A Growing Source of New Clients

International Real Estate Investors –

Don Pasek, CIPS, TRCOmniterra Real Properties, Chicago

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Why Seek Out International Investors? Volume

Increasing number of transactions in the USA involve international investors

24% increase 2010-2011 Approximately 1 of 12 transactions involve foreigners

Total 2011 Sales: $1.07T 2011 Sales to Foreigners: $82B

50% “green card” holders 50% non-permanent residents

International Real Estate Investors - A Growing Source of New Clients

Source: NAR Profile of International Home Buying Activity 2011

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Why Seek Out International Investors?

International Real Estate Investors - A Growing Source of New Clients

Source: NAR Profile of International Home Buying Activity 2011

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Why Seek Out International Investors?

Intent “A” clients Know what they want, what they can spend Have geographic area identified

International Real Estate Investors - A Growing Source of New Clients

Source: NAR Profile of International Home Buying Activity 2011

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Why Seek Out International Investors?

High Liquidity Most buyers use all-cash to make purchase

62% of purchases cash only 36% with mortgage financing 2% not known (?)

Typical sale price is higher than median Median all U.S. = $170K Median foreign investor = $200K 26% of all foreign investor sales over $400K

International Real Estate Investors - A Growing Source of New Clients

Source: NAR Profile of International Home Buying Activity 2011

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Finding International Investors

Current Clientele: Your BFF for FII Referrals

Do your current clients know that you practice internationally?

Home-country connections Are any of your current clients recent immigrants? Second generation? Business Interests?

International Real Estate Investors - A Growing Source of New Clients

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Finding International Investors USofA: We Speak Your Language, Pardner!

17.89% of Americans speak a foreign language Top 10 Foreign Languages Spoken in the USA

1. Spanish/Spanish Creole (28.1M)2. Chinese (2M)3. French (1.6M)4. German (1.4M)5. Tagalog (1.2M)6. Vietnamese (1M)7. Italian (1M)8. Korean (0.89M)9. Russian (0.70M)10. Polish (0.67M)

International Real Estate Investors - A Growing Source of New Clients

Source: 2010 U.S. Census Data, Tabulated by NAR

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Finding International Investors Illinois: Land of Linguae

19.23% of Illinoisans speak a foreign language Top languages in Illinois (NAR Compilation of 2010

Census):1. Spanish/Spanish Creole (1.25M)2. Polish (185K)3. Chinese (65K)4. German (63K)5. Tagalog (62K)6. Italian (52K)7. Korean (44K)8. Greek (40K)9. French (40K)10. Russian (38K)11. Arabic (35K)12. Urdu (32K)

International Real Estate Investors - A Growing Source of New Clients

Source: 2010 U.S. Census Data, Tabulated by NAR

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Finding International Investors

Professional Networks: Strength in Numbers CIPS Network

Over 2,000 CIPS Brokers Worldwide 55 in Illinois

Local Association Network Does your association have an International Section? Global Real Estate Forum (CAR)

Chambers of Commerce Neighborhood Chambers Ethnic Chambers Regional Chambers/Business Development Authorities

International Real Estate Investors - A Growing Source of New Clients

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Finding International Investors

Overseas Partners: Go to the Source Consulates/Embassies

Have you met the Commercial Consul? Have you met the Cultural Attaché?

Overseas Real Estate Associations NAR Network

Global Alliances – more than 60 national associations President’s Liaisons/Gateway Associations

Local Overseas Associations Trade Missions – Host or Participate Mentoring

International Real Estate Investors - A Growing Source of New Clients

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Investor Culture and Real Estate

How does culture affect business decisions? Decision-making styles

Risk-taking or risk-averse culture Individual or group decision-making style Opinion leader (vs. decision-maker)

Attitudes toward real property Permanent or temporary Family, investment, or business necessity Perceived appropriateness for intended purpose

International Real Estate Investors - A Growing Source of New Clients

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Create an environment of tolerance My way or the highway? NO WAY! Awareness and sensitivity

Accept that there is no one “right” way Understand and respect cultural norms Lead clients using their frame of reference

Patience, respect, and support Time may not be of the essence Form over function – indication of respect Mutual learning, mutual benefit

International Real Estate Investors - A Growing Source of New Clients

Investor Culture and Real Estate

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Managing Client Expectations

Outline the process Communicate clearly

Simple vocabulary, avoid jargon, idioms Recognize possible alternate definitions Use reference points based on home culture

Create a timeline Establish order of events Identify milestones to closing Balance certainty/uncertainty (mortgage, inspections,

etc.) Handle objections sensibly

Sympathy, acceptance, validation Mutual, cooperative resolution

International Real Estate Investors - A Growing Source of New Clients

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Managing Client Expectatons

Carrying the transaction to closing Keep the client informed – create a contact

schedule Be aware of potential pitfalls, roadblocks Be prepared to provide direct assistance if

necessary

Closing Day Attend the entire closing! Prepare the client to close (documentation, etc.) Assist with explanations, misunderstandings

International Real Estate Investors - A Growing Source of New Clients

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Post-Closing Action

Solidify the relationship Transactional vs. relationship broker (“Podolsky

decision”) What will your client say about you post-closing? Will your client return or refer others?

Recognize additional business opportunities Property tax reductions, payments Management services (maintenance, leasing, etc.) Additional real property investments

International Real Estate Investors - A Growing Source of New Clients

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Case Study: Inbound Transaction Country of origin: Poland Transaction Facts:

Type of purchase: Residential Condo Number of purchasers: 2 (husband/wife) Location: Chicago Loop Transaction Closing: January 2012

Prior client experience in USA Husband studied in summer school at UIC Both travel frequently to the USA Both have business contacts in USA

Primary purpose: personal use, later rental Daughter currently studies at UIC Seeking less expensive alternative to dorm/hotel Want good return after daughter finishes school

International Real Estate Investors - A Growing Source of New Clients

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Case Study: Inbound Transaction Issues:

Location near UIC, but also near Loop Investment value: adequate return after renovation Parking Money transfer PL to USA

Resolutions: Location: South Loop Predicted return at current rental rate: 11.2% Arranged zoned parking permit at City Hall Arranged bank transfer via Citibank

Outcome: Transaction Closed

International Real Estate Investors - A Growing Source of New Clients

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Case Study: Outbound Transaction Country: Poland Transaction Facts:

Type of transaction: Single family home inheritance/sale Number of sellers: 1 Location: Near Jelenia Góra, (Silesia) Transaction Date: TBD

Prior client experience with Poland Emigrated post-WWII Has no family in Poland, wife/daughter in USA

Primary purpose: liquidation of asset Client does not plan to return to Poland (96 years old) No family members remain Would like to use funds for family in USA

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Case Study: Outbound Transaction

Issues: Verification of ownership by brother of deceased Remote location Interim protection of property

Resolutions: Assistance in finding capable legal advice in PL Referral to Association-member broker Assistance in obtaining, providing documentation

proving relationship to deceased

Outcome: Pending

International Real Estate Investors - A Growing Source of New Clients

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Summary International transactions are increasing in

USA Find clients using familiar, traditional methods Make contact with international organizations,

representatives Recognize culture as a factor in real estate

investment Adapt practice to the client’s cultural needs Manage client expectations Offer post-closing assistance

International Real Estate Investors - A Growing Source of New Clients

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Thank You!

Don Pasek, CIPS, TRCOmniterra Real Properties, Chicago

dpasek@omniterrarp.com