International Real Estate
As the world keeps growing, global business and international real estate are becoming more common and more popular. Mark Makoto Kitabayashi lives in Washington State and teaches the certification class for Certified International Property Specialists. He joins Monica on the show today to talk about aspects of the global real estate market, and how REALTORS® can help clients involved in these transactions. Monica and Mark talk about how to develop rapport with foreign clients, what things to focus on, cultural differences, as well as some of the technical aspects of completing these kinds of transactions. Today’s episode is a wealth of knowledge — you won’t want to miss out!
Mark is a first-generation immigrant; his parents came here from Japan when he was twelve years old. He went to school in Los Angeles, and before he got involved in real estate, he was doing international corporate travel and international import/export. He’s been doing real estate for about 17 years, and actually got into international real estate via his first real estate client who was Vietnamese.
Homeownership is a dream of most people in this world. Here in the States, we know this as the American Dream, but around the world, everybody wants to have a safe place for their family. But if you’re looking to buy real estate somewhere other than your country, there may be some cultural differences to keep in mind as you go through the process of acquiring the real estate. As agents, it is our job to help them achieve their dream of homeownership, no matter the culture. If you have that foundation, you can do a great job.
The culture in the U.S. is heavily influenced by immigration. Globalization and the progression of technology (and tools that allow information to spread more quickly) have contributed to the way we do business and how people look for and find houses. There are many ways to communicate with people about finding areas and this helps give everyone the opportunity to meet international clients.
The Certified International Property Specialist designation is about learning about foreign buyers or local buyers who are foreign-born. It teaches American REALTORS® about business in other cultures. Our perception of what global business is may differ but, for Mark, all global business starts locally. The goal is to understand how different cultures or different parts of the world handle business and how they handle real estate specifically. There are typically two types of international clients. The first is people locally who are foreign-born and probably speak English as a second language, looking for real estate locally. You could also have clients abroad that are looking for property in your area.
When working with domestic foreigners, the biggest thing is that they want to work with someone they can trust. Knowing their first language would be helpful, but building a trusting relationship can help grow your business with other people in that culture. There are two aspects to keep in mind when working with domestic foreigners or international clients. The first is understanding their understanding of how the real estate transactions are conducted in the countries that they’re from.
There are two big groups of different culture: high context culture and low context. In high context culture, the relationship is more important and personal space is very large (less physical contact). Low context is agreement-driven and personal space is very small. In high context, the relationship usually comes first before negotiations start, unlike low context, where the start of a negotiation is usually the start of the relationship.
As an American REALTOR®, you can do some preemptive research about the culture where your client comes from to better understand what processes they’re used to. In addition, there is nothing wrong with asking questions or sharing what you understand to make sure that’s how they understand as well. It is better to ask than to assume.
When it comes to negotiation, the key is communication, communication, communication. In our low context culture and the ease of text and email, it’s important to establish a method of communication that is right for that clientele. This might be a text, but they also might prefer a phone call or a visit. Another aspect is considering a bargain — in some cultures, this is one of the first things that is addressed. Comparing how things work here to how they work in the culture where your client is from can also be very beneficial. This should be done in a professional and respectful manner. Mark shares a story of a low context versus high context culture that he experienced when working with a Vietnamese client, and how bargaining is different. Essentially when working with domestic foreigners, it’s important to educate them on the real estate norms in the U.S. without being blunt or overpowering to them.
In some cultures where back and forth negotiation is more common, as a representative of a domestic foreigner, you may find yourself in a situation where you are the go-between and can offer something else to sort of halt the negotiation. As a representative of the seller, understanding our own client as well as the opposite side makes a whole lot of difference.
What are some of the other details involved in international real estate? For Mark, with his global business background, he found that the CIPS class really helped him learn the cultural aspect of exchanges but also learn how real estate was transacted in different places around the world. If you have friends from other cultures, you can also have an open conversation to learn more about each other’s cultures and as a REALTOR®, you can learn how you might best conduct business with other people from their culture. Other cultures may also have rituals or traditions that become a part of the real estate transaction, and as a real estate agent, you have to be sensitive to things and help work around them to satisfy your client. Monica and Mark talk specifically about some aspects of Asian cultures and share some stories they’ve experienced with their own clients.
Mark shares some ideas of topics you can discuss with your clients to start the conversation. Food is usually a good icebreaker for any culture. You can ask for restaurant recommendations in your area. Immersing yourself in their culture, or learning about their culture, can help you start to build the trust with your client.
There are some technical aspects of foreign real estate to consider as well, such as currency conversion. Arrangements for closing dates, etc., may have to be made to accommodate the time it takes to convert the currency and get it sent to the correct channels. One thing Mark recommends is having your currency converted and sitting in a U.S. bank before you even begin any transactions. This will allow you to complete the transaction more quickly and can eliminate the exchange rate frustration as well. If your clients are living in the U.S. on a Visa, they can usually get a mortgage. For these types of transactions, it is good to have a team who understands all aspects of a transaction like this. This could include an immigration attorney and a lender who understands foreign buyers.
One of the benefits of the CIPS designation is that you could learn things that you didn't even know you didn't know. It is also a great way to network and find colleagues that may be able to give you advice on other cultures. The NAR also has global reports where you can learn more about other countries.
For people who want to start serving an international market, begin by incorporating this into your business and action plan. This could be as simple as attending a cultural event — it doesn’t necessarily mean you jump right into a foreign transaction. If you have a good business model that serves foreigners, you can successfully help more of those clients find a home and also grow your own business at the same time.
When working within the context of global business, you have to remain fair housing compliant. There is a fine line between discrimination and preferences. As a REALTOR®, you have to be neutral and treat everybody equally. You also need to let your client know about the fair housing laws in the United States.
Your global business starts in your local marketplace. As times move forward, it’s going to be hard to avoid global business. It’s important to start incorporating it into your business and action plan now, so you can be proactive about working with foreign investors and domestic foreigners. When you’re more educated about these subjects, it will be more fun for you and your clients. Don’t be afraid to ask questions!
About Mark Makoto Kitabayashi, Managing Broker, CIPS, AHWD, SRES, ASP, CSP
Mark has been a REALTOR® in Washington State since 2000. He is part of the Management Team at Windermere Real Estate/Puyallup. He is one of the top producers in the area for the last 10 years and actively involved with REALTORS® Association at all levels. Thurston County REALTORS® (Local Association) President in 2006 & 2010. Washington State Association President in 2013. At the National Association Level, he has been on the Board of Directors since 2011 and involved in the Global Business Alliance Division since 2006. Currently, he is the President’s Liaison to Japan, and in 2017, He was part of the Enlarged Leadership Team as Committee Liaison to All Global Business. In 2019, he is in line to become Regional Vice President for Region 12. He is a licensed CE instructor for Washington State and is also teaching NAR Designation Classes, such as CIPS & AHWD. His extensive international marketing, R&D, and sales experience of over 25 years add extra dimensions to his expertise.