John Doe Slept Here: Selling Homes to the Rich, But Not Necessarily Famous

“We have a referral for you,” says an excited voice on the other end of the phone. "We can't tell you the person's name or contact information. In fact, you may never get to meet them or speak to them. You will be dealing with their personal assistant, business manager, or attorney. The price range is $5 million to $8 million, and they will be paying cash."

Sound like a bogus referral? Or a scam, perhaps?

That's not an unusual response. Most likely, it's just another day in the life of a bicoastal relocation department located in Los Angeles or New York City, two markets where real estate prices are breaking records each year, with enormous press coverage of the latest, highest sales achieved and who bought what and where.

A good example is the recent sale of a $100.5 million Manhattan penthouse in the new ultra-luxury Ones? condominium tower. This was the highest price ever paid for a New York City residence on record. The press coverage was massive, but the identity of the buyer was not disclosed. This is not unusual. The buyer identity of high-profile properties is generally closely held, as most buyers prefer to keep their transactions private.

While most referral customers are entry-level, first-time buyers or midlevel corporate executives, relocation professionals occasionally have a brush with the rich and famous. Most markets may not see this type of high-level referral often, but on occasion you may find yourself with an opportunity to participate in one of this magnitude.

 

Every major city has its own roster of high-profile personalities and stars of the business, sports, cultural, and entertainment fields whose relocation needs may fall outside the typical framework of corporate relocation. Well-connected real estate brokers and independent sales associates may have an opportunity to tap into these high-profile referrals. The key to working successfully with this caliber of client is to give the customer and those referring the customer confidence that your firm has in-depth market knowledge and expertise, operates with utmost confidentiality, and can create a tailored experience for their client.

 

WHO ARE THESE PEOPLE?

These clients generally fall into the category of "high-net-worth individuals" (HNWIs), aka the superrich and ultra rich.

According to Wealth X, a global ultrahigh-net-worth intelligence and prospecting firm, the U.S. has the most HNWIs in the world, with North America accounting for 35 percent of this wealthy population. Seventy-nine percent own two or more residences, and 6 percent are based outside of their home country. They might be millionaires or billionaires, and they hail from the finance and banking industries, media, sports, entertainment, the tech sector, entrepreneurial endeavors, international royalty, and sheikdoms.

The extreme wealth of HNWIs comes from both "new" and "old" money-be it self-made, inherited, or a combination of the two. Some new-money customers may appear at a property showing with their entourage and seek out extreme properties with paparazzi watching their every move. But that is the exception, not the rule. Most HNWI buyers are very discreet about their search and their purchase. Many customers tend to blend into the crowd and are visually unassuming-often dressed in clothes unexpected from a millionaire or billionaire, whether it's an old-money client or a newly minted tech billionaire. When it comes to real estate buyers, you can never judge a book by its cover.

According to a 2014 study conducted by Coldwell Banker Previews International and the Luxury Institute, today's HNWI homebuyers prioritize their choice of real estate professional by the agent's expertise in their local market and by their ability to be discreet. Privacy is critical to this buyer.

The "Luxury Market Report" also points to an affluent consumer who is mobile, tech-savvy, cash-focused, socially conscious, and less concerned with status. The affluent buyer has a desire for turnkey properties that may come fully furnished and ready to occupy.

WHY ARE THEY BUYING ON THE COASTS?

For HNWI clients, the decision of where to buy can be based on strategic financial considerations, lifestyle choices, or both. New York and Los Angeles rank as the top two cities in the U.S. with luxury real estate sales of properties worth more than $10 million.

The Los Angeles area at the time of this writing boasted the highest-priced residential single-family listing in the country. "Palazzo di Amore," listed for $195 million, is located in prestigious Beverly Hills, a favorite destination of wealthy international buyers.

These buyers remain attracted to high-end real estate because of a strong perception of value and desire for homes that facilitate the lifestyle they prefer such as laid-back sunny California living or the excitement of urban Manhattan.

WHAT DO THESE REFERRALS REQUIRE?

The ultra-affluent may want trophy properties in the form of vacation homes or a pied-a-terre. They generally desire easy access to international travel hubs, a multicultural environment, and a safe haven for their money. The HNWI buyer often seeks close proximity to top educational institutions, to others of high net worth, and to their sources of income. They might rent due to temporary assignments, as is common with sports and entertainment figures.

Today's HNWI buyer can be far less restricted to a particular location. They have carved their own professional path, and their office often resides within a laptop. They can choose to live in New York, Los Angeles, Miami, or all three locations. This is particularly true among wealthy buyers under the age of 35 who rely heavily on social media and online reviews as an information source for vetting agents and properties. A company that can satisfy a buyer's need for a multicity search will be well-positioned to meet the needs of the next generation of affluent buyers.

Top-notch client service, market expertise, and discretion are necessary for dealing with these types of buyers or sellers, whose requirements generally fall far outside the usual required skill sets of our relocation departments and relocation-trained teams. A great deal of flexibility is required for all parties involved; this client is busy and mobile. These referrals are not for the faint of heart.

KEEPING QUIET

For the high-profile client, the receiving relocation department has to assess the referral and then respect and accept that the client associated with the referral will most likely remain very private. Expect to sign a confidentiality agreement. Name-dropping is a definite no-no. The pseudonym of choice used by the client on these transactions may be John Doe or a business name used solely for real estate purchases.

Confidence and credibility can be gained by citing other recent examples of high-end properties your company has represented that can successfully validate your expertise without divulging clients' names. For example, you could phrase a reference, "We recently placed a Saudi prince in a $35 million Manhattan condominium," or "A prominent television producer rented a $30,000-a-month Malibu beach house from our company last summer."

While the sales associates close to the transaction keep quiet on details, the media frequently sniffs out the prominent listings and sales and may announce who the participating real estate agents are in local publications, blogs, and tabloids. The source of the leak may even be the client themselves, using the media as an additional means of generating exposure and buyer interest for their home.

 GETTING THE JOB DONE

Once the level of experience in dealing with high-profile clients has been established by the company sending the referral, it is important for the source of the referral to let the local experts do their job and not get in the way of the process. The local relocation department should work closely with their senior leadership to assess which of the top independent sales associates will be the best match for a customer of this caliber.

Many people will try to capture these types of clients, so agent selection is critical while you are fending off interlopers trying to derail the referral.

It is important to get accurate information on the client's wants and needs quickly. Sometimes when relocation professionals are not dealing directly with the client, others may incorrectly interpret what the client wants, which may send the agent down the wrong path. Ideally, the designated contact will have actually had a conversation with the customer, so everyone can start looking in the right direction.

Just like any other client, these customers often have very specific requirements. Real estate professionals know that speed and accuracy in matching the customer's profile is crucial. Many independent sales associates who deal with high-net-worth clients specialize in one field, such as entertainment or sports, and it is essential to tap into that expertise.

The agents who work with the ultrarich may have also lived internationally and speak several languages, which creates an immediate and unparalleled cultural connection for clients traveling from other countries. These high-end independent agents may have never attended a relocation training class or earned a relocation certification, but the key is to find an agent who works comfortably in this space. A crash course on the details of relocation may need to follow if it involves corporate benefits. In this situation, the expertise in dealing with high-net-worth customers far outweighs an agent's relocation expertise.

WHO ARE THESE AGENTS WHO RUB ELBOWS WITH THE MEGARICH?

The high-end independent agents are often quite wealthy themselves, and they represent a very small percentage of the overall real estate agent population. Selling multimillion-dollar properties is business as usual for them. They may have gotten their start in the business through a famous client or relative. They are rock stars in their own markets, with reputations for dealing with extreme wealth.

They move in the same social circles as, and therefore understand the demands and idiosyncrasies of, the rich and famous. They could in fact be reality TV stars who are recognized on the streets like a celebrity. Never ones to be star-struck, they remain cool and calm on the surface. They are fierce negotiators, with access to the very highest level of properties on the market-and even those not yet on the market. They practice the utmost discretion in dealing with their famous customers and are often dogged by the press for information. They show listings only by appointment, and everything becomes a customized high-tech marketing experience for the client. Although they are typically not on the relocation team, they have successfully placed clients from around the world, and they have provided a level of service and resources to these clients that proves invaluable in their new locations.

These agents are connected and know how to get the job done. Need a custom wine cellar built? No problem; they know someone who can help. Want a company to install a safe room? Got it. Need to build a 20-car garage for your custom cars? Easy. A pop star has bizarre wall murals? No worries-not exactly the "corporate beige" we are accustomed to in executive relocation, but in a hot market, the notoriety of the seller will overshadow any weird decorating flair that may come with flamboyant people; it sometimes even adds value. Let's face it: The public is fascinated with people in the public eye.

It will be up to the local relocation department to set the expectations with these superstar agents and communicate timelines for feedback and paperwork. The local relocation department will deal with the agent team. These independent sales associates usually have other independent agents working with them, as well as assistants to rely on for this activity. Direct contact between the originating source and the assigned agents only adds a layer of confusion and communication that may get in the way of the flow of the superstar agents.

Those of us involved on the close periphery of the agent/ client relationship in typical relocation

referrals are accustomed to micromanaging both the process and the agents. This is our opportunity to exhibit our skills in patience, trust, and flexibility, and to put a collaborative partnership approach into full swing. While every day will not bring a movie star referral, we all have to be prepared to deliver a highly customizable process to this growing segment of referral opportunities, since every referral is a star in their own right...even if his name might be John Doe.

Carol A. Kelly, SCRF, SGMS- T, is senior vice president, corporate relocation services, at The Corcoran Group. She can be reached at carol.kelly@corcoran.com.