pass the exam. It will involve getting fingerprinted, something that you will have to do before you become an official real estate agent.
Once your application is processed, you will receive an examination schedule notice telling you where and when you’re supposed to write the California real estate license exam.
Write and pass the exam.
Now it’s time to write the California real estate license exam and show you know the course material inside and out. The exam features 150 questions, all of which are multiple-choice, and you need a 70% to make a passing grade. Once you’ve passed the exam, you’re almost there.
When you’re preparing, it can help to take a California real estate practice exam to get a feel for the kinds of questions you are likely to be asked and brush up on all the most important information. You can take the California real estate exam prep course from RealEstateU. The course can reduce your study time by 90% and ease your anxiety about the test. You’ll be more confident walking into the exam having practiced. The course includes:
- Filtered out information so you know exactly what you need to for the exam
- Practice California real estate license exam questions
- Key concept summaries drawn from your California real estate license courses
- 13 practice tests and one California real estate practice exam
- A glossary of key terms
Stop worrying about the exam and let the experts help you ace it. The California real estate exam prep course is ideal for students who aren’t sure if they’re fully prepared for the exam. Since the state exam fee is $60, it can be cheaper to make sure you pass the first time (and get you started on your career in real estate sooner).
Get a sponsoring broker.
There’s one last thing you should be doing while you prepare for the California real estate exam, and that’s interviewing with brokers. Once you get your real estate license, you’re not the one who holds onto it. Instead, it gets mailed to your real estate broker, someone with whom you share your commission in exchange for office space or professional development. You can benefit a lot from an active and engaged real estate broker.
The luxury real estate market in California is one of the most remunerative real estate opportunities available in the country. It all starts when you decide to get your California real estate license. To learn more about earning your license, contact our help desk with any questions you might have.
Real estate is a uniquely rewarding industry, and the luxury market is another world entirely. The first step to selling California dream homes is earning your California real estate license, but there’s so much more to the journey. If you’ve always dreamed of selling California dream homes, whether it’s a mansion in Hollywood Hills or a heritage townhouse in Pacific Heights, San Francisco.
Your real estate license is one of the quickest and most affordable ways to change your career and blow open your earning potential. Your real estate license can change your life and start you down the path of realizing your dreams. Sign up for online classes today!