International Clients in Your Local Market

Foreign direct investment in U.S. real estate has increased sharply from $38 billion in 1997 more than $50 billion in 2002. Although there are a number of factors involved in this trend, most notable are the globalization of the real estate industry and the inflow of foreign investment caused by favorable conditions in the United States and weak conditions abroad. U.S. real estate is attractive to foreign investors for a number of reasons, including its diversification, openness, size, selection, and investment-grade quality.

Working with international real estate clients in your local market can be an exciting, adventuresome experience. It may lead you to work with higher-level and more sophisticated investors. It can create opportunities for meeting people from different cultures and for traveling to other countries. Many real estate professionals also find the international specialty to be personally rewarding because it allows you to make friendships and grow in new areas.

To evaluate your potential for developing an international real estate practice, consider the following requirements for working with international clients:

• Commitment. Starting an international practice can require more time, money, and effort to succeed than a domestic practice, and it requires a long-term commitment. Results are often slow in coming, and there is no guarantee that there will be any business at the end of the development period. However, with patience, international business can be very lucrative. To realize the opportunities, you have to make a commitment to working in a business that has unique challenges.

• Time. Expect to spend time establishing relationships before any “real” business can begin. Transactions themselves also take longer to complete in the international area due to distances, time differences, money transfers, etc.

• Costs. The costs of networking, marketing, promoting, and general overhead are much greater than in a domestic business. For example, faxes, telephone calls, travel, legal fees, document preparation, accounting, and tax reporting will all be more expensive when working with international clients and customers.

• Education. Development of cultural understanding and international expertise requires ongoing education and training. In addition to the Certified International Property Specialist (CIPS) program offered by the NATIONAL ASSOCIATION OF REALTORS®, many seminars are available on international business. The International Consortium of Real Estate Associations (ICREA) offers an online Transnational Referral Certification. Colleges and universities, world trade centers, firms and non-profit associations, such as the International Real Estate Federation and the Royal Institute of Chartered Surveyors also offer courses on international business. Knowing and understanding the foreign market with which you are working involves reading, research, and probably taking further classes in international real estate.

• Keeping Current. Invest time in staying up to date on world events and their impact on global economic and political trends, as well as the legal, tax, and regulatory factors that affect international transactions. Make it part of a regular routine to read newspapers, magazine articles, and online information on the subject.

• Adaptation. Differences in business practices, banking and legal procedures, customs, or time zones require changes in the way you conduct business. You must understand, appreciate, and be able to respond appropriately to these differences. You can become familiar with other cultures and countries by reading, attending courses, and traveling. This also involves people skills—being able to apply what you know to your interactions. You may have to redefine your philosophy and/or attitudes concerning business associates and clients in order to communicate and negotiate effectively.

• Networking. It’s important to begin a network with other professionals and organizations, including government offices and international organizations. Formation, organization, maintenance, and cultivation of your network in an international context can be daunting due to different practices and levels of development in other countries. However, real estate professionals view their networks as essential to business success, and they know that one of the most effective ways to build a personal network is to be part of the networks of others.

The annual REALTORS® Conference & Expo presents a valuable opportunity to learn about other countries, meet key players, and participate in international real estate events. More than 20,000 U.S. real estate professionals and approximately 1,000 real estate professionals from more than 35 foreign countries usually attend this conference.

Excerpted from “Expand Your Market,” a course developed by the international section of the NATIONAL ASSOCIATION OF REALTORS® that provides elective credit towards the Certified International Property Specialist (CIPS) designation. To learn more about this designation, click here.

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