Agents Pick Up Extra Business from Foreign Buyers
01 Dec 2008
by: Tom Kelly -
|
| Tom
Kelly's book "Cashing In on a Second Home in Mexico: How to Buy, Rent
and Profit from Property South of the Border" was written with Mitch
Creekmore, senior vice president of Houston-based Stewart
International. The book is available in retail stores and on TomKelly.com. |
 |
While
housing analysts continue to paint a rather anxious and uncertain
picture for residential property in the near future, one emerging
source of business for agents has been foreign buyers investing in the
U.S., and another is Americans buying abroad.
According
to the National Association of Realtors, approximately 178,000 of its
members closed a transaction with a foreign buyer in 2008, including
approximately 61 percent of all Florida real estate agents. About the
same number of agents had a deal fall through with a foreign buyer
because of price, immigration laws, higher-than-expected property taxes
or home insurance costs.
While
the "in flow" of Russians, Germans and United Kingdom residents has
been common in the past five years along the Atlantic Coast, the "out
flow" of Americans heading north to Canada and south to the Central
America sun also is increasing.
While
the total foreign business - approximately 3 percent - is tiny compared
with the number of total deals done in the United States, the category
is expected to rise faster than any other housing group.
"I
have Realtors who have businesses in Florida and in Panama and others
with businesses in Texas and Costa Rica," said Lawrence Yun, NAR's
chief economist. "They travel back and forth. This can be new business
for Realtors or they can also simply focus on the referral business."
North
American referrals are a hot commodity, especially in the Caribbean and
the rest of Central America. U.S. brokers and agents have been asked to
send potential clients to offshore developers and marketing companies
and earn a handsome commission for doing so.
For
example, MexicoAlive (www.mexicoalive.com) a Puerto Vallarta-based real
estate marketing and development company that offers developer direct
sales of popular Mexican destination properties in Mazatlan, Puerto
Vallarta, Cancun and other regions, is hosting a North American brokers
weekend in January to educate professionals on its commission referral
structure.
"We
know U.S. Realtors have friends and business associates who are
interested in purchasing property in Mexico," said Benjamin Beja,
MexicoAlive's president and founder. "We are happy to pay those
Realtors a referral to work with us. We would welcome the chance to
have them learn more about our culture, property and traditions."
The
MexicoAlive weekend for brokers and agents offers an explanation of
housing type, price and location along with useful educational material
that includes financing, taxes, culture, health care and title
insurance.
Baby
boomers, born between 1946 and 1964, number approximately 77.8 million
people in the United States alone. Many of them are rediscovering
regions of previous travels and charting a way to buy in order to
vacation now and retire there later. Every year, they are being joined
by more and more Canadians, Europeans and Asians - many of whom place a
premium on their return on enjoyment.
Sales
to Americans abroad have slowed - mirroring a pattern in the States -
yet many of the "fly-in" destinations are experiencing steady sales,
thanks mostly to the international boomer profile.
"Remember
that World War II ended at the same time in Europe as it did in the
United States," Yun said. "Many of the Europeans had bought in Spain
but the Spanish market is undergoing a transition now. Some of them see
the lower cost of U.S. real estate and consider it a good investment."
Canadian
property referrals have provided an attractive niche, especially with
the 2010 Olympic Games in Vancouver, B.C., just around the corner.
Retirees and aging baby boomers "from the States" are drawn to Canada
for its wonderful skiing, health care, bargain medicine, terrific
sailing and clean air. Europeans have long coveted summer homes in East
Coast waterfront regions of Nova Scotia and New Brunswick.
The
group with the most "in flow" potential is members of the rising middle
class in Brazil, Russia, India and China (the "BRIC" countries) who are
expected to buy vacation homes in California, Arizona, Florida and
Nevada.
"I
expect to see 80 million people rising to the middle class every year
in the BRIC countries," Yun said. "Approximately 1 percent of them will
move to the bracket of super rich and the biggest status symbol they
can have is a home in an international city on the West Coast or Las
Vegas or Florida. Many of these are cash buyers who don't have to worry
about the mortgage markets. This is going to bring new business to
Realtors."
Tom
Kelly's book "Cashing In on a Second Home in Mexico: How to Buy, Rent
and Profit from Property South of the Border" was written with Mitch
Creekmore, senior vice president of Houston-based Stewart
International. The book is available in retail stores, on Amazon.com
and on tomkelly.com.
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