Peggy Fong Chen is a California real estate agent who sold 80 homes last year, mostly to Chinese buyers, who mostly paid cash. Chen’s current listings range in value from about $500,000 to $7.1 million.
Peggy is an expert in Chinese buyers. If you also want to sell more to Chinese buyers, there are three facts you need to know.
1. There might be a long lead time.
A buyer located in Shanghai can’t just pop into open houses in the United States on a weekly basis. So when Chinese buyers do their research before buying, most of it is done in China via three channels: the Web, their personal social network, and property expos and events.
Not all Chinese buyers do this research. Hua Guiping from Shanghai bought a 500,000-euro, three-bedroom house near Lisbon, Portugal, last year. Unfortunately, she soon discovered online that similar homes in the same development were selling for half of what she had paid.
But Hua is one of the exceptions that proves the rule. Most buyers do learn about a market before purchasing.
To connect with buyers in the research stage, you can advertise online in Chinese and on a website that is hosted in China. A second strategy, to conduct in parallel, is to pack a suitcase and fly to China. The face-to-face interaction you can have with buyers at a property expo is priceless. You can build relationships and get a better sense of their needs.
Agents who attend these events often leave with a list of prospects and signed contracts in their pockets.
One show I recommend is the Beijing Property Expo, coming up this April. If you can’t make it, however, don’t worry. Check the “Upcoming Events” list on our website for suggestions.
2. Their transactions are different
One way Chinese buyers are different is that they often open their networks to an adviser who has won their confidence. Agents who are honest and helpful with a buyer can find themselves invited to also work with that person’s friends, family members and colleagues with very little additional vetting.
Those who abuse the buyer’s trust, such as those Hua worked with in Portugal, might find themselves shunned.
Chinese buyers are also unique in that they pay cash about 76 percent of the time. Investment-oriented buyers are increasingly discovering the power of leveraged financing, but cash buyers are still the majority.
Chinese buyers are often only in town for a few days. We connected Los Angeles Realtor Coco Shelburne with a Beijing family. Then, suddenly, she learned the family would be in town looking at homes.
Shelburne helped her buyer make an offer on the second day of property hunting, and it was accepted.
3. For every one today, there will be two in 18 months.
The third fact is that the Chinese buyer market segment is growing quickly and sustainably.
The most recent data show that private wealth in China is growing by a remarkable 49 percent per year. The number of new millionaire households jumped by 82 percent to 2.4 million in a single year.
“Time” magazine calls this “staggering growth.” The U.S. still has more millionaires, but at just 18 percent millionaire growth, it might not be able to keep its lead for long.
Wealthy Chinese buyers have a great pent-up demand for property in the U.S. because only recently has it begun to be possible for them to buy it. With only about 4 percent of Chinese holding passports, compared with about 30 percent of Americans, the potential growth is huge.
The Bank of England projects that Chinese investors could increase their holdings of overseas assets by 600 percent over the next several years. That’s not a typo — it’s really 600 percent.
What all this means for real estate agents and brokers in the U.S. is that the Chinese buyer is not going away. In fact, at current rates of growth, the number of Chinese millionaires — those who have the wealth necessary to buy U.S. property — is doubling every 18 months.
Andrew Taylor is the co-CEO of Juwai.com.