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PROFILE OF LUXURY CLIENTS

PROFILE OF LUXURY CLIENTS. Survey Methodology 730 online surveys were received in November 2013. Respondents are Luxury clients who purchase/sell a home

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PROFILE OF LUXURY CLIENTS

Survey Methodology• 730 online surveys were received in November 2013.

• Respondents are Luxury clients who purchase/sell a home for over one million dollars.

•Maximum sampling error: ±3.5 percent at two standard deviations (a 95% confidence level).

Type of Client Represented

Q: Who did you represent in your last transaction?

41%

40%

18%Buyer Seller Both

The Typical Luxury Client

74% College

Educated

48% Single

92% permanently reside in the United

States

71% Caucasian

53 Years Old

$350K Median Income

Singles made up 48% of Luxury Clients in 2013

Married Single Other0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Over 70% of Luxury Clients were White

African American/

Black

Asian Caucasian/White

Hispanic/Latino

Other Unsure0%

10%

20%

30%

40%

50%

60%

70%

80%

2%7%

74%

7% 7%2%2%

16%

73%

2%5% 3%

Buyers Sellers

Client Profiles

Luxury Buyers

Traditional Buyers

Luxury Sellers

Traditional Sellers

Age 46 Years 38 Years 60 Years 46 Years

Median Household

Income

$350K $125K $275K $140K

Marital Status Single (57%); Married (24%)

Single (37%); Married (63%)

Single (44%); Married (30%)

Single (32%); Married (48%)

Over 70% of Luxury Buyers were White

African American/

Black

Asian Caucasian/White

Hispanic/Latino

Other Unsure0%

10%

20%

30%

40%

50%

60%

70%

80%

2%7%

74%

7% 7%2%

8%

28%

37%

26%

1% 0%

Luxury Buyers Traditional Buyers

Over 70% of Luxury Sellers were White

African American/

Black

Asian Caucasian/White

Hispanic/Latino

Other Unsure0%

10%

20%

30%

40%

50%

60%

70%

80%

2%

16%

73%

2%5% 3%

12%

25%

36%

26%

0% 0%

Luxury Sellers Traditional Sellers

More than four of five luxury repeat buyers owned more than one property

0 1 2 3 4 5+0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

17%

38%

21%

9%

5%

9%

Mean: 2.4 properties

Q. How many other properties does your last luxury client own?

International Buyers Are Purchasing Properties in California

Luxury Homes All Homes0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

5%

8%

SERIES: 2013 Housing Market Survey and 2013 Luxury Clients SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

PROFILE OF LUXURY PROPERTIES!

Majority of Luxury Transactions were Traditional Sales

Regular/Tradtional/Equity Sale

REO/bank-owned

Foreclosure

Short Sale

Other

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

90.3%

2.7%

0.1%

3.0%

3.9%

Luxury properties often had a hilltop or ocean view

Ski resort

Lakefront

Resort area

Oceanfront

Mountain area

Golf course

Ocean view

Hilltop

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

1%

4%

9%

10%

12%

16%

28%

41%

Luxury Buyers intended Largely to use their Luxury Homes as their Primary Residence

Primary Res-idence

Vacation/Second Home

Investment/Rental

Property

Other0%

10%

20%

30%

40%

50%

60%

70%

80%

90%79%

10% 9%2%

Property Value Breakdown

$1M - $2M $2M - $3M $3M - $5M $5M - $10M $10M+0%

10%

20%

30%

40%

50%

60%

70%

80% 76%

13%

6%3% 3%

Median Price: $1,375,000

BUYING AND SELLING PROCESS

BUYING

Main Reasons for Purchasing a Home

Other

To Rent it Out

Desired Smaller Home

Tired of Renting

Change in Family Status

Desired Larger Home

0% 10% 20% 30%

11%

2%

2%

3%

5%

5%

6%

11%

11%

20%

25%

Luxury Home Buyers

Q. What primarily motivated the client in your last luxury transaction to buy within the past year?

Other

Retirement/Move to Retirement Community

Desired Smaller Home

Desired Better Location

Investment/ Tax Considerations

0% 10% 20% 30%

9%

2%

3%

4%

4%

4%

15%

17%

21%

23%

Traditional Buyers

Reasons for Buying – All Homes First Time Homebuyers Vs. Repeat Homebuyers

Q. What was the single most important reason for selling/buying the property?

Tired of Renting

Desired Larger Home

Investment/ Tax Considerations

Desired Better Location

Change in Family Status

Changed Jobs

Foreclosure/Short Sale/Default

Desired Smaller Home

Retirement/Move to Retirement Community

Other

0% 10% 20% 30% 40% 50% 60%

Repeat Buyers First-Time Buyers

SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

The Median Number of Years that Luxury Buyers Intended to Keep the Property was 10.

Luxury

Traditional

0 1 2 3 4 5 6 7 8 9 10

10

6

Q. How many years does the client in your last luxury transaction intend to keep the property?

One –Third of Luxury Buyers Paid with All Cash

Luxury Buyers Traditional Buyers0%

5%

10%

15%

20%

25%

30%

35%

40%

35%

27%

% of All Cash Sales

• More than a third of luxury buyers paid with all cash

• The share of all cash buyers had been on the rise for overall sales until this year

SERIES: 2013 Housing Market Survey and 2013 Luxury Clients SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Majority of Luxury Home Clients used their Personal Savings as the source of their down payment

27.8%

55.7%

1.4%

7.1% 8.0%

Proceeds from a Previous InvestmentPersonal Savings1031 ExchangeOtherDon't Know/Unsure

What was the source of the down payment in your last luxury transaction?

Luxury clients utilized their personal contacts to find their agents.

Tradtional Buyer

Tradtional Seller Luxury Client0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

Internet

Advertising

Relationships/Con-tacts/Referrals

Q. How did you find the client in your last luxury transaction?

How Agents Find Luxury Clients

Other

For Sale Sign

Client responded to my ad

Client is a relative

Client found me online

Open House

Previous Client

Prior dealings with my brokerage

Referral from another agent

Referral from a previous buyer

Referral from a friend

Client is a friend

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

10%

2%

3%

4%

7%

7%

8%

8%

9%

12%

15%

18%

Q. How did you find your client in your last luxury transaction?

Agents spent about 5 weeks on average looking for properties with their luxury buyers

Luxury Buyers Traditional Buyers

0

2

4

6

8

10

12

5

10

Weeks

Q. How many weeks did you spend looking for a property with your client in your last luxury transaction?Q. How many properties did you view with your client prior to the client making a purchase in your last transaction?

• A luxury buyer typically viewed 10 properties with his/her agent before making a home purchase.

• A traditional buyer viewed 10 properties with his/her agent before making a home purchase

Luxury Home Buyer Made Fewer Offers Than a Typical Home Buyer

0 1 2 3 4 5 6+0%

5%

10%

15%

20%

25%

30%

35%

# of Offers Made on Other Properties

Luxury Buyers Traditional Buyers

Q. How many offers did your last client make on other properties?

Luxury Buyers

Traditional Buyers

0 1 2 3 4

1

3

Median # of Offers

SELLING

Main Reasons for Selling Luxury Home

Other

Affordable Price

Investment/Tax Advantages

No Longer Wanted/Needed a Vacation Property

To Flip it for a Profit

Desired Larger Home

Desired Better/Other Location

Changed Jobs/Relocated

Desired Smaller Home

Change in Family Status

0% 2% 4% 6% 8% 10%

12%

14%

16%

18%

20%

15%

2%

4%

4%

5%

9%

12%

13%

18%

18%

Q. What primarily motivated the client in your last luxury transaction to sell within the past year?

Traditional Sellers - Reasons for Selling

Other

Desired Smaller Home

Changed Jobs

Retirement/Move to Retirement Community

Investment/ Tax Considerations

Desired Better Location

Change in Family Status

Desired Larger Home

Foreclosure/Short Sale/Default

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

16.7%

6.0%

6.3%

9.5%

10.8%

11.0%

11.6%

12.6%

15.5%

Q. What was the single most important reason for selling the property?

Luxury Sellers Typically Keep Their Properties Longer than Traditional Sellers

Luxury Sellers

Traditional Sellers

0 1 2 3 4 5 6 7 8 9 10

10

8

How many years did the seller own the property in your last luxury transaction?

Luxury Home Sellers Received Fewer Offers Than Traditional Home Sellers

1 2 3 4 5 6 or more

0%

5%

10%

15%

20%

25%

30%

35%

# of Offers Made on Other PropertiesLuxury Sellers Traditional Sellers

Median # of offers received by luxury sellers: 2Median # of offers received by traditional sellers: 3

Q. How many offers did your last client received?

Luxury Sellers

Traditional Sellers

0 5 10 15 20 25 30 35

30

11

Median # of Days on Market

Over a Quarter of Luxury Homes Sold Above Asking Price

% of Sales Above Asking Price0%

10%

20%

30%

40%

50%

60%

27%

50%

Luxury Homes All Homes

Q. What was the initial/listing price of your last transaction?Q. What was the final sales price of your last transaction?

• A luxury home typically sold with 1 percent discount below its asking price in 2013

• A traditional home typically sold with 0 percent discount below its asking price in 2013.

Over 9 out of 10 Properties were marketed through an MLS

Other

Builder/Developer

Private Listing

Advertisement

Open House

MLS

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

10%

4%

10%

35%

37%

91%

Q. How was the property in your last luxury transaction marketed? Select all that apply.

Marketing through the MLS was still the most effective way to sell a Luxury property.

Other

Builder/Developer

Advertisement

Private Listing

Open House

MLS

0% 10% 20% 30% 40% 50% 60% 70%

Q. Which of these marketing techniques was most effective in your last luxury transaction?

The Median Amount spent on marketing a luxury property was $1,000.

47%

13%

14%

1%

11%

14%

PhotographerVideographerDesignerArchitectOtherNone

Q. Which of the following professionals did you hire to help assist you market the property in your last luxury transaction? Select all that apply.

Marketing Breakdown• The median amount that sellers spent on a photographer was 300 dollars.• The median amount that sellers spent on a videographer was 250 dollars.• The median amount that sellers spent on a designer was 500 dollars.

Luxury Home Prices Are Expected to Increase

Luxury Buyer

Traditional Buyer

Luxury Seller

Traditional Seller

1 Year

Up 71% 36% 67% 43%

Down 1% 20% 2% 21%

Flat/Unsure 27% 44% 31% 36%

5 Years

Up 79% 60% 76% 58%

Down 3% 17% 3% 23%

Flat/Unsure 18% 23% 21% 19%

Q Do you think home prices in the neighborhood where you purchased will go up, down, or stay flat … in one year, in five years?

What Luxury Clients Needed the Most Assistance with?

Negotiating (28.3%)

All aspects of buying and selling (10.2%)

Inspections (8.2%)

Contract (4.6%)

The Takeaway

•Sales of luxury properties will grow steadily as the economy continues to improve• International buyers are purchasing high-end properties in California•Luxury clients need help, especially in the negotiation process•Keep in touch with your clients