Conducting international business has long been acknowledged as an opportunity for REALTORS® to expand their client base and enhance their incomes. However, there has been a dearth of empirical analyses that supports this perception, primarily due to the lack of quality international real estate data.

This analysis, based on a recent survey of REALTORS®, investigates the impact of international real estate activity Consistent with the CIPS Network, an international real estate activity in this study is defined as one in which any component of the deal (buyer, seller, or source of financing) is from a foreign country. on REALTORS®’ income, and identifies the factors that may help REALTORS® initiate or even accelerate their international involvement. While international deals are a small percentage of total real estate activities, the analysis shows that there may be benefits associated with international real estate activity for REALTORS®.

Findings

Ninety one percent of REALTORS® conducting international real estate business identified themselves as residential specialists, while the rest were commercial/investment specialists. Fifty-two percent of REALTORS® involved in international real estate business possessed a NAR designation, while 19 percent had the CIPS designation. Respondents included REALTORS® in the U.S. and 13 countries such as Brazil, Bulgaria, Canada, Costa Rica, Czech Republic, Denmark, Ethiopia, France, Iran, Mexico, New Zealand, Romania, and Singapore. Nearly 90 percent of those surveyed generated part of their income in the year 2000 from international real estate activity.

Analysis of the survey results using advanced econometric analysis shows that REALTORS® conducting international transactions have a positive and statistically significant impact on income. While these results do not necessarily imply causation, REALTORS® who conducted international deals in 2000 generated higher income. This finding was consistent across all four regions of the U.S. as defined by the Census Bureau.

	Median Income of REALTORS®
	Without International Deals / With International Deals
Northeast	$25000 - $34999 / $35000 - $49000
Midwest	$35000 - $49000 / $50000 - $74999
South	$25000 - $34999 / $50000 - $74999
West	$35000 - $49000 / $50000 - $74999

	Median Income of REALTORS®
	Without CIPS / With CIPS
Northeast	$35000 - $49000 / $100000 - $149999
Midwest	$50000 - $74999 / $75000 - $99000
South	$35000 - $49000 / $75000 - $99000
West	$50000 - $74999 / $75000 - $99000

Initiating International Deals

Given the statistically significant positive effect of international real estate activity on income, the study looked at factors that could help facilitate or “jumpstart” REALTORS® international real estate activities. Results of the study indicated three key drivers:

· Obtaining a CIPS designation,
· Knowledge of languages other than a native language, and
· Location

Holding the CIPS designation has a statistically positive impact on clinching international deals. Notably, the CIPS Network helps REALTORS® to be better informed of changes in the global real estate environment by providing up-to-date global real estate and other relevant information. It also facilitates direct access to other fellow designees outside their countries. At the same time, the CIPS designation helps provide some assurance to international buyers who are unfamiliar with the market they are entering.

Knowledge of languages other than the REALTORS®’ native tongue also has a positive and statistically significant impact on handling international deals. This finding was consistent across all regions in the United States.

Location is the final factor that had a positive and statistically significant effect upon conducting international transactions. Most of the international transactions of US-based REALTORS® in 2000, which have been primarily with permanent resident aliens, occurred in locations with high levels of immigration. Transactions with permanent resident aliens were highest in the South and West – regions identified by the Census Bureau as having the greatest number of immigrants. This suggests that REALTORS® seeking international opportunities should tap markets where immigration levels are high.

Anecdotal Recommendations To Increase International Opportunities

Other anecdotal recommendations from REALTORS® that have successfully expanded their international real estate opportunities include:

· Understand the culture of the international client
· Research immigration and tax laws
· Attend international real estate conferences
· Establish a presence on the Internet

Methodology

The sample for this analysis was drawn from 727 responses to an electronic survey conducted in March and June 2001. There were 536 usable responses. Six respondents were dropped from the sample since the scope of this analysis only includes members of the NATIONAL ASSOCIATION OF REALTORS®, while another 185 respondents were eliminated due to missing data on the location in which respondents conducted business.

This analysis of the relationship between international real estate activity and income is based on a logistic regression model. In order to extend the analyses of the determination of income, an international exposure variable was included along with the traditional independent variables such as CIPS designation, other NAR designations, knowledge of other languages, location, and the type of firm (franchise or independent). Note that some traditional factors such as education and experience were excluded from the models due to the survey’s data limitations.No published studies could be found that examined the effect of international real estate activity on income. Much of the existing literature that focuses on the determinants of REALTOR® income is centered on the relationship between educational requirements and earnings. Follain, Lutes, and Meier (1987), Glower and Hendershott (1988), Crellin, Frew and Jud (1988), and Jud and Winkler (1998) analyzed how licensing, schooling, experience, and professional training impact REALTORS®’ earnings. In general, these studies have found a positive and statistically significant relationship between educational variables and earnings. Most of the remaining literature explores the effects that firm characteristics and location can have upon earnings.

References

Epley, Donald R. U.S. Real Estate Agent. Journal of Real Estate Research, 2001, 21:3, 221-244.

Follain, J. R., T. Lutes, and D. A. Meier, Why Do Some Real Estate Salespeople Earn More Than Others? Journal of Real Estate Research, 1987, 2:1, 73-81.

Frew, James R. and G. Donald Jud, The Value of a Real Estate Franchise. AREUEA Journal, Summer 1986, 374-83.

Glower, M. and Hendershott, P. H. The Determinants of REALTOR® Income. The Journal of Real Estate Research, 1988, 3, 53-68.

Jud, G. D., R. C. Rogers, and G. E. Crellin, Franchising and Real Estate Brokerage, Journal of Real Estate Finance and Economics, 1994, 8, 87-93.

Jud, G. D. and D. Winkler, The Earnings of Real Estate Salespersons and Others in the Financial Services Industry, Journal of Real Estate Finance and Economics, 1998, 17:3, 279-91.

The Foreign-Born Population in the United States, U.S. Census Bureau, January 2001.