After Gloria Weinstein watched her Miami luxury condo sit on the market for more than a year, she fired her real estate agent. “I felt that everyone around here who could afford my condo had already seen it,” she says. But she found a new agent with European connections. Within four months, her condo sold to a German family.
Like Weinstein, other owners of high-end properties are looking beyond U.S. borders for buyers.
“Foreign money often can purchase what the local market can’t,” says Beverly Hills, Calif., broker Carmela Ma. To wealthy buyers accustomed to sky-high prices for puny places in crowded Tokyo or Brussels, a Palm Springs estate or a Palm Beach palace seems reasonable; and a ranch in Montana or a South Carolina plantation seems a steal.
But tapping the global market isn’t easy. Many countries don’t have multiple listing services, buyer brokers, national real estate franchises or relocation firms. Some don’t even require licenses for real estate agents.
“Most countries aren’t as advanced as the United States when it comes to real estate transactions,” says University of Denver professor Mark Levine. “And international firms have only recently been formalized.”
While the major U.S. real estate companies all have international arms, some of the best-connected luxury home brokers are independent operators or with small firms. Many, like Ma, a Hong Kong native, are foreign-born; others, like Dayton, Ohio, broker Ari Feldman, who specializes in Mexico, developed residential connections while navigating commercial deals.
“You need someone with personal contacts abroad, because foreigners only do business with people they trust,” says Feldman.
The National Association of Realtors is trying to link these specialists through its international section, which has 1,500 members in 27 countries.
To tighten quality standards, the trade association also offers a Certified International Property Specialist designation, which agents can earn by attending five days of classes and conducting three international transactions. So far, only 335 agents world-wide have earned the designation.
Because distance and culture complicate transactions, sellers need to investigate an international agent’s credentials thoroughly. Though agents don’t need to be bilingual, they do need to be up-to-date on currency exchange rates, international banking practices and tax laws.
At closing, having a foreign buyer generally doesn’t make a difference, but it can during the early stages of a deal. Qualifying is especially difficult, unless the buyer shows up with a bank letter of credit.
According to Ma, foreigners, and especially Asians, tend to be reserved about their finances, and may be funneling funds through a tight-lipped tax haven like the Cayman Islands.
“You can’t run a credit check like you can on an American,” she says. “You have to be patient and careful.”
Negotiating styles also vary. Though a U.S. seller may expect to knock off 5 to 10 percent of the selling price after a short volley of offers and counteroffers, a Mexican is likely to make one take-it-or-leave-it bid, says Feldman. In contrast, he says, a Middle Easterner may bargain for days over some small point.
Agents must be sensitive to such cultural differences.
“Though it’s not good to stereotype, you have to understand different customs,” says New York broker Susan Greenfield Merdinger.
She recalls one deal where she showed homes, day after day, to a group of Japanese middle-managers who were opening a branch in the U.S. Though they appeared to like everything she showed, no one would buy.
Then the managers’ boss showed up and picked out a home. The next day, everyone else bought.
“If anyone had purchased a bigger or more expensive home than the boss, he would have lost face,” she explains.
Similarly, a Brazilian couple once showed a great deal of interest in one of her luxury listings in New York–but made no offer. They disappeared for six months, then called her, as if they’d only dropped by the day before, ready to buy.
“Foreigners may have other notions of time, body language, and what’s appropriate,” she says. “If you want to close the deal, you have to appreciate that.”
