Luxury Second Home Brokerage Marketing with Scenic Sothebys Adam Pfaff

Brokerage Insider

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After COVID hit, the demand for second homes dramatically increased. Those living in big cities flocked to drivable second home communities like near lakes, The Hamptons, and around Florida - including communities like Destin, FL and the surrounding 30A region.

As the Director of Marketing & PR of Scenic Sotheby's International Realty, Adam Pfaff has seen firsthand the explosion in demand for second homes in and around the Destin area.

TRANSCRIPTION

Eric Stegemann (00:00):

Thanks for listening to Brokerage Insider. This week's episode was recorded live during the explore virtual conference on Thursday, September 24th. We look forward to returning to our regular scheduled program soon, but until then, enjoy this session

Starting things off here, let me first introduce you, Adam Pfaff is the director of marketing and public relations at Scenic Sotheby's International Realty in beautiful, gorgeous Destin, Florida, the Destin, Florida area. I should say most people will know it there, but I think, you know, you have, you have offices along 30A, which technically aren't in Dustin and along 98, which Santa Rosa beach, I think is where your other offices, right?

Adam Pfaff

Correct. Yeah. So we have we have an office in each of the major markets that we serve. So we have one essentially located here on the Eastern side of Dustin right on 98. We then have one in the heart of 30A and blue mountain beach. And then we have a, another office on the Eastern side of Santa Rosa beach, which is technically an inlet beach. So that office definitely is able to serve our micro markets over in Rosemary beach, Panama city, beach spaces like that.

Eric Stegemann (01:14):

So that's great. So I guess w where I should have kicked off and kind of mentioned is one of the things that I wanted to have Adam on today particularly about is is about marketing, but, but also specifically on second home marketing and again, the rental market marketing, because in the area that is the big pole. It is a second home community, a rental community. And so I think, you know, even if you're not, if you're a broker that's listening into this right now, even if you're not in one of those markets, I think it's important to know what's going on in these types of markets, because you can know how to leverage it or leverage relationships as people change their environments because of COVID. And we're going to get into a little bit of that. So first of all, let's kick off the softball question here. How's the market been?

Adam Pfaff

Man, the market's been, it's been crazy. And I know that's kind of like the standard real estate answer. Everyone just says, it's crazy, but there's really not a better adjective to use because you know, our agents are they're out there hustling, they're working as hard as they possibly can. I know my staff and all of our operations teams are busier than we've been, you know, even on the uptick in the market that we've seen for the last few years, just the amount of volume of transactions that we're doing is so great. The you know, we're definitely feeling an inventory pinch right now. Our inventory is down to under two months. So just under 1.8 months of inventory currently on the market, whereas pre pandemic, we were, you know, in a most of our markets were an upper end luxury market. So eight months of inventory in certain wasn't

Uncommon, but we're not seeing any of that now. It's it's definitely a fight to get people really what they want but we're doing it. So yeah, it's a, it's definitely a hustling market and we're not only are we seeing inventory down values, just keep rising and rising. That demand is not slowing. So

Eric Stegemann (03:21):

So Talk about that, you know, as I understand it in the market and I should mention in full disclosure I purchased a home from Adam's brokerage in the not distant past here. So I somewhat know some of the questions that I'm asking, but, you know, talk to me about multiple offers because everything I've heard with the area is every home that goes in the market is pretty much getting, not, not just scooped up in the first week, but multiple offers over asking price in the first few weeks.

Adam Pfaff (03:53):

Yep. Yeah. So, you know, number one thing, if, if you're a broker or an agent listening in and you know, the most important marketing strategy is a pricing strategy, number one. And so in order to create that frenzy, your property has to be priced correctly. Luckily we're having so many transactions right now that it's hard not to price correctly. We'd still do have aspirational owners that want to see what they can get. But even in those cases, we're still finding backup offers being placed sometimes three or four. We're having gold front listings that are going under contract which really are the cream of the crop of our higher end market. And even they're getting three or four backup offers, and it's exceptionally important that agents are familiarized with the process of a backup offer because in a lot of cases, you might have buyers representation that is familiar with how they work in a listing agent that might be a little bit newer, that doesn't necessarily know how to navigate those waters. And, and that can ruin a deal and really put a bad taste in people's mouth. So, you know, our brokers we're lucky that we have a strong leadership team. We're doing constant training on how to manage both sides of that multiple offers scenario. And it's deemed really helpful. We've, we've had properties that, you know, people put stuff on our contract site on scene with viewing contingencies. And so, you know, and that might be a week out. Yeah,

Eric Stegemann (05:21):

We did that. That's why I'm laughing at it.

Adam Pfaff (05:23):

And so, you know, it's important that the agents are handling those backup offers correctly and really keeping them in the running cause we have plenty of people that come down and think they love something. And then by the time they get down a week later, something might be better, better available to fit their needs and being able to handle those second and third place contracts with ease is good. And, you know, the most important, especially here in Florida is really how to handle that earnest money deposit, that EMD money that's being traded and really training your buyers who might be in a second, third, or even fourth position seat with the contract to be ready, to be able to make those deposits down and be willing to make larger deposits than they would a few years ago in order to stay competitive.

Eric Stegemann (06:07):

Yeah. I mean, I know when we bought our house the earnest money deposit that was requested in st. Louis where I was a broker the earnest money deposit was almost considered a joke. It was more nominal than anything else. I mean, it was a hundred dollars, $500, maybe a thousand dollars at most that I ever saw was probably $2,500 for anything that wasn't a commercial building and down here, you know, it, it was much more than that. Let's put it that way was the expectation to show that you were serious and you had the money to be able to put down, to buy a house. Right. So you know, is there, is there a big tip for those that are listening, if you're a broker listening in, is there one particular big tip you could give to a broker owner or a staff person that's listening right now on something that they should either look into from a multiple offer situation or any, any training that you've seen online, that's good on providing for multiple offer situations?

Adam Pfaff (07:10):

Yeah, I think the number one thing that we've seen success with is role playing with with other agents in the office. And really it's just figuring out from both sides, both the listing and the buy side, figuring out what questions are gonna come up during that whole process. And really being able to kind of put your emotions aside, not rush any deals, which means when we rush, we miss the details which make or break those deals for their clients. So really getting comfortable with that whole process, asking those hard questions, being persistent without, you know, maybe ruining our reputation, our reputation in the market. But then number one thing is familiarize yourself with the form. So there are, you know, acknowledgement of backup contracts that, you know, the seller selling a client needs to see, you know, they need to acknowledge those.

Adam Pfaff (08:01):

And so the listing agents especially need to know how to handle those documents, know how to really read them, know the fine print, see how second, third, and fourth position seats will work and understand escalation clauses or best and final offers. So there's differences in the two and you really have to understand, you know, Hey, this client, when you're weighing those additional offers, Hey, this client has the best and final that looks great, but this one started lower, but has an escalation clause, you know, really understanding how to read those and feel comfortable explaining them to your client in a way they're gonna understand. We're lucky that most of the homeowners down here, these are not their first properties and a lot of times use their, their 20th property that they purchased. And so they're used to some of this stuff, they're there, they're savvy with the market. But a lot of times, especially if we're a listing agent that hasn't done a ton of had to do a ton of backup contracts really being able to explain the details of those things like escalation clauses is really important in being able to, to, to make it understandable to those people that might not work in finance.

Eric Stegemann (09:11):

Yeah. so for those that aren't, or that are listening, that maybe haven't heard of an escalation clause before, because I actually mentioned this to some brokers in the not distant past, and they didn't know what this was. Why don't you explain how an escalation clause works?

Adam Pfaff (09:29):

Yeah. So I'm full disclosure. I'm not a practicing realtor here in this market. So, you know,

Eric Stegemann (09:35):

Do you want a license though, right? You are.

Adam Pfaff (09:37):

I am licensed. Yeah. I'm not an, I'm not an active realtor. So so my explanation is not going to be as deep as, you know, a super experienced broker, but essentially an escalation clause allows you, as, you know, as you represent, as you are representing a client, it gives you the ability to negotiate up to a certain amount over an asking price or over where a current contract is. So essentially your client will allow you to go up to a certain point based on a best and final that another client might've given or a list price, depending on how that clause is written. So it's not a carp lodge to make as many offers as you want on your client's behalf. But what it can mean is it can mean that there's not a hesitation between the selling and the buying agent when you're negotiating price. Because if there's an escalation clause present, you can pretty much say, Hey, these people are going to go, you know, 1% over the highest, best and final on this property, 5% over list and know what that deal is going to be. So you can really expedite things without having to go back and forth and back and forth. And, you know, it eliminates emotions which, and this market is exceptionally important.

Eric Stegemann (10:52):

Very, very sound a thing to do. If you're in a broker, if you're in a market where there are multiple offers going on the next thing, you know, in the, in the vein of second home markets that I would ask you about is obviously when the virus did people that had a vacation rental houses, Airbnbs, you know verbose those types of things. I think they were, they got hit pretty hard. Cause the expectation was the summer revenue was probably just getting ready to pick up for you. How has it been or what have you seen are, are they coming around and everything is okay now or are they still being hit pretty hard.

Adam Pfaff (11:31):

Yeah. So when the pandemic hit Florida specifically, we did close short term rentals. So I believe it was, they closed our beaches and then for public beaches and they they pretty much closed down short term rentals. So it was illegal for a rental management company. And BRBO even if you were independently managing your property to do short term rentals to an out of state person and they closed those down for, I believe about six weeks. And then when it happened, when it opened though the companies that had been able to maintain staffs were able to keep their websites as clean and easy to utilize as possible. They saw immediate returns with guests coming in because you know, certain areas did limit how many people could kind of be in certain places at a time. But overall we saw a lot of people coming in, especially large houses.

Adam Pfaff (12:29):

So with us being in a market that is sprinkled with both large homes, as well as condos, we definitely saw the immediate reaction was people gravitating towards those homes people that hadn't seen their family out of town, they could all get together, gather one location, feel like they were quarantined to the outside world, enjoy the beauty that we had in our national surroundings with the beach and the Bay is, and the state parks and the trails and still feel a sense of safety. And we've continued to see that we, my wife and I laughed, we, we ran to the grocery store. One of the things about living on an Island is you kind of have to take a track to, to go towards some, some normal conveniences. So we made the track to go to the grocery and we said, man, this was last weekend.

Adam Pfaff (13:16):

You know, three days after a hurricane and said the traffic is like, it is during the summer. We just, you know, may touch base with the Ronald management companies. And they said, yeah, they're not slowing down. They're you know, we normally would see the last weekend in July be the last busy weekend. And then it pick up for labor day, but we've seen little depths, but the consistent traffic and that it can consistent bookings they've maintained, which has been great for those people buying secondary homes. Usually right now is the time that a owner would take their property, block it out, do repairs, and then ready it for the sales market. But we're still seeing agents having to juggle turn days, which pretty much means certain people leave. It has a certain amount of time to get cleaned. The next group comes in and the agents have to show all the cleaners are up at the house in most cases. And even here at the end of September, getting into October, we're still having to juggle those. So the rentals have been

Eric Stegemann (14:16):

Strong. That's a, that's great to hear. Cause I, you know, I think there was a lot of worry if you listen to CNBC business news there was a lot of worry about the real estate market falling apart in, in second home communities, right. When this happened. In fact, I think the CEO redsin came out and said they're toast. I mean, literally I think that's the quote that he gave and from our data analysis that we've seen Travis, is there anything but toast? And I think Adam's conversation here is proven not to be the case now, Adam, you know, I want to ask you a little bit about marketing since that's your specialty. How, how is as somebody who's been a, an agent before, but has a specialty in the marketing side of the business how has marketing in a second home community different from maybe somebody who's selling primary homes in a city like Atlanta?

Adam Pfaff (15:09):

Yeah, so, you know, I came from a practicing realtor in a majority primary market. We had a secondary market within 30...