Luxury Homes Market: Know Your Market

“You only have once chance at making a good first impression, and this opportunity is only a small window of time,” says Dave Kenny, PhD, a psychologist at the University of Connecticut and a pioneer in the field of measuring the accuracy of first impressions. In his landmark study, which appeared in the Journal of Personality and Social Psychology he studied 250 college students. In the study each of the students was assigned to a group of three others whom they had never had met and had not a chance to speak with. Armed with nothing more than their first impression the students were asked to measure each person in the group, including themselves, based on five criteria. The results were then compared to the individuals self assessments. 

Amazingly the students were able to accurately describe each others personality traits based on nothing more than their gut instincts. The bottom line: People are extremely good at doing a mental function now known as “thin slicing”, a term coined by Malcolm Galdwell in his bestseller of the same title, which means taking huge amounts of data, parsing it down to the key elements, and making a conscious, or often unconscious decision based on this narrow window of knowledge.

For decades the ability to “thin slice” large amounts of data was attributed to a large memory and therefore a higher intelligence level.  But in a study by Edward Vogel, an assistant professor of cognitive neuroscience at the University of Oregon he found that the brain actually employs a “bouncer” – a neural mechanism that controls what information gets into awareness. The bouncer’s job is to assess each piece of information and decide if it gets processed or tossed.

To ensure we get past the “bouncer” and have a shot at building a professional relationship we need to understand the power of making a strong first impression. Many studies including detailed research from the University of Toledo suggest that in a sales setting or job interview we have 30 seconds (or less) to make a lasting first impression. According to their study the keys to a great first impression (and the first step to terrific presentation) are:

• Visual Appearance (55%) – Body language, posture, facial expression and eye contact
• Voice Quality (38%) – Tone, inflection and volume
• Content (7%)  – What you have to say

For example, to increase their odds of success, top producers in the field of selling luxury homes make it a point to make a good first impression. They are relaxed; they smile often and make frequent eye contact. Their tone of voice is low key, warm and winning. They engage the prospect by asking questions and building rapport.  In addition they know exactly what they are going to say based upon who they are working with.

They know that luxury home buyers fit a unique demographic space in the residential real estate market. As described by the agents who sell high end homes, luxury home buyers are by and large middle aged, hard working couples, who have made their own fortunes and are now in a position to live the luxury lifestyle they have earned.

According to a study conducted by the Luxury Home Council:

• The majority of luxury home buyers are aged 40-50 (48%) or 50-65 (44%) - the “Baby Boomer” market.

• Virtually all affluent households consist of a married couple; 50% having children inside or outside of the home.

• The typical luxury home buyer makes a large cash investment in their home purchase - on average over 33 percent. This compares to the median down payment of all buyers of just over 9 percent.

• By far, the vast majority of luxury home buyers active in the market today are best described as “New Money” (89%).

• The average luxury home buyer will look for a home with 3,500-4,000 square feet, 4-5 bedrooms and 3-4 bathrooms. During their search, they will spend an average of 11 weeks looking for a home and will view 12 homes before making a buying decision.

The bottom line is – nobody (except those like Dorothy’s Scarecrow) gets engaged within the first 30 seconds, but those 30 seconds are critical elements in the process.  If you want to learn more about making that critical first impression and getting engaged with your client, a great place to start is by taking the Accredited Luxury Home Specialist (ALHS) course form the Luxury Home Council.