Sitting in bed at 1:40 a.m. one morning last November, Jon Hoefling was thinking about selling his 4,300-square-foot home in Morgan Hill, Calif. While browsing Facebook on his phone, he clicked on a real-estate ad offering to estimate his home’s value. His future listing agent, who paid for the ad, was waiting.
Mr. Hoefling, the 50-year-old owner of an office-furniture resale company, had been targeted for the ad—along with 1,500 others in California’s Silicon Valley area—by an algorithm that identified him as a likely home seller. The telltale signs: Mr. Hoefling has lived in the home for more than 15 years, and his home’s market value is high for the area. Most important, his youngest son will soon leave for college. Empty nesters might as well wear a bull’s-eye.
Last year, Sotheby’s International Realty announced a partnership with Wealth-X, a consulting group that uses public records and research staff to manually track the habits of “ultrahigh-net-worth individuals.” There are about 211,000 people world-wide valued at more than $30 million, according to the company’s president and co-founder, David Friedman—and the firm’s goal is to write a detailed dossier on each one of them.
These reports may contain everything from an individual’s net worth and social circles to even more personal details. For example, the dossier for one Australian multimillionaire notes that he is likely fond of topiary, because he proposed to his wife in front of a massive topiary created by artist Jeff Koons.
Mark Lowham, managing partner at TTR Sotheby’s in Washington, D.C., enlisted Wealth-X to help find a buyer for a penthouse apartment listed at $9 million in the Georgetown neighborhood. His team first established a basic description of the people they were looking for: Homeowners with a combined income of $2 million who have lived in a house assessed at more than $4 million for at least five years.
Then, they got more specific: Art collectors, because the condo has ample wall space. Empty nesters, because they prefer single-floor living. Private-aircraft users, because the area attracts jet-setters.
Using a combination of data from Wealth-X and their client contact base of about 700,000, they might be left with 400 targeted leads, Mr. Lowham says. The listing isn’t public yet, but the next step is to launch a mail campaign to their targeted list of prospects.
Sophisticated data collection has been crucial to the growth of the Agency, says Billy Rose, co-founder of the Beverly Hills, Calif.-based real-estate firm. His company, which launched in 2011, closed on 12 transactions of $20 million or more last year. He says the Agency so far has spent about $800,000 to create a database of people with high-net worth. “When I have a house coming up for sale with a garage for six cars, I’ll reach out to my Lamborghini owners,” he says.
Mr. Rose declined to describe the sources that make up the database, but says they have 100,000 individuals in their direct network and another half-million through partnerships. People familiar with the system say it incorporates data from credit-card companies, as well as sales information from luxury brands.
Scanning obituaries for leads has long been a tactic of up-and-coming real-estate agents looking for new business. Today, the practice is getting a 21st-century makeover. Tracking major life events—marriage, divorce, death, all of which frequently entail a home purchase or sale—is big business for a number of new firms.
Morry Eghbal, a co-founder of the website Successors Data (briefly known as ObituaryLeads.com), says the 1-year-old company, based in Rancho Cucamonga, Calif., is nearing 1,000 paid subscribers at $99 a month. The company scours title company records for estates of deceased homeowners that are likely to enter the probate-court process, as well as obituaries nationwide to find potentially motivated sellers.
Mr. Eghbal says the leads are worth pursuing, because relatively few agents are aware of the strategy, and many of these homes are paid in full. “There’s a big difference between ‘I want to sell’ and ‘I have to sell,’” adds Bill Byrd, an agent with Re/Max Gold in the San Francisco area, who sold a $1.1 million home he found through AlltheLeads.com, a probate-court data company based outside Fort Lauderdale, Fla.
Reaching out to the newly bereaved is a delicate process. Jim Sullivan, founder of AlltheLeads.com, which was founded in January and has about 200 probate subscribers, suggests that agents pursuing probate leads write letters to the next of kin before picking up the phone—and exercise patience. “You don’t want to come off as an ambulance chaser,” he says, adding that about 90% of probate leads sell within the first year.
Brett Jennings, the Silicon Valley agent who advertised to Mr. Hoefling on Facebook, relied on a website called LeadsToday.com (subscriptions start at $497 a month). The site tracks life events like job changes, pregnancy, divorce and children heading to college—all clues that might signal an impending sale, says Scott Kliger, the company’s chief executive. The company provided Mr. Jennings with a list of email addresses of likely sellers based on their findings, which he then used to launch his Facebook ad campaign.
Mr. Hoefling, who says he knew why he was being targeted for the ad, doesn’t object to the strategy. “That’s how it goes,” he says, noting that online ads are often tailored to his web-browsing habits. He chose Mr. Jennings instead of two local agents because Mr. Jennings had promising leads on Chinese buyers, and offered drone photography. The home was listed in March for $1.99 million, and lowered to $1.94 million in April.
Online ads can target potential real-estate clients with increasing precision. GeoCommerce, in Irvine, Calif., is one of a number of companies that serve ads directly to a household’s unique IP address. Jeff Sparrow, the chief executive, says they can use latitude and longitude to pinpoint potential clients within four meters, or about 13 feet, of their location. When the target visits one of the roughly 100 million web domains in the company’s network, they might be served with a real-estate ad, based on their past online behavior or purchases.
Devin Doherty, an agent with Keller Williams in Orange County, Calif., has used GeoCommerce to send ads to households that his research identifies as potential clients. “They don’t know what they want until they have it in front of them,” he says.
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