FEBRUARY 2013 |
www.opp-connect.com
abroad? We know that signifi cant numbers buy not only in Central and South America but also in Europe and the Far East. Paris is a particularly popular destination for those looking to invest for pleasure combined with profi t but cities such as Berlin and, of course, London are also on the radar as are specialist products such as chateaux and vineyards in France and houses in the hills of Tuscany. How are US brokers and agents addressing this market? According to Phillip White, the President and COO of Sotherbys, not a lot. “There is not much activity by US buyers overseas.” In a wide ranging conversation with OPP, Janet Choynowski, President and CEO of Real Buzz, said “the main market relating to international property in the US is for US agents selling real estate in the US to foreigners. There is very little activity by agents selling real estate overseas to people in the US. Most do not have the skills, the knowledge or the connections to do so and they perceive the market to be too small to make it worthwhile pursuing these.” Yet again, others disagree but they are few in number and tend to be very focused on selling a particular property in a particular location to a particular US clientele. For example, apartments in central Paris, investment properties in the UK or retirement homes in Belize.
What put ordinary agents off getting involved in selling foreign property to people in the US? The fi rst barrier is undoubted and genuine concern about whether the size of the market would make the exercise worthwhile. Inez Hegedus-Garcia, a realtor based in Miami was one of several who pointed out that there was – or appeared to be a lack of available information about the size and shape of this potential market. In a world where the general public has – through superb websites like
realtor.com and zillow. com – free access to incredibly detailed and pretty accurate data and any realtor has access to even more comprehensive data via the NAR the lack of reliable information about foreign markets seems both incomprehensible and suspicious. “Its kinda muddy out there” says Ines Hegedus-Garthia of Majestic properties.
This is clearly an issue that needs to be dealt with and it is one that OPP will be tackling in the coming months but it will take a long time to produce credible and easily understandable statistics. In the meantime, American realtors wanting to get involved in the international real estate market by selling foreign property to Americans are going to have to do so on the basis of gut instinct and blind faith. Neither sits comfortably with the increasingly professional and analytic real estate profession in America. Those who take
FEATURE
the leap may make a fortune – or fall fl at on their face.
The second barrier is lack of understanding of foreign markets. In a world where language skills – except in Spanish and English – tend to be poor and there is a general preconception that everybody, throughout the world, does or should do things the American way realtors are nervous about dealing with countries where the whole process of buying a property is so alien. Pamela Lieberman of the Corcoran Group, who has been dealing with international
“Paris is a
particularly popular destination for those looking for pleasure and profi t”
property for over 40 years and 40% of whose business is international, understand the problem. “You need to know what you are
doing. You need to have your team in place – lawyers, accountants, immigration advisors etc.” Although her business has, historically, been more inbound she sees the same requirements applying even more strongly for outbound investment. The third barrier is fear. Fear of damaging your hard won reputation by the use of ill-chosen foreign “partners.” Fear of embarrassing yourself by dealing with something about you know little or nothing. Fear of investing huge amounts of time and money to no advantage. Shaun Osher, the South African founder and CEO of New York based Core Real Estate understands this. “You just can’t get away with something you don’t know.” Lombardo Cromstedt, the broker and owner of Spanish based RE/MAX Eralia, who is based in Marbella in Spain, told OPP much the same thing: “to sell Spanish property to the American market you really need to understand both the American and the Spanish way of doing business. You end up being a translator, not of the language but of the basic concepts of real estate transactions in the two countries.” Speaking to OPP after the conference ended he added “it is diffi cult to get across how this is the moment for Spain. The opportunities are huge. Over the next year or two we will see investment opportunities that will make people a lot of money. “ The fi nal major barrier is the opportunity within the US itself. Delegate after delegate stated that the corner had been turned and that the US was now a rising market. Many delegates spoke of the problems in their particular market now being the shortage of supply – needing quick decisions by potential buyers – and the fact that historical comps (comparative values in the area – a key requirement
THE VIEW FROM THE USA | 63
for both buyers and lenders) are lagging behind the times.
Of course, this is not true in all areas. According to today’s ‘Mansion’ section of The Wall Street Journal I can buy a 5,520 sq ft (that’s over 500 sq metres of constructed area), 7 bedroom and 6 bathroom 1930’s mansion in the very best area of Detroit for an asking price of $535,000 or a 10,000 sq ft 7 bedroom 9 bathroom mansion in the same area for $700,000. The so called “rust belt” is clearly still struggling. Contrast this with the price of $27 million just obtained for a penthouse apartment in Miami Beach, the highest price ever paid for a private residence in the city.
Pretty clearly the recovery in the US has been uneven, but investors can still see a lot of home grown opportunity. Many, however, see a market where they have already missed out on the best opportunities.
As Brad Inman, founder and CEO of Inman Connect said at the conference; “Four years ago I went to Miami specifi cally to buy investment property. For various reasons I didn’t do it. I am now kicking myself.”
So are there international real estate opportunities in the US. Undoubtedly, yes. There are clear opportunities – possibly diminishing opportunities for people wanting to sell US property
to the international market. Whatever happens, this market will always be there. The only question is its future size. There are also more complicated opportunities – where there is much less competition – for selling foreign property into the US market. These 2 opportunities have similar
but different requirements of the people who are wishing to exploit them. In both cases, they need to
understand the markets and cultures in the 2 counties concerned.
In both cases they need to cultivate the contact and skills needed to tackle the markets.
In both cases this probably requires some training. We hope that at least some of them take advantage of the new OPP training, due to be launched in April!
In both cases as Nik Nik (Nichole Nicolay) of Real Estate Barcamp in San Francisco says, “Don’t wait, do it.” This was an approach which found favour with many of the delegates to whom we spoke and it sits comfortably in the mindset of these young, smart and independent agents looking to fi nd success in this industry.
For those operating outside the US, whether as introducers of buyers or sellers of property, the challenge is to form relationships with the right people. Hopefully, OPP can help.
Worth the risk? | Is it too dangerous for a broker to make the change?
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68