Last year alone, foreign buyers put more than $7 billion in commission into the pockets of U.S. agents. Here are five tips from top agents to help you learn how to increase your share of that income.
Working with overseas buyers is just one niche in the real estate market, but they have the potential to be the most profitable niche of all. Last year alone, foreign buyers put more than $7 billion in commission into the pockets of American agents.
This $7 billion figure was calculated based on an NAR foreign buying report, which says that sales to foreign buyers — seller commission numbers are not included here, to be clear — totaled $121 billion from April 2017 to March 2018. At an estimated 6 percent commission rate, those sales generated about $7.3 billion in commissions.
To help you learn how to increase your share of that income, I asked some top agents for their cross-border buyer tips. Here are their five best suggestions.
1. Know the buyers’ motivation
Herman Chan, who has brokered over half a billion dollars’ worth of property with Sotheby’s International Realty in San Francisco, told me that one-third of his business is from offshore buyers.
Chan says that, in San Francisco, young tech and hedge fund hot shots from China were the biggest, highest-priced buyers over the past five years.
“They wanted to make a sound buying decision,” he said, “but it wasn’t their main driver.” Those buyers were treating real estate the way you might treat a term deposit: as a safe place to put your money, even if the returns aren’t great. They looked for trophy properties, big price tags and big floor plans.
Today, Chan says those big fish buyers have become rare. Now, his offshore buyers are much more likely to be looking for a better life for their kids.
Chan recently showed homes to two families from China whose daughters are attending the University of California, Berkeley. These buyers are looking for safety and convenience — which is why he showed them listings abundant in these benefits, including condo apartments in the Four Seasons tower.
When you know what your buyer wants, you know how to help them find the perfect home.
2. Familiarity breeds investment
You have heard the saying that familiarity breeds contempt. With offshore buyers, the truth is different. Familiarity often leads to a transaction.
Ben Chen, a broker associate at Berkshire Hathaway HomeServices KoenigRubloff Realty Group, says that few offshore buyers know anything about his hometown of Chicago.
“I think a lot of buyers are still not that familiar with Chicago,” he said. “But when they check out the city, they realize that Chicago is like a hidden treasure, and they want to invest here. Property in Chicago is much less expensive compared to Miami and Boston, and yet the rental income is almost the same.”
For Chen, then, a key to success with offshore buyers is educating them about your market. That’s especially true if you are not located in one of the most popular coastal and southern markets that foreign buyers are most familiar with. Once they understand your market and why it’s special, they are much more likely to buy.
3. Building trust is essential
They say that being trusted is a greater compliment than being loved. If that’s true, it’s even more true with offshore buyers. The extra geographic distance and cultural differences mean that it is harder to win the trust of foreign buyers — but more rewarding when you do.
Susan Post, director of relocation and business development at Berkshire Hathaway HomeServices Verani Realty in New Hampshire and Maine, believes that winning this trust is key to success with cross-border buyers.
“It’s about gaining their trust in the agent and the agent’s market knowledge, to ensure they really feel confident that the agent is trying to get them the best property at the best price,” she said.
One way to win trust is to provide exceptional service. That could mean everything from attending home inspections on behalf of foreign buyers, to helping them adapt to their new home by introducing the neighborhood, schools and local shopping.
Post says, “We even take the time to drive them around so they can see where they are and which location is right for them. We try to put ourselves in their shoes, coming to a location they may never have seen before.”
4. Be a passion player
Alan Tian is a top agent who runs a five-person team with ERA Singapore, based in the Asian city-state of Singapore. Singapore is one of the most international real estate markets in the world, which makes Tian a deep source of knowledge for American agents.
Tian has many practical tips for success with foreign buyers, but there’s something even more important, he says, than following the right strategy. It’s having a passion to serve buyers from other countries.
“I have five team members. We are very focused on providing the best service possible to foreign buyers. Passion and hard work are the most important traits I expect my people to have.
“Foreign buyers are a big market, and it’s worth it. My goal is to reach out to as many clients as possible, so I can help them secure their dream home.
“As long as my passion is there, I will continue to work for as many years as I can,” he said. “There is no time-limit for real estate agents.”
5. Go mobile
Our last piece of advice comes from Eric Chen, director of Asia Pacific Initiatives at Long & Foster Real Estate. Chen points out that the mobile phone is often the search and communications tool of choice for overseas buyers.
“If you want to work with buyers from Asia or many other parts of the world, your marketing has to be mobile-friendly,” Chen says.
Asian buyers typically use their smartphone even more than the average American. Both China and Southeast Asia have more mobile internet users than the entire U.S. population. China has 620 million mobile internet users and Southeast Asia has 391 million.
Chinese make payments via their mobile phones so often that the Wall Street Journal has called China the “first cashless society.” The mobile phone has replaced the desktop computer, and mobile apps have replaced email, fax and credit cards.
To work with these buyers, your website needs to be mobile-ready. If you post virtual reality tours, video or floor plans on your listings pages, make sure you don’t repeat the mistake of many others by failing to ensure they will work for people viewing with a smartphone.
On your website, make your contact information highly visible and easy to find. Remember, even a little scrolling seems like a lot on a small mobile screen. Also ensure your phone number is clickable so that mobile users can dial the number just by tapping it with their finger.
Finally, optimize your web design so that large pictures and complicated formats don’t slow down your page’s loading speeds. If it takes too long for your pages to load, impatient fingers will have tapped onto someone else’s page before you have the chance to acquire a lead.
Follow these foreign buyer tips, and the world will be your oyster.