Meg White is the former managing editor of REALTOR® Magazine.
It’s easy to see the draw of getting into international real estate. The adventurous aspects of global travel combined with the opportunity to spread the uniquely American view of property ownership across the globe are just the beginning.
What’s not so easy is figuring out how to be successful in global real estate. Thankfully, the third and final day of Inman News Real Estate Connect NYC this year was devoted to helping brokers and real estate professions break into the global market, or expand their international business holdings. We distilled hours of discussions, expert tips, and market predictions to help you flourish around the world.
They say it’s a small world, but let’s face it: The world of international real estate is already crowded. Thankfully, there are a number of concrete steps practitioners who are just starting out can take to make the move to global operations smoother.
You don’t even have to leave your farming area to get to know the global market as it applies to your area. Managing Director of Coldwell Banker India Ramnik Chopra says he’s gotten a fair amount of referrals fromIndians who are living in the United States. They’re eager to tell friends and relatives back in their home country that they know someone in the United States who can help with property purchases stateside.
“Start getting entrenched in the local immigrant community here,” he advises. If you’re not sure where to start, the National Association of REALTORS®’ state-by-state international business reports can help.
And while we’re at it, let me mention that I recently sat in on a Certified International Property Specialists (CIPS) course and found it contained both highly specific guidance on difficult tax and legal issues and a practical what-to-expect guide. Learn more about CIPS here.
In addition to pursuing CIPS classes, Shawna Gilbert, a senior regional development consultant with RE/MAX, also recommends looking around locally.
“Pick a country, or maybe two countries, that make sense for your market,” she says, and then “learn about the country.”
Several speakers at the event recommended taking advantage of any travel opportunity—business or pleasure—to set an appointment with someone who can open up that market to your business. But how do you find people with whom to set those meetings? Nikki Field, a senior global advisor and associate broker at Sotheby’s International Realty suggests you make connections with money managers and other advisors who have the ear of wealthy, would-be investors.
“Call your banker. Who does he know in Shanghai?” she says. After you meet with your banking connection abroad, then some of “their trust with their clients [can be] transferred” to you.
The likelihood an international buyer is going to find you from your neighborhood bus bench ad is pretty low. The very nature of international property searches means your web presence is even more of a determining factor than it is in your local market.
However, the technical solutions to reaching international audiences online are not overly complex. Coldwell Banker’s Chopra recommends reaching out by adding two cheap, simple tools to your site: Google Translator and a currency converter.
Or maybe you just aced a deal with someone who speaks another language fluently. Eleonore Rojas, vice president of partnerships and product integration at Move Inc., suggests asking them to write a review: “If you have recommendations in different languages, and reviews, that’s a big plus.”
Staying connected with international clients may require tools apart fromphone and e-mail. Several speakers at Inman suggested cross-platform mobile messaging apps such as WeChat, a free app run by one of China’s largest Internet service providers, and the low-cost Silicon Valley-based alternative, WhatsApp.
But don’t forget good, old-fashioned Skype. “It really shows that you know international if you go ahead and publish your Skype information along with your contact information,” saysJanet Choynowski, founder and CEO of Immobel and Real-Buzz Group.
Though international buyers are easier to connect with using online tools, don’t make the mistake of thinking that searching for real estate online looks the same in every country.
“Advertise to the global wealthy where they live,” says Ryan Serhant, executive vice president and managing director of New York-based brokerage Nest Seekers. For example, Serhant advises those looking to capture the Chinese market have a presence on Soufun (a listings portal for real estate in China), Weibo (a social networking/microblogging site), and Baidu (a popular search engine). “Spend the money. It’ll pay dividends, I promise.”
Globe-trotting sounds fun, but there is math involved at the end of the day. Make sure you know about customary commission structures in the countries you’re dealing with.
Olivia Decker, founder and co-owner of Decker Bullock Sotheby’s International Realty, notes that commissions in the United Kingdom tend to be “very low,” around 2 percent. Meanwhile, in Italy, the buyer pays half the commission. That means that “if you’re a buyer’s agent, you don’t get paid from the listing side.”
Still, Decker has completed multi-million-dollar deals without having to necessarily obtain licensure in the countries where she’s working. Often she’ll create a consulting agreement with her client. The actual deal is closed by local attorneys or agents, and the amount she’s paid in the end is dictated by that agreement.
Knowing the landscape in the country you’re targeting is a necessity. But you also need to know local numbers in order to convince these savvy clients to work with you. After all, many foreigners aren’t used to being able to rely on an established group of real estate professionals to assist in the transfer of property. So why should they start now?
“The global wealthy shop for real estate on their own, [so you need to] convince them of your worth. Convince them you know more than they do,” says Serhant. He says real estate professionals need to know local properties well, be prepared to compare values across different global markets, and be able to highlight favorable tax structures to make the case for buying in your market. “Your knowledge can… turn an asking price into a bargain.”
One takeaway from the conference was the dominance of Chinese buyers and investors in the U.S. market today. According to the 2013 Profile of International Buyers, 12 percent of international buyers who bought in the United States last year were from China, second only to Canada.
Jonathan Cooper, vice president of operations at Vancouver-based Macdonald Realty Group, said real estate professionals in North America can be great resources of local tax and legal information for Chinese buyers, who are used to a very different set-up in their home countries.
“Ninety-nine to 100 percent of property in China is leasehold,” he said. When looking at property he showed them, many of his clients “didn’t know that most of the property is actually free title… that was a revelation to some of them.”
Cooper also advised practitioners to learn about the waiting periods maintained by financial institutions in the area where Chinese buyers are looking to purchase. Buyers might have to wait anywhere from 30 to 90 days before they can close.
“The money can be there, liquid, but the bank won’t release the mortgage,” he said. “Some Chinese buyers are not aware of that.”
It’s also important to stay up on the news coming out of a country where you want to work. Serhant says that upcoming reforms the Chinese government says it will make to increase transparency and fairness in the tax code may cause some Chinese owners to move property investments abroad: “Not all Chinese owners are looking forward to that increased transparency.”
No matter where you decide to set up your foothold in global real estate, be sure you have the staff and referral relationships necessary so that you don’t neglect your deals locally. Sotheby’s Field says she relies on a team of eight to keep things on track when she’s out of the country.
“They’re minding my business while I’m traveling,” she says. “Keep minding the home front. Don’t let it slide.”