 |
|
| NATIONAL ASSOCIATION OF REALTORS® | Videos | Store | Library | Directories | Need Help? |
| Search REALTOR.org | Register | Login | My Account | NRDS | |
 |
REALTOR® ASSOCIATION EXECUTIVE
| |
| Borders Be Gone California practitioners see their markets expand internationally By Kevin Hawkins Africa, Bulgaria, Brazil, Canada, Colombia, France, Germany, Greece, Hong Kong, Indonesia, Israel, Japan, Jamaica, Mexico, the Netherlands, Pakistan, the Philippines, Poland, Russia, Singapore, Taiwan, Thailand, Venezuela and Vietnam. This list isn't an itinerary from a travel agency, but just some of the countries where California REALTORS® have strong real estate business connections. That's because international real estate transactions rapidly are emerging as huge business opportunities for U.S.-based REALTORS®. In fact, more than 600 REALTORS® from all of these countries, as well as the United States, already have earned their CIPS (Certified International Property Specialist) designation from the NATIONAL ASSOCIATION OF REALTORS®. Armed with extensive training about the world's markets and diverse cultures, CIPS candidates must already have international experience under their belts before earning their certification. Currently, another 700 practitioners around the world are in the midst of training, which includes five courses and six days of instruction. The growth of the CIPS Network is remarkable, considering the designation has been available only since 1992. The result is a burgeoning international network of real estate professionals that puts a REALTOR® in Fresno just a mouse-click away from initiating a deal with a counterpart in the Ukraine. Indeed, technology, U.S. investment overseas, direct foreign investment in the U.S., and explosive immigration in the 1990s are driving the globalization of the real estate business, says Dr. H. Nathan Booth, president of the Northern Virginia Association of REALTORS® and an international practitioner himself. “We've had the largest number of immigrants we've ever had in the last decade,” Booth says. “Clearly, the 10 million immigrants who are here now are all wanting that American Dream; they want to buy that home.” According to Fannie Mae's national housing survey, new immigrants, on average, are more predisposed to have a much stronger desire for homeownership than the average U.S. citizen. Booth, who is a leading CIPS instructor, also is an NAR regional director for the Eastern European countries. “I have Russian, Polish, and Czech Republic clients,” he says, “and I'm working with people in Romania and Bulgaria.” For real estate professionals, Booth says, the international designation is no longer a luxury. “Having these skills ... dealing with other cultures ... is essential. In fact, it's a survival skill,” he maintains. It's a Small World “The world is getting smaller,” explains Beverly Hills-based Takashi Misawa, director of international marketing for Prudential Referral Services, who works with clients around the world, from Osaka, Japan, to Berlin, Germany. Bob Miller, head of Burlingame's E. Robert Miller & Associates, which specializes in representing overseas owners, agrees. “Because of computers and the Internet, the world is smaller. It's brought us closer.” As an example, Wendy Furth, of Fred Sands Properties in Northridge, notes, “I'm on a plane to San Francisco talking with someone from Tokyo about purchasing a mobile home park in Arizona.” And while Furth, Miller and Misawa live near major gateway cities, places where thousands of new immigrants have come to make their new homes, the Internet, some agents maintain, allows anyone anywhere to conduct international transactions. Jim Hildreth, of RE/MAX Park Place REALTORS® isn't based near a gateway city, but in Sonora. He tells fellow agents that the “world is in your notebook computer. With Yahoo!, IRED (International Real Estate Directory) and [translation] software,” he says, “you can conduct business anywhere in the world.” As point-of-fact, just minutes after saying this, Hildreth receives an E-mail from a Russian living in Moscow who has an apartment overlooking the Kremlin that he wants to sell. Hildreth also recently practiced what he preaches by selling a property in his market to someone in Italy. He got the referral from a fellow RE/MAX agent who needed someone who knew the marketplace and worked with “virtual tools.” Hildreth fit the bill. It took six months of exchanging E-mail and documents, he says, but Hildreth was able to help his Rome-based customer purchase a California bed-and-breakfast. For Steve Goddard, of RE/MAX Beach Cities in Manhattan Beach, it's TRW calling him up to ask for his help moving one of the company's executives from Belgium to Southern California. “We had to sell his house in Belgium and close escrow in order to close our transaction here in the U.S.,” Goddard notes. The incredible shrinking world also is getting smaller because more than 30 state and local REALTOR® associations have established international business outreach groups, according to NAR. For example, Susan Chou, broker/owner of Pasadena-based Premiere Properties, heads one of these organizations based in Southern California, the Chinese American Real Estate Professional Association. Established in 1983, the group hosts a half-dozen events each year and partners with seven other local Chinese American professional associations to enhance members’ local networking opportunities as well as share their international experiences. Chou notes these activities allow members to learn about things that aren't commonly known “but are very important when dealing with international transactions.” Allen Okamoto, of San Francisco's T. Okamoto & Company, strongly believes in cross-cultural networking. While he is of Japanese descent, he serves on the board of directors of the Chinese Real Estate Association of America, calling it “an invaluable source of contacts and business.” International real estate skills, Furth points out, are just as applicable at home as they are around the globe. “We have it right here in our own backyard,” she says, “as California is the world in its own microcosm.” Goddard concurs, noting the diversity of markets such as Southern California and the Bay Area serves as a catalyst for explosive international growth ahead. “There are three more languages spoken here in L.A. County than in the United Nations,” he says. The Big One While the world may be getting smaller, international transactions are often bigger. But bigger, as real estate professionals know, also can mean more challenging. Take Okamoto's $70 million deal. In October 1989, Okamoto was working with a major Tokyo-based real estate developer who was purchasing a large apartment complex in South San Francisco. It was to become the city's largest single transaction that year. This client, Okamoto says, “literally was writing a check for it.” As Okamoto was about to close the transaction, the Loma Prieta earthquake hit. Okamoto's deal nearly collapsed, literally, as the complex was on filled land. Fortunately for Okamoto, the complex was undamaged because it was newer and built to the latest earthquake standards. Still, the client had to fly in from Tokyo to inspect the property himself and the transaction was delayed for a brief period. While the complexity of Okamoto's unique experience may be atypical, many CIPS designees will tell you that the large transaction size is not. For Booth, one memorable and large transaction came from working with a group that was looking for warehouse space. “It turns out the group represented the interests in 13 refineries offshore in Belize,” he says. “It became that ‘miracle one,’ where the figures are so big you ask yourself, ‘Could it be true?’” Booth must be asking himself that same question again today. A German investor who wants to place $300 million in U.S. real estate investments contacted him recently to handle the transactions. Okamoto tells of an East Coast CIPS colleague who was complaining about a European company that wanted to hire him to sell a property, but was only willing to pay a “one-half of one percent commission. He was outraged,” Okamoto says, “until his wife ran the numbers and told him the commission would be somewhere around $3 million.” Miller points out that accepting a lower commission cut for a larger international deal isn't always the case. In fact, just the opposite can occur because commission structures vary worldwide. For example, Miller had a U.S.-based client that wanted to sell his holdings in Buenos Aires, Argentina. The client owned a cattle ranch, a farm, a condominium, two homes and an office condo. By contacting a fellow CIPS member in Florida, Miller made an important connection: the Florida CIPS member had a friend who was a prominent broker in Buenos Aires. Miller was penciling the deal and figuring the commission split when he decided to review an NAR-provided book that discusses how real estate transactions are structured in other countries. “I discovered that in Argentina the buyer pays the broker his commission,” Miller says with astonishment. In that moment of discovery, his commission doubled. “We're talking about a lot of money,” he says with a laugh. His next international project? Miller will travel to Tokyo as part of a team to survey nearly 900,000 apartment units owned by the Japanese government and assess how it's managing the properties, as well as present new ideas for improvement. Meanwhile, Goddard currently works with a network of agents on a transaction in Puerto Vallarta that will build some 700 homes and condominiums. “We're talking about marrying our franchise here with one [in Mexico] and dual-promoting the project,” Goddard shares. Dispelling a Few Myths The greatest myth about doing an international real estate transaction, some CIPS Network members say, is that you must speak another language. That's simply not true, says Booth. “It's not true because the international business language of the world is English,” Booth notes. “We do tell [CIPS designees] that they need to learn phraseology to be polite. But it's very dangerous, even if you think you know the language, to try and negotiate a real estate transaction in it, because it's easy to not get the right term or the right word.” Booth also notes conventional thinking says dealing with foreign investors requires a “kindergarten approach of walking them through from A to Z.” While this sometimes remains true, Booth says the profile of most international investors today is that of a customer with greater business savvy. They also have higher expectations for performance than the typical U.S. customer. “International investors come armed with much more information,” Booth says. “They could already have shopped for the money, know what the rates are and how to play lenders off each other to get the best rate, and already have done virtual home tours. They really have done quite a bit before they wind up in a REALTOR®’s office.” The challenge for REALTORS®, Booth notes, is demonstrating the value one brings to the transaction. “Otherwise, one of two things will happen,” he says. “Either they'll want to price down what they want to pay for your service, or they'll decide they can do the transaction without you.” Gettin’ Global Experience California REALTORS® conducting international real estate transactions often combine the traits of having a wealth of international experience as well as a penchant for travel. Goddard is a reciprocal director of NAR and serves as the National Association's Ambassador to Mexico. He's been involved with international real estate since he started in the business 25 years ago and today has a half-dozen transactions in various stages throughout Mexico. He owned a travel agency, traveled extensively, and has taught himself how to “say ‘good morning’ in 29 languages.” Chou, who was born in China and was raised in Taiwan, spent nearly two decades in computer software project management. Ten years ago, she joined her husband, who's a real estate developer, to embark on a real estate sales career. Her international ties to clients in Indonesia, Hong Kong, China and Taiwan catapulted her to win Prudential Real Estate's national Rookie of the Year award. Hildreth went to school in Mexico, was a member of AMPI, Mexico's equivalent to NAR, and traveled extensively through Costa Rica and Guatemala to study their real estate markets. His interest in getting a CIPS designation was done “out of a love for travel and respect for other nations,” he says. Today, one out of every 10 of Hildreth's transactions is international, a remarkable feat considering his Sonora location. Others come naturally to the business through cultural affiliation. Okamoto started his real estate sales career working with Japanese-American clients in 1965. He spent the majority of the 1980s handling purchases of apartments, shopping centers, golf courses and hotels. “It's been quite a roller-coaster ride,” he says, noting the rise in the ‘80s and fall in the ‘90s of Japanese real estate investment. The Future Boom International investment often is tied directly to the strength of the real estate investor's country. In the 1980s, for example, when economies in Asia and much of the world were strong, investments in U.S. real estate grabbed headlines. Japanese investors bought the Exxon headquarters building in Manhattan's Rockefeller Center for $610 million, while the British, who once burned Washington, D.C., have pumped more than $1 billion into real estate development and purchases in the U.S. capital. But while purchases of “trophy properties,” as Okamoto calls them, grabbed the headlines, things can turn on a dime when it comes to foreign investment. “Someone turned off the light switch in 1990,” Okamoto says. In fact, according to the Urban Land Institute, Japanese investors owned $15.2 billion in U.S. real estate in 1990. In 1996, that figure had been cut nearly in half to $8.8 billion. While the news media widely reported fears about the once rapid pace of U.S. real property purchases by foreigners, the fact is very little of the U.S. currently is owned by foreigners. According to the Urban Land Institute, only 2.5 percent of all U.S. property is foreign-owned, or about $500 billion of our $20 trillion real estate market. But in certain U.S. markets, international real estate investment is powerful, and experts predict this trend will continue, largely because of the political and economic stability the U.S. has offered historically. That's why both Okamoto and Misawa strongly believe that international investors from Asia will return when their economies bounce back. Okamoto notes it's not just those with ties to the Pacific Rim who will benefit. “I think C.A.R's International Forum and the CIPS program are positioning us for an incredible international real estate boom,” he says. Booth agrees, adding that the numbers favor the real estate professionals who embrace international transactions. “There doesn't seem to be an adequate number of people to service this market,” he says. “So, international investors are really out there looking and when they find someone who is certified to do it, they're very happy and you get a lot of referral business from the fact that they pass your name on.” Booth also predicts that once the U.S. real estate market suffers its next downturn, real estate professionals with international real estate skills will be the ones to survive. “Those survivors will have to have global skills and technology-based business paradigms to get their work done. If they don't,” he says, “they're just going to be left on the wayside.” Kevin Hawkins is a freelance writer who lives in Bainbridge Island, Washington. (This article was reprinted with permission from California Association of REALTOR®’s California REALTOR® magazine, May, 1999.) |
  |
 Copyright NATIONAL ASSOCIATION OF REALTORS® Headquarters: 430 North Michigan Avenue, Chicago, IL. 60611-4087 DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 1-800-874-6500 Terms of Use | Privacy Policy | REALTOR.com | Contact NAR | Site Map |