Marie Shoemaker, Director for Network Education Services at Berkshire Hathaway HomeServices
Working with international buyers can be extremely rewarding, but it has its challenges. Newcomers to the U.S. real estate market can need a lot of hand-holding in the early days.
Innovative agents keen to work with international buyers should look at ways of smoothing the buying process, according to Marie Shoemaker, director for Network Education Services at Berkshire Hathaway HomeServices this week.
“They can build a network of specialists — attorneys, tax advisers, accountants, interpreters” and others, she said, to help simplify every step.
This is likely to be one of the suggestions Berkshire Hathaway HomeServices agents will be discussing in the new specialized Certified International Property Specialist (CIPS) training the Irvine-based brokerage network has designed to build up agents’ international transaction knowledge.
Not your average international transaction course
This is not just a course for agents working in the usual big-city centers with a strong international buyer base, she said.
The course will include up to five days’ study of international business markets in Europe, Asia and the Pacific Islands, and the Americas, in addition to information on transaction tools, currency and exchange rate issues, cross-cultural relationships, regional market conditions, investment performance, and inheritance and property tax issues.
As well as National Association of Realtors (NAR)-CIPS certified trainers to run the course, the network will be inviting other companies — such as foreign exchange specialist, Moneycorp — to come in and talk about what they do.
‘Demand has been huge’
“There is an abundance of global business that is happening right now through the U.S.,” said Shoemaker. “And it’s not just isolated to gateway cities such as San Francisco, Los Angeles and New York.”
“The demand from agents in the network has been huge — we are just now rolling it out, and my email inbox is full of requests from broker/owners from all over wanting us to bring it to them.”
Berkshire Hathaway HomeServices has 40,000 agents and 1,200 offices in 47 states.
“Few brokerage networks offer CIPS training,” said Peter Turtzo, Berkshire Hathaway HomeServices’ senior vice president for International Operations. “We want our agents to earn their unfair share of the $104-billion international market in the U.S.”
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How to build a network
Some agents just need the confidence to go out and build international contacts in their home city, said Shoemaker.
“Let’s say you decided you wanted to work with an Irish clientele — there is an Irish pub in every state, in every city,” she added. “If you want to reach out to Chinese clientele, join a mahjong club, or if you are interested in the British market, join a soccer club that is aligned with the U.K.
“If you have an international company in your area, go to the HR department,” she continued. “Get to know these people, and let them know the services that you offer and that you have a group of specialists. Be their ‘go-to’ person.
“The contacts are there if you are willing to go out and look for them.”
Attract buyers from all angles
Shoemaker will be urging agents to think of attracting international buyers from all angles.
“When we think of international real estate trends, we tend to think of people coming into the U.S.,” she said. “What we fail to think about is over 7,000 people a day in the U.S. turn 65 — and these people represent outgoing referrals.”
They are moving to Mexico and Belize to stretch their Social Security checks, she noted, and they will be meeting people in these countries who may be interested in buying in the U.S. Mexico represents the third-biggest group of internationals buying property in the U.S.
China currently top the list of international investors, followed by Canada, Mexico, India, U.K., Germany, France and Venezuela, according to NAR figures.
“When foreign buyers are purchasing in the U.S., they tend to buy in close proximity to their homeland,” said Shoemaker. “More people from the UK are buying in Florida, and people immigrating from Mexico are buying in Arizona or Texas.”
Heading south
Although Canada has lost its top place as international real estate buyer in the U.S., the Royal Bank of Canada, the country’s largest bank, is easing the way for Canadians to purchase a second home to retire here — and there is still plenty of appetite thanks to two of the worst winters in Canada in the past 25 years.
Alain Forget, head of sales and business development at RBC in the U.S. based in Fort Lauderdale, Florida, said Canadians are still getting used to their weaker dollar against the U.S. due to low oil and gas prices, taking the Canadian dollar from 85 cents to 75 cents against the U.S. dollar. It is the weakest it’s been in the past 11 years, which might explain the Chinese overtaking Canadians as real estate investors, but Forget thinks Canadians will get used to this.
“This is an issue we are trying to help brokers and builders overcome,” said the banker.
“Waiting right now is not an option — property will be more expensive, and interest rates will be higher,” he added.
Many Canadian buyers are taking less of a currency hit by taking out a mortgage in the U.S.
However, “there are a lot of differences between getting a mortgage in Canada and getting one in the U.S.,” said Forget. Canadians are not used to closing costs, for instance.
In the year to March 2015, Canadians spent $11.2 billion in real estate in the U.S. Tending to buy mainly in Florida, Arizona and California, they spend, on average, close to $400,000 on second homes or vacation properties, he said.
Property is still reasonably priced in certain U.S. markets compared with the expensive Toronto and Vancouver ones, said Forget.
“A property in La Quinta or Palm Springs that costs $800,000 or $900,000 would cost Canadian $2 million in Vancouver,” he said.
Buyers from China
While the Chinese may be the biggest buyers in the U.S, with Juwai.com predicting they will be buying $100 billion in real estate by 2020, the Chinese government has clamped down on allowing Chinese buyers to move large sums of money out of the country — so in some cases these buyers are needing mortgage advice.
Becca Zou, a Chinese-born Seattle agent for Berkshire Hathaway HomeServices, said she has three or four mortgage brokers she connects her Chinese buyers to when arranging financing in the U.S. In the last year, Zou has had around 350 Chinese groups through her Bellevue office in Seattle.
Chinese buyers are sending funds out of China with multiple family members to get around the recent restrictions.
“I still get tons of inquiries but don’t have (as many) serious buyers,” said Zou.
“Quite often they don’t have the full amount — they put more like 30 or 40 percent down.”
On average, Zou’s buyers are looking to spend at least $1 million.
“Next week I am closing on three transactions, two of which are being financed through loans, one in cash,” said the Seattle agent.
Zou works with a variety of international buyers, as Seattle is becoming an increasingly popular head office for multinational corporations.
