By Rabih Chamseddine
Houston is a melting pot: 25% of our city’s residents hail from international backgrounds. Additionally, foreign investors are increasing their real estate purchases in Houston and Texas, in general. If you want to tap into this emerging market and become an international client expert, there are a few things you need to consider.
There are to two main types of international homebuyers, in my opinion. The first buyer is one who recently moved to the U.S. and is likely to be unfamiliar with our domestic home buying process; neither they nor their family before them have been through the home-buying experience in our country. The second international homebuyer is a person who lives abroad but is looking to purchase real estate in the U.S .for the investment opportunity.
Both international homebuyer types reach out to real estate professionals to seek knowledge and information every day. They want to understand how the industry works here so they may make a smart investment decision. Normally, they don’t have a lot of connections in this country, so they come to us with faith and trust. If we can’t meet their expectations, they may move on to another, potentially less qualified source for knowledge.
When you help someone from overseas, you don’t have to speak their language; you just need to know how to deliver your message effectively. You should speak clearly and explain the definition of the terms we normally use, such as title company, survey, inspection, appraisal, equity, escrow, mortgage, and even mortgage insurance, to name a few.
Understand that buying a house is a culture shock to many international homebuyers. We know how different the home-buying process is from one state to another, so you can imagine how different it can be between diverse countries. Walking clients through the process step by step and going over their (and your) expectations will help them through this new process. When someone is moving to a new country with their family and kids, and shipping their belonging from overseas, mistakes can be costly. Most people I’ve encountered would like the ugly truth rather than a sugar-coated reality; therefore, under promise and over deliver.
Additionally, make sure you’re using the right type of communication for the culture with which you’re working. It is important to realize that not every culture communicates in the same way we do in the United States. Although we tend to do most of our communication via email, depending on their origin, your international clients will likely prefer to meet in person, over the phone, or by Skype. You need to find this out.
Having the right network for expats is mandatory. Referring your client to an insurance company that can’t provide a policy for someone without credit history might cost you that deal. Having a stellar team in place that specializes in working with international buyers is the best way to impress your foreign client and save your transaction from going wrong.
Also realize that financing a real estate property is not very common in a lot of countries outside the US. Thus, giving people the chance to own a property may be a unique lifetime opportunity but will require much explanation. When it comes to financing, there are many options for both the individual homebuyer as well as the international investor. For investors, these options will likely provide them more opportunity for larger returns on their investment. Remember, these investors are used to paying cash for their real estate investments, so opportunities that require only a 40% down payment allow them the unique ability to invest in two properties instead of just one.
You likely have strong relationships with mortgage professionals who deliver excellent service to your local clients. However, when it comes to an international transaction or dealing with an expat homebuyer, working with a mortgage banker who has been in their shoes will likely help the transaction close smoother. Like with all new real estate transactions, prequalifying your client is imperative. Ensure that a mortgage bank reviews their financial situation, and confirm that they are prequalified before taking the time to show them half the city. When it comes to the final step of the process–closing the loan–realize that verifying employment, income, and assets is more complex than getting them from a U.S. source. Therefore, it may take more time to gather every piece of their puzzle, and 45 to 50 days may be needed to close, in some cases.
However, in the end it will be worth it. Expat homebuyers and international investors are a very loyal group. If you take the time to learn about their culture and communication methods, while also making an effort to understand their ultimate home-buying goals, they will hopefully turn to you for future transactions and referrals.
Rabih Chamseddine is a 2015 HAR International Advisory Group appointed advisory panel member and a mortgage Banker with Sente Mortgage.