understanding the international real estate buyer
TRANSCRIPT
UNDERSTANDING THE INTERNATIONAL REAL ESTATE BUYER
Survey Methodology• The survey was sent via email to a random sample in October 2013, and 218 valid survey responses were received.
• All eligible respondents closed escrow within twelve months prior to October 2013.
International Buyers are Getting a Bigger Slice of the Market than Last Year
Q. Was the buyer an international buyer – a person who was a citizen of another country who wished to purchase residential real estate in the U.S.?
2008 2009 2010 2011 2012 20130%
1%
2%
3%
4%
5%
6%
7%
8%
9%
8%
SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Many REALTORS® worked with International buyers in the 2013
Q. How many properties have you sold to an international buyer in the last 12 months?
0 1 2 3 4 5+0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
71%
14%
6% 4% 2% 4%
79%
9%5% 3% 1% 3%
2013
2012
# of Properties
% Who Sold to International Buyers
# of Properties Sold to International Buyers in the Last 12 Months
SERIES: 2013 Housing Market SurveySOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
China, Canada, and Mexico are still the major sources of international buyers
China
Canada
Mexico
Japan
France
India
Russia
United Kingdom
Brazil
Germany
0% 5% 10% 15% 20% 25% 30% 35%
32%
16%
11%
6%
3%
3%
3%
3%
2%
2%
Please tell us about your last closed transaction with an international client. What is your client’s country of permanent residence?
Most international buyers are individual buyers
Was your last international client an:
Individual LLC Corporation LLP Other0%
10%
20%
30%
40%
50%
60%
70%
80%
90%86%
8%3%
0% 3%
The Typical International Buyer
86% Individu
als
70% Married
81% College Educate
d
60% Males
45% Asian
46 Years Old
$200K Median Income
For half of all international buyers, it was their first time purchasing a property in the U.S.
Yes; 51%
No; 35%
Unsure; 13%
In your last closed transaction with an international client, was that the buyer’s first home purchased in the U.S.?
Other Properties International Buyers Own
How many other properties does your last international buyer own?
1 2 3 4 5 6+0%
5%
10%
15%
20%
25%
30%
35%
13%
30%
20%
10%
7%
20%
WHY THE UNITED STATES?
Majority only considered the U.S.Considered
Other Countries;
15%
Considered only the
U.S.; 85%
In which other countries did your last international buyer consider purchasing real estate?
Why the United States?
To obatain a visa, immigration
Political stability & safety
Affordable pricing
Educational opportunity
Changes in work & employment
Investment opportunities
To be closer to family &friends
Desirable location & climate
0% 5% 10% 15% 20% 25%
2%
3%
4%
6%
9%
9%
20%
20%
Q. Why did your last international buyer choose to purchase in the U.S. as opposed to the other countries he/she/they considered?
International buyers purchased primarily for investment purposes
Investment to acquire legal permenant U.S. resident status
Tired of renting
Affordable price
Desired a better/other location
Changed jobs/relocated
To rent out property
Investment/tax advantages in U.S.
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
5%
5%
5%
7%
12%
14%
18%
What was your clients’ main reason for buying now in your last closed transaction with an international client?
Traditional buyers purchased because …
Other
Foreclosure/Short Sale/Default
Retirement/Move to Retirement Community
Changed Jobs
Desired Smaller Home
Change in Family Status
Desired Better Location
Desired Larger Home
Investment/ Tax Considerations
Tired of Renting
0% 5% 10% 15% 20% 25%
9%
2%
3%
4%
4%
4%
15%
17%
21%
23%
SOURCE: 2013 Annual Housing Market SurveyWhat was your clients’ main reason for buying now in your last closed transaction with an international client?
Reasons to Buy in California Mild year-around weather
Amazing outdoor environment
Advanced Educational Opportunities
Easy access to variety of entertainment throughout California
Climate in California
• Moderate temperature year round• Dry weather• Clear Skies
Amazing Outdoor Environment
Advance Educational Opportunities
System # of Campuses
Examples
University of California 10 • University of California, Berkeley• University of California, Los
Angeles• University of California, Riverside• University of California, San
Diego
California State University 23 • Cal State University, Fullerton• Cal State University, Northridge• Cal State Polytechnic University,
Pomona
California Community College
109+ • Santa Monica College• Pasadena City College
Private University Hundreds • California Institute of Technology• Pepperdine University• Stanford University• University of Southern California
Easy Access to a Variety of Entertainment
Most international buyers did not purchase their properties as a primary residence
What was the intended use of the property in your last closed transaction with an international client?
Other
Vacation/Second Home
Investment/Rental Property
Primary Residence
0% 10%
20%
30%
40%
50%
60%
70%
80%
4%
31%
33%
32%
0%
6%
19%
75%
Traditional BuyerInternational Buyer
Southern California is a popular destination for international buyers
Where was the property in your closed transaction with an international client located?
Northern Southern Other0%
10%
20%
30%
40%
50%
60%
70%
22%
66%
12%
Top Counties where International Buyers Bought
Where was the property in your closed transaction with an international client located?
Los Ange-les County
Orange County
San Diego County
Riverside County
Contra Costa
County
Santa Clara County
0%
5%
10%
15%
20%
25%
30%
35%35%
22%20%
14%
7% 7%
International buyers are heavily concentrated in suburban and urban areas
Other
Small town/rural area
Resort area
Central city/urban
Suburban
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
1%
8%
9%
40%
41%
Please select the category that best describes the location of the property in your last closed transaction with an international client?
Seven out of ten of international buyers purchased an equity sale
Equity Sale REO Sale Short Sale Other0%
10%
20%
30%
40%
50%
60%
70%
68%
15% 15%2%
What type of purchase/sale did your last international client(s) make?
Majority Bought a Single Family Home
Other
Commercial office space
Comercial retail space
Multifamily home
Condo/townhome
Single family detached home
0% 10% 20% 30% 40% 50% 60% 70%
5%
0%
2%
5%
24%
63%
What type of property did your last international client purchase/sell?
A typical international buyer purchased a property with …
4 Bedroo
ms
2,000 Square Feet
2.5 Baths
2 Car Garag
e
Square Footage of the Property
What was the square footage of the property in your last closed transaction with an international client?
< 1,000 ft
1,000 - 1,999 ft
2,000 - 2,999 ft
3,000 - 3,999 ft
4,000 - 4,999 ft
5,000 - 5,999 ft
6,000+ ft
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
6%
44%
29%
10%
3%
4%
5%
Square Footage of the Lot
What was the square footage of the property in your last closed transaction with an international client?
< 2,000 ft
2,000 - 3,999 ft
4,000 - 5,999 ft
6,000 - 7,999 ft
8,000 - 9,999 ft
10,000 - 14,999 ft
15,000 - 19,999 ft
20,000 - 49,999 ft
>50,000 ft
0% 5% 10% 15% 20% 25%
9%
13%
17%
23%
9%
9%
7%
7%
8%
Number of Bedrooms
How many bedrooms did the home in your last closed transaction with an international client have?
1 2 3 4 5 6 70%
5%
10%
15%
20%
25%
30%
35%
40%
0%
4%
19%
40%
32%
4%
1%
Number of Bathrooms
How many bathrooms did the home in your last closed transaction with an international client have?
1 2 3 4 5 60%
5%
10%
15%
20%
25%
30%
35%
40%
45%
8%
34%
42%
13%
0%3%
Garage Size
What was the size of the garage in your last closed transaction with an international client?
0 1 2 3 40%
10%
20%
30%
40%
50%
60%
70%
11%9%
62%
15%
2%
What amenities did international buyers want in their properties?
Please check all the amenities of the property in your last closed transaction with an international client.
Workout room
Outdoor pool
Hot tub
Outdoor kitchen
Heated floors
Private beach
Putting green
Sauna
Wine cellar
Designer kitchen
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
3%
3%
3%
3%
4%
4%
6%
9%
26%
44%
Initial Listing Price
What was the initial listing price of the property in your last closed transaction with an international client?
Less than $200,000
$200,000 to $299,999
$300,000 to $399,000
$400,000 to $499,999
$500,000 to $599,999
$600,000 to $699,999
$700,000 to $799,999
$800,000 to $899,999
$900,000 to $999,999
$1,000,000 to $1,499,999
$1,500,000 to $1,999,999
$2,000,000 and over
0% 2% 4% 6% 8% 10% 12% 14% 16%
13%7%
12%14%
9%4%
8%6%6%
11%3%
8%
Final Sale Price
What was the final sale price of the property in your last closed transaction with an international client?
Less than $200,000
$200,000 to $299,999
$300,000 to $399,000
$400,000 to $499,999
$500,000 to $599,999
$600,000 to $699,999
$700,000 to $799,999
$800,000 to $899,999
$900,000 to $999,999
$1,000,000 to $1,499,999
$1,500,000 to $1,499,999
$2,000,000 and over
0% 2% 4% 6% 8% 10% 12% 14% 16%
14%5%
14%14%
9%4%
8%5%
6%11%
2%7%
More than half of international buyers paid at or above the asking price
Un-der -10%
-6% to -10%
-1% to -5%
0% 1% to 5%
6% to 10%
Over 10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
12%9%
25%
32%
11%
6% 5%
International BuyersDistribution of Sales by % Above/Be-
low List Price
22% of Sales Above Asking
Price
2005
2006
2007
2008
2009
2010
2011
2012
2013
0%
10%
20%
30%
40%
50%
60%
26%
50%
Traditional Buyers% of Sales above Asking Price
Long Run Average = 18%:
International Buyers vs. Traditional Buyers
International Buyers
Traditional Buyers
Squre Footage 2,000 1,659
Final Sale Price $525,000 $392,900
% of Sales With Price Above Asking Price
22% 50%
THE BUYING PROCESS
International Buyers Found Their Properties from the MLS
How did you find the property for your international buyer in your last closed transaction?
Other
From seller directly
Builder
Advertisement
Open house
Client found property
My listing
Another agent's private listing
MLS
0% 10% 20% 30% 40% 50% 60% 70% 80%
5%
2%
2%
2%
3%
5%
5%
5%
71%
Weeks Spent Looking for Property
How many weeks did you spend looking for a property with your last international buyer?
2 weeks or less
3-7 weeks 8-12 weeks 13-16 weeks 17 weeks or more
0%
5%
10%
15%
20%
25%
30%
35%
30% 31%
14%
6%
18%
Median: 5 weeks
Number of Properties Viewed
How many different properties did you view with your last international buyer prior to the client making a purchase?
1 to 2 3 to 4 5 to 6 7 to 8 9 to 10 11 to 15 16 to 20 21 or more
0%
2%
4%
6%
8%
10%
12%
14%
16%
14%13%
12%
9%
11%12%
14%14%Median: 9
Offers Made on Other Properties
How many offers did your last international buyer make on other properties (in addition to the one purchased)?
1 2 3 4 5 6 to 10 11 or more
0%
5%
10%
15%
20%
25%
30%
35%
40%
37%
13% 12% 12%
5%
13%8%
Median # of offers made = 2
Properties sold to an international buyer typically stayed on the market for a month
How many days was the property on the market in your last closed transaction with an international client?
1 to 30 Days 31 to 60 Days 61 to 90 Days 91 to 120 Days 121 or More Days
0%
10%
20%
30%
40%
50%
60% 57%
22%
10%
4%7%
Days on market (median) = 30 days
International Buyers vs. Traditional Buyers
International Buyers
Traditional Buyers
Weeks Looking for Property 5 10
# of Properties Viewed 9 10
# of Offers Made on Other Properties
2 3
All Cash International Buyers
Obtained financing;
31%
All cash; 69%
How did your last international buyer pay for the property?
All Cash International Buyers
SOURCE: 2013 International Client Survey, 2013 Annual Housing Market SurveyHow did your last international buyer pay for the property?
International buyers Traditional buyers0%
10%20%30%40%50%60%70%80%90%
100%
69%
27%
31%
73%
All cash Obtained financing
Source: National Association of Realtors®
Down-Payment as Percentage of Sale Price
How much was the down payment for the home purchased (as a percentage of the sale price) in your last closed transaction?
10% or less 11-20% 21-30% 31-40% 41-50% Greater than 50%
0%
10%
20%
30%
40%
50%
60%
8%
14%
27%
14%
22%
14%
1%
39%
55%
0%4%
0%
International Buyer Traditional Buyer
Sources of Down-Payment
Unsure
Other
Sale of personal assets (other than real property)
Gift
Proceeds from a sale of previous property
Personal savings
0% 10% 20% 30% 40% 50% 60% 70%
18%
2%
2%
6%
12%
65%
What was the source of the down payment in your last closed transaction with an international buyer?
Difficulty in Obtaining Financing
Please rate how easy or difficult it was for your last international buyer to obtain financing.
1 2 3 4 5 6 7 8 9 100%
5%
10%
15%
20%
25%
11%
0%
13%
19%
17%
19%
0%
15%
0%
6%
Median = 5
Difficulty in Obtaining Financing
SOURCE: 2013 International Client Survey, 2013 Buyer SurveyPlease rate how easy or difficult it was for your last international buyer to obtain financing.
1 2 3 4 5 6 7 8 9 100%
5%
10%
15%
20%
25%
30%
35%
40%
11%
0%
13%
19%17%
19%
0%
15%
0%
6%
0% 0% 0% 0%
6% 6%
11%
6%
38%
33%
International Buyer Traditional Buyer
Only a few international buyers had difficulty in bringing funds from outside the U.S.
Unsure
Yes
N/A, client had funds in the U.S.
No
0% 10% 20% 30% 40% 50% 60% 70%
18%
8%
15%
58%
Did your last international buyer encounter any difficulty in bringing funds from another country into the U.S. in your last closed transaction with an international client?
What other problems did international buyers encounter?
What, if any, other problems did your last international buyer encounter? Please select all that apply.
• Difficulty in finding a property • Problems with immigration• Financing• Challenges finding insurance• Documentation• Decide on which city to buy
Most did not hire an attorney or a tax professional to facilitate their transaction
Yes; 6%
No; 88%
Unsure; 5%
Hired an Attorney
Did the international client hire an attorney to help facilitate your last closed transaction?Did your international client hire a tax professional (i.e. accountant, financial consultant, etc.) to help facilitate your last closed transaction?
Yes; 6%
No; 88%
Unsure; 5%
Hired a Tax Pro-fessional
Many international buyers did at least some work on their properties, which typically costs them $10,000
What type of rehabilitation / remodeling was done on the property in your last closed transaction with an international client? How much money did your client invest in rehabilitating/remodeling the property in your last closed transaction with an international client?
None
Major
rem
odeling
Major
cos
met
ic re
pairs
Minor
cos
met
ic re
pairs
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
37%
8%
13%
41%
Work Done on Property
Less than $5,000
$10,000 to $19,999
$30,000 to $39,999
$50,000 to $99,999
0% 5% 10%15%20%25%30%35%
32%
13%
19%
12%
5%
2%
7%
11%
Money Spent on Repair/Remodel
Property Management
Who will manage the property in your last closed transaction with an international client?
Owner Unsure Property manager
Other0%
10%
20%
30%
40%
50%
60%
56%
17% 15%11%
CLIENT/AGENT RELATIONSHIP - COMMUNICATION
International buyers relied more on referral and relationship when connecting with their agents
Advertising
Internet
Relationships and Contacts
0% 10% 20% 30% 40% 50% 60% 70%
9%
63%
28%
12%
21%
61%
International Buyers Traditional Buyers
SOURCE: 2013 International Client Survey, 2013 Buyers SurveyHow did you find your last international client?
International buyers relied more on referral and relationship when connecting with their agents
Other
Social media
Client is a relative
"For Sale" sign
Client responded to my ad
Prior dealings iwht my brokerage
Open house
Referral from another agent
Client is a friend
Referral from a friend
Client found me online
Referral from a previous buyer
0% 5% 10% 15% 20% 25%
7%
1%
3%
3%
4%
4%
5%
6%
10%
19%
19%
20%
How did you find your last international client?
Primary Language of International Buyers
Portuguese
German
French
Japanese
Russian
Spanish
English
Chinese
0% 5% 10% 15% 20% 25% 30% 35% 40%
1%
2%
3%
3%
4%
9%
26%
36%
What is your last international client’s primary language?
… but most of them were communicated in English
Russian
Other
Spanish
Chinese
English
0% 10% 20% 30% 40% 50% 60% 70% 80%
1%
7%
8%
15%
70%
In which language did you primarily communicate with your last international client?
Use of Translators
Yes; 3%
No; 97%
Did you use a translator in your last closed transaction with an international client?
Email Communication
How did you primarily communicate with your last international client?
Email Telephone Text message Video calls Other0%
10%
20%
30%
40%
50%
60%58%
29%
7% 1% 5%
Email Communication
How did you primarily communicate with your last international client?
Email Telephone Text message
Video calls Other0%
10%
20%
30%
40%
50%
60%
70%
58%
29%
7%
1%5%
43%
51%
5%0% 0%
International Buyers
Devices of Communication
Other
Fax machine
Landline
Tablet
Mobile phone
Desktop
Laptop
Smartphone
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
4%
1%
1%
5%
7%
7%
30%
45%
Which technological device did you utilize the most in communicating with your last international client?
CONCLUDING REMARKS
The Takeaway
• California housing market will continue to draw interests from international buyers
• International buyers purchased primarily for investment purposes
• International buyers relied more on referral and relationship when connecting with their agents
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