There is a surge of international homebuyers across the nation, especially in California. Each year, hundreds of thousands of migrants from foreign countries move to California, for a net gain of nearly 200,000 new international residents annually. This is excellent news for California’s real estate market.
One-in-four California residents are foreign-born, according to the Public Policy Institute of California. For perspective, the national average is one-in-eight. Three-quarters of the international population is documented or U.S. citizens.
While most of California’s foreign-born population hails from Latin America, most individuals who arrived during in the last decade are from an Asian country. They are also most likely to be a working-aged adult and have mixed educational background.
County-by-county, international residents are most likely to reside in Santa Clara, followed by:
- San Mateo;
- Los Angeles;
- San Francisco; and
How can real estate agents prepare to work with today’s growing population of international clients?
Real estate agent advice
The first thing an agent needs to know about working with international buyers from any country is this: research and due diligence is required.
Find out information about the client’s language, culture and the background of their nation’s current economic situation with the U.S. Is their currency stronger or weaker than the dollar? How can they expect their U.S. home purchase to compare as an investment?
It’s likely the buyer already knows the answers to these questions, but since you’re the real estate expert, you need to know these answer too in order to fulfill your fiduciary duties and represent their best interests. [See this article for an example of how to calculate investment return between currencies]
If you live in an area where international clients are common, the best favor you can do yourself is to learn the language (i.e. Mandarin, Spanish, Tagalog, etc.). Of course, many of these international buyers have completed studies in California — the number of foreign students in California schools having more than doubled in the past decade — and so have no difficulty conversing in English.
For agents looking to grow their international clientele, word of mouth within your target community is always the easiest way to gain clients. Therefore, your first few clients from a particular country will be your most important. They can send newly immigrating friends, family and co-workers your way, and can point you in the direction of websites or other services they used to find you.
Individuals from other countries will have their preferred ways of communicating overseas, which are often different from what we are used to in the states. For instance, if you have a client from China, be sure to check out WeChat, a popular social media and messaging service used by Chinese residents. Agents have found WeChat features helpful in communicating with their clients across time zones.
Agents who are members of a large team with sufficient resources can consider scheduling several meetings and traveling abroad to meet their customer base and grow their business relations. Meeting face-to-face with clients can build trust and show your commitment.
Agents also need to familiarize themselves with obtaining financing for non-U.S. citizens.
Cash-heavy buyers will opt to pay cash, side-stepping the onerous steps needed to obtain mortgage financing. But those reliant on financing will need to obtain an Individual Tax Identification Number (ITIN).
Homebuyers with an ITIN often have a more difficult time qualifying for a mortgage than those using social security numbers. Thus, only those with the highest credit scores and best debt-to-income ratios (DTIs) are successful.
Many international buyers have just recently graduated school and have a short credit history. For buyers in this situation, the solution is all-cash, or some more creative arrangement. Offering a large down payment of 30% or more can help alleviate lenders’ concerns. Further, some buyers make arrangements with their employers to provide financing as part of their employment agreement. Others borrow money from family or friends so they can pay all-cash.
Agents: once you feel you are an expert on assisting international clients, market yourself as such. Include “international client specialist” on your business card and talk to your broker about becoming the brokerage’s international client go-to. Write up a blog post about your experience assisting international buyers or sellers and post it on your real estate website.
Agents and brokers: What other advice do you have for those attempting to get ahead with international clients? Share your experience in the comments below!