An Interview with Arizona’s Number One Luxury Home Agent
September 8, 2014
By Tricia Covert
There have been recent reports in the media about luxury home sales from both a global and national perspective. According to the reports, sales in this market are rebounding faster overall in comparison to regular home sales. Some major metropolitan areas are seeing double the volume second quarter of this year compared to the same time in 2013. But, what’s happening here in Phoenix metro?
I had the opportunity to meet with Walt Danley to obtain his view about the Phoenix metro luxury home market. Walt is ranked the number one selling agent in luxury home sales in Arizona, regardless of his company affiliation. He has been in the top 1 percent of REALTORS® every year for 30 years nationwide and among the top teams according to the Wall Street Journal’s annual list of most successful REALTORS®. We are pleased to have Walt as a featured panelist at our Luxury Home Seminar on Friday, October 17th. He was very gracious to take some time out of his busy day to answer some of my questions in preparation for our seminar.
You’ve been in luxury home sales for over 30 years in Arizona. What prompted you to get into this segment of the market?
I was taking tennis lessons and ended up playing with a couple from Chicago in the 1980s. As we were playing, they asked me, “What would $1 million dollars buy?” I said, “I don’t know, let’s go find out.” I went home and changed and then drove their big Mercedes to about 5 or 6 houses. The buyer asked me what house I thought he should buy and I told him. Guys like him don’t like to negotiate, so he paid exactly $1 million dollars in cash – that was a lot of money back then.
I thought this sure beats the lower-end. In the early 1980s, there were about 6 luxury homes for sale a year. I was thinking if I could get 3 out of the 6, that would suit me well. There was only one other agent selling luxury homes at the time. It was very difficult at first because there wasn’t a lot of inventory to make a living here, so I tried to sell at the lower end as a supplement. I sort of got put in a box that made people think my heart wouldn’t be in the lower end, so they didn’t hire me. I didn’t necessarily care for luxury home sales initially, but I stuck with it and the inventory progressively increased. The sales became easier and now it’s a great place to be.
What price point defines a luxury home in Arizona?
To me, $1 million has always been the price point, but it really depends on the area. In some places, it could be about $600,000 to $700,000 and other places, such as Paradise Valley, $1.5 million may be a more accurate starting point. Although today you can get a lot more house for $1 million even in the higher end areas.
What trends have you seen in the luxury home market, particularly with the market crash? What’s happening right now?
Luxury homes dipped just as much as the regular market. They probably went down to about 50 cents on the dollar – they’ve come back up about 30 percent. I really don’t think we’re going to have the market we had before here. I think people have changed so much because of the recession and they’re now scaling down. It use to be bigger and better and that’s not the case anymore. We’re the number one luxury home selling office, so we track all buyers overall every Tuesday. We’re just not seeing anyone looking for larger homes. I hesitate to take a home over $10 million because we just don’t have the buyers for them.
What’s the current inventory and what are your predictions for the future?
We have such an abundance of inventory, I think it’s going to take years to thin it out. In my opinion, the inventory is going to expand. People got scared to put their home on the market because of the crash and thought they would wait it out. They were hoping the market would pick up last year and we saw some movement in the number of listings and then it dipped again. But, you can only hold off for so long before life changes happen, than people are almost forced to list because kids are going away, they’re retiring and other circumstances that accelerate the need to move.
People could see a light last quarter of 2013 and first quarter of 2014, so they started listing their homes which created more inventory. Now, we’re in a holding pattern.
What about new luxury home sales? What’s happening within that market?
New home sales is an inventory that’s lacking. Investors that finance the contractors for luxury homes are hesitant to invest in the product. They think we can’t sell what we do have, why would we want more. Investors are the same local people they were before – that hasn’t changed.
Many of them got burned at the end of the recession, so that’s left an imprint with them. They typically didn’t pay all of the money up-front to start building the home, so they would fund the down payment, take on the construction and hope to turn the home over quickly. Unfortunately, they ended up getting stuck with the property and many times lost all of their money, so investors are very hesitant to return to the market.
When did we reach the bottom of the market for luxury homes?
We reached rock bottom at the beginning of 2013. Then, the market turned a bit and I thought great it’s going to be a seller’s market. It then turned again in February of 2014. But, it’s not going to last long – I can feel it from the calls we’re receiving.
When do you think the luxury home market is going to pick up in Phoenix metro?
I predict our next buying season is going to be really strong. The buying season for luxury homes is from around January 20th to the end of June. We generate two-thirds of our business during that time period. With the NFL Super Bowl here for the buying season, we should have additional people falling in love with Phoenix metro that want to buy – that can only help.
Can you describe a typical buyer for an Arizona luxury home?
About 70 percent of our buyers are from out-of-state. Canadian buyers are number one, mid-west is number two and California is number three. The average age of the buyer is about 52 to 56 years old. People want to retire here and they think the values are good even if they don’t plan on using the home for 4 or 5 years. We have buyers planning ahead for grandchildren they don’t even have yet. They couldn’t afford the larger home when they were younger, so they’re buying it now.
Has the interest to be an agent in luxury home sales grown overtime from the two agents in the early 1980s?
With the steady growth of population since the 80s, the volume of homes naturally increased producing a lot more interest. I’m amazed at how many agents are in luxury home sales today. The turn of the market weeded out agents who really weren’t serious about it, so I think that’s been good.
Our market has a luxury home sales meeting every second and fourth Friday of the month at a church called the Luxury Home Tour Group. We must have at least 500 active agents in that group, so that’s a lot more interest from when I started.
If someone in real estate sales is interested in moving into the luxury home market, what characteristics would they need to focus on to be a top producer?
They absolutely have to know the inventory. They have to know all about the product and be knowledgeable. Knowledge is king. You need to have an understanding of what a luxury home buyer is looking for and so many agents don’t know that. You also have to position yourself to fit the buyer, that’s also really necessary. You’re usually dealing with a sophisticated buyer, so you need to model yourself the same way. There’s a lot more to know in luxury homes than regular home sales.
Would you recommend luxury home sales to an agent based on your experience?
Absolutely. I work a lot of hours, not that everyone has to, but I really love my work. You can succeed in this business. Agents who don’t succeed are putting their efforts in the wrong place.
You were a panelist at our luxury home seminar last year. Thank you for accepting our invitation to be a panelist for our upcoming seminar this year. What was your take away from our seminar last year?
I felt blessed coming out of the seminar, truly. Even though I’ve been in this business for over 30 years, I still have challenges. I learned some new tactics and felt good after hearing that my colleagues were facing similar challenges that I face. I typically don’t take enough time to network with my peers and it was an excellent place to do that.
Walt Danley’s input of luxury homes in the Valley provides a glimpse of what’s ahead. It will be interesting to see the progression of sales in the luxury home market in Phoenix metro as the prime buying season approaches in 2015. Our beautiful city has the advantage of showcasing some of our luxury homes on our mountainsides to give our out-of-state visitors a spectacular preview.
If you would like to learn more about this market, attend our Luxury Home Seminar at our Scottsdale Campus
October 17, 2014, 9:00 a.m. – 12:30 p.m.
Tuition: $40 Credit: 3 hours Contract Law (CL)
Tricia Covert is the Marketing Manager for the Arizona School of Real Estate & Business. She has more than fifteen years of marketing experience working in various industries at a corporate and small business level.