By Martina Nerrant
The term “international buyer” refers to two categories of buyers. The first category represents non-residents; foreign clients with permanent residences outside the U.S. They typically purchase a property for investment, vacations or visits of less than six months to the U.S. The second category is the resident foreigner; they are recent immigrants (in the country less than two years) or temporary visa holders residing for more than six months in the U.S. for professional, educational or other reasons.
The “international buyer” sales volume represented $92.2B in March 2014 versus $62B in March 2013. Of total international transactions, approximately $45.5 billion were attributed to non-resident foreigners and approximately $46.7 billion to resident foreigners. Texas ranks third (after Florida and California) in total international sales.
International sales are still increasing in the U.S. because buying a property here remains affordable. Most sales or transactions are cash or high down payments, making the transactions attractive to sellers. You certainly do not want to miss out on those opportunities, but you must understand what it takes to work with an international prospect.
What does an agent need to know? An agent needs the knowledge, education and attitude to work with foreign buyers. Understanding the international buyers’ interests in the U.S. real estate market and a cultural affinity to the prospect are really important to achieving a successful transaction. My first recommendation would be to take the CIPS designation course (Certified International Property Specialist) to gain expertise regarding working with international clients. The second recommendation would be to focus on buyers with whom you share their language and relate to their culture and background. You can belong to many different networks, clubs and groups in your city in order to get more familiar and establish relationships. Traveling abroad is also a great way. Finally, be informed of international news, i.e.: the interest rate and political and economic status of their country of origin.
Most prospects are ignorant of U.S. real estate procedures and special requirements applicable to foreigners. It is important that you spend some time with your clients to explain those procedures and regulations. You must become their trusted adviser.
The agent needs to know most international buyers are looking for a suburban area, and about a quarter of them are looking for a more central city/urban area. But in all cases, they are looking for a safe area where they can spend quality time with their families.
The agent has to investigate the profitability of the investment in U.S. real estate. Many professionals in the real estate ecosystem are ill prepared to work with foreign investors. It is important that you select and qualify professionals who will be in a position to help you and your clients; such professionals are closers at the title company, international tax CPAs, and translators. With the recent shift by the banks to provide loans, it is even more important to have resources available, such as lenders familiar with the process when working with clients with no U.S. credit history. Immigration and business lawyers can help and guide your clients on the way to approach some legal matters. It is a plus if those professionals speak the same language as your clients. Your bag of tricks should also include moving companies, insurance agents, contractors, remodeling companies and appraisers.
Relocation companies can also be part of the process. Offering assistance in logistics and administrative tasks such as obtaining a Social Security number or a driver’s license. Things we take for granted can become a huge obstacle for an international buyer. For example, try opening a utility account without a Social Security number!
Always try to put yourself in your client’s position and follow up closely on every step of the process.
International buyers look for experts and experienced agents. One who might know their language and possess cultural affinity. Agents that shows patience, experience and expertise and can explain American real estate practices will certainly be successful in the global market.
Realtor, CIPS, MCNE
HAR International Advisory Group Member