Last month, I was invited to a Global Real Estate Conference in Las Vegas. At a Referral Exchange, agents from around the world met, exchanged referrals and information about their countries. I had the opportunity to discuss how real estate is conducted in other countries and how different it can be from the way we practice in the U.S. I interviewed agents from three different continents, Australia, Brazil and Spain. I was amazed by what I discovered.
Ros Waters, Owner Real Estate Company,
Ros is an owner-agent in Australia, knowledgeable and fun to talk to. Australia has regulations similar to the U.S. and it is the easiest to do business from the three countries. Agents are regulated, have to have a license, have to be registered and abide by the law. Insurance is required. REIA (Real Estate Institute of Australia) is similar to our National Association of Realtors®.
A seller is represented by a listing agent and will have a written contract. There is no mandatory seller’s disclosure of a property. If a buyer retains a ‘Buyer’s Registered Agent’ he will pay the commission. This is popular in Brisbane, Melbourne and Sydney. Most agencies are run with listing agents solely. A contract is drawn up with conditions to be met, like financial approval and pest and building report (inspection). Once all the conditions are met, the contract become unconditional and the property will settle in 14 days. The solicitors draw the title and do the closing for a fixed fee. The buyer then will perform council searches, making sure everything in the construction of a home has been approved.
Tellea Moraes, Agent/Owner Real Estate Company
South America, Brazil
Tellea is a new owner of a U.S. franchised office in Recife & Carpina, Brazil. From the three countries this is by far the most difficult area to do business. He is in Recife, the fifth largest metropolitan area with more than four million people. With a tropical climate and the proximity to the Atlantic Ocean it is the most commercial hub of the area. Properties are sought after.
The real estate industry is not regulated. There is no licensing, registration or training requirement. There are no boards, associations or Multiple Listing Services (MLSs). Any person can call themselves ‘agent’. Properties are found by ‘word of mouth’ and ‘drive by-signs’. The transaction favors the sellers with no concern for buyers. Sellers will contact many agents and might give a different price each time. There are no written contracts or documents to sign. The transaction is based on the ‘word’ of the parties.
Tellea said that the transaction takes place when sellers and buyers talk. On average, an agent is not involved in 83 percent of the transactions. Once they agree verbally on terms, the buyer transfer the monies to a bank. The agent and the parties might decide to involve a notary to do a title search; 75 to 80 percent of the time properties are not found. Most agents will not do a title search and will transfer the money and close on the transaction. The buyer can hire a notary at a later time and in many occasions will find that the sale has been a fraud. This is the reason why Mr. Moraes purchased a U.S. franchise and is using regulated systems and procedures. The reaction from the sellers has been positive. He believes that this will improve the profession.
Bernar Jimenez, Agent/Manager Real Estate Companies
Last year in Spain, there were 95,000 new businesses and as a result, the real estate market increased by 10 percent. Bernar said that real estate is not regulated and any person can be an agent. Education is not a requirement. One thing that amazed me is that an agent is not required to know how to read. For an educated agent, it is very complicated to work with these type of agents. There are no Boards or Multiple Listing Systems.
According to Mr. Jimenez, the agent tends to find sellers. Seller and Agent sign an exclusive contract. When a buyer wants to see a home, buyer and seller has to sign a ‘Visitor Pass’ stating that the buyer saw the home. If the buyer decides to purchase, he will transfer one percent of the offer price to the ‘Agent’s’ account. Once the money is in the account, the buyer will submit an offer in writing and the agent will present it to the seller. The written offer has to include buyer’s ID to avoid legal problems. If the offer is accepted, a second document has to be drafted and signed. The buyer will provide 10 percent of the selling price to a notary. They will use a public organizer where he certifies the old ownership and the new; the property will be registered at the Property Registry of the town with the new buyer’s name.
We are extremely fortunate to have regulations, licensing structures, associations, MLS and a Code of Ethics! When searching for a referral partner on another country a thorough due diligence is imperative to protect your client.
These are important facts and questions to ask before referring your client:
- Is the real estate profession regulated?
- Is the agent licensed?
- Is the agent experienced, educated ?
- Is there a local association with a Code of Ethics?
- Work with agents that are associated with large US brands.
- Where there is not an MLS you must work with several agents to get access to the array of listings.
- Your client should contact a reputable Notary or Surveyor in the country where they are purchasing.
Ask yourself: Does this person match my style and the client’s? These guidelines will also give you an idea of what to look for and will help you to determine if you want to work with this person. Remember that you want to build lasting relations with agents around the world.
Enid C. Cleland is the Owner/Founder of The RE Company Luxury & International in Houston, TX