According to the National Association of Realtors, the Chinese remain the top foreign buyers of U.S. real estate.
Donald Trump‘s presidential victory appears to be boosting interest in American property investment among this group, according to a recent study conducted by my company, East-West Property Advisors.
The survey of 500 mainland Chinese citizens conducted immediately after the election showed that 53 percent of Chinese real estate investors are now more positive about U.S. property. Only 16 percent said they were less likely to buy in the U.S.
Trump’s reputation as a businessman aligns with the mindset of many Chinese, East-West notes.
Popular states among Chinese people include California, New York, Texas, Washington and New Jersey.
Aside from the typical East and West Coast locations, Chinese buyers have become more widely distributed across the nation, geographically speaking.
Second-tier or third-tier cities have been gaining traction. Over the last 12 months, East-West Property has seen more than 30 percent of all inquiries for cities show interest for locations outside of the three typical destinations (New York, San Francisco and Los Angeles).
The main forces behind this trend are education and investment. About 300,000 Chinese students come over to the U.S. to study every year. And this number keeps growing, resulting in rising Chinese interest in buying a house across more American cities that offer good education options.
Furthermore, as the Chinese are maturing in their investment style, they are keen to look for houses all over the country that produce solid rental returns.
American real estate agents often ask how to best prepare for these overseas buyers — and how to close deals. We can provide insight by sharing some examples.
Mr. Li moves to St. Petersburg, Florida
In 2015, Mr. Li from Beijing decided to send his high-school-age son to study at a private boarding school in St. Petersburg, Florida.
However, his son could not get accustomed to the food there, and his health was deteriorating. Mr. Li was worried and, realizing that his son still had another two years to study, moved to St. Petersburg himself to cook for his son every day.
The school is not located in one of the top destinations for Chinese buyers, with little information available in China about this particular real estate market. Our team in China helped him understand the differences between the real estate processes in China and the U.S., the local market in St. Petersburg, what he needed to prepare before he flies over and more.
Agent Wu, one of our member agents who lives close to the school, was introduced to Mr. Li before he made the trip.
With knowledge of Mr. Li’s purpose, budget, type of property of interest and distance from the school requirement, Agent Wu was well prepared to guide him through a week of property showings.
Finally, Mr. Li selected two properties of interest close to his son’s high school. One house was under a pending contract, but the other was still on the market — a bigger and newer property.
Wu assisted Mr. Li with making the offer and negotiating the price for the second property. The offer for the second home was not accepted.
However, two weeks later, the first property was released from contract — and Mr. Li successfully got the deal.
The main takeaways for U.S. real estate agents: Build a relationship with prospective Chinese buyers before they actually arrive, and have deep knowledge about the schools in the town that you cover.
Building a relationship can be done different ways, but finding Chinese buyers where they are increases your chances of closing that deal. WeChat is the most popular social media tool in China and allows instant text messages, voice calls and many other functionalities right from your phone.
Moreover, gain deep knowledge about the school systems in your city. Spend time with families who have children and listen to their stories about their school life. Look up school ratings and understand the application process.
Mr. Yu finds home in Detroit
Mr. Yu, based in Shanghai, has been investing in real estate over the last 15 years. He owns two properties in Shanghai and one in Tokyo. He is now considering investing in the U.S. for the attractive rental returns.
Mr. Yu had heard about Detroit as an investment option but had many questions and concerns.
There is a large amount of information available on the internet about Detroit, but he also noticed that many sources can’t be trusted.
Struggling with this lack of trust, Mr. Yu asked us questions about the city, the risks, rental returns, property management and taxes.
Here, the key was to address his questions promptly and professionally. Successfully accommodating the time difference and language needs allowed Mr. Yu to close the deal.
Sam Van Horebeek is a director at East-West Property Advisors, a U.S. real estate advisory firm based in China. You can follow on Facebook and Twitter.