While All Real Estate Is Local, Today’s Buyers May Be International

Posted on November 29, 2012 by Oli LoCurto

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Of the approximately $1.07 trillion in existing-home sales between March 2010 and March 2011 in the United States, approximately $41 billion dollars-worth were purchased by foreign buyers (38.3% of the entire real estate market). Given the differences in culture, customer needs, negotiation styles and other factors, there is a growing need to become culturally intelligent. Foreign buyers are coming to the U.S. from over 70 different countries, but the primary ones are Canada, China, Mexico, India and the United Kingdom. They have become today’s new niche market. These investors are drawn to many of the major metropolitan cities such as Miami, San Francisco, New York, Houston, Phoenix and Las Vegas. (Source: NAR Profile of International Home Buying Activity 2011)

So why are foreign investors coming to the United States? Some of the primary reasons are because of favorable exchange rates, low property prices, clear legal codes, desirable vacation locales and well-defined property rights. Also, due to the volatile world stock market, property is viewed as more stable here in the U.S. (Source: Overseas Property Professional, 7/21/2011)

The face of our nation is radically different today than it was 20 years ago. At 51.2 million people, Hispanics are the largest and fastest growing ethnicity in the United States. At 14.3 million, Asians are the second fastest growing culture in the country and the third largest ethnic group. Corporate America has taken notice of these trends, and many Fortune 500 companies have shifted their marketing approaches to address the needs of this cultural revolution. In a phrase, “They get it!” These companies realize that some of the most robust buying power resides in the “Minority Majority.” Consider the following statistics:

  • Presently the Asian American buying power is $577 billion and is expected to grow to $775 billion by 2015.
  • At $91,000 Asian Indians have the very highest median household income of any culture in the U.S.
  • Presently the Hispanic American buying power is at $1 trillion and is expected to grow to $1.5 trillion by 2015. (Source: The Selig Center)

Our industry has learned that when serving the business needs of our multicultural clients, there are very important “cultural nuances” that affect the real estate transaction. To ignore or overlook some of these differences could leave the client feeling offended or alienated, thus damaging the business relationship. I recently gave a presentation entitled “Cultural Nuances of the Escrow and Settlement Process” to a group of agents in Northern California, and a highly-respected, top-producing agent made the following comment after the presentation: “I’ve now learned why I lost my last Asian client.” There were a few things she unintentionally did that were considered highly offensive to her client, and these mistakes were the “deal breaker.”

Everyone has culture, and each culture has its own special nuances that affect virtually every aspect of our lives, such as how we celebrate, how we raise our children, how we mourn our dead, how we make decisions and even how we buy and sell. It’s vitally important for us to know that no culture’s values are more right or wrong than another’s. We simply need to strive to understand that these nuances do exist, and for that particular culture, they are very important.

Let’s examine a few cultural nuances to be aware of as we interact and do business with one another. It’s important to note that these are valid generalizations (widely held to be true for the majority of a group) and not absolute truths for every single person of that particular race. For ease of understanding, we will highlight a few nuances from the Hispanic, Asian Indian and Asian cultures:

Hispanic Americans

  • Language – 75% of all Hispanics in the U.S. are English-speaking only or are bilingual.
  • Trust – Hispanics want to do business with people they like and trust. (Friendship is key!)
    • There is a gray area between business and friendship.
  • Family – Extended family is very important.
    • This doesn’t include just the immediate family, like in the American culture. This includes aunts, uncles, grandparents, cousins and even close family friends.
    • All may have a say in the decision-making so never exclude them from the home buying process.
  • Sharing & Collectivism – The good of the whole is more important than the individual.
    • This includes pooling funds to live together for the importance of one family member owning a home; then helping that other family afford to buy their own home…and so on.

Asian Indians

  • Hierarchy and Formality – Titles are revered in the Asian Indian culture.
    • Always use the person’s title when addressing them.
      • Titles include vice president, professor, doctor, engineer, etc.
      • If they do not have a title, use the honorific “Sir” or “Madam.”
    • Never address an older Asian Indian woman by her first name.
  • Business Card Exchange
    • Only use your right hand to exchange business cards.
      • Traditionally the left hand was used for hygienic purposes and is considered unclean.
  • Indirect Communication – Asian Indians will often rely on you to interpret what they are saying.
    • “No” has harsh implications and is considered dismissive and insulting.
      • More often you will hear evasive, indirect refusals such as “I’ll try” or “Maybe.”
    • A side-to-side toss of one’s head indicates agreement.
  • Greetings and Handshakes – Handshakes are common among urban Asian Indian businessmen; however, due to their increased awareness of social hierarchies and varying religious beliefs, always let your customer initiate a handshake.
    • Traditionally, it is acceptable for women to shake hands among themselves, but unacceptable for a woman to initiate a handshake with a man.
  • Proper Behavior – Being proper is very important to the culture.
    • Some actions that we consider harmless may be offensive to someone of Asian Indian descent.
      • Whistling at any time is considered impolite.
      • Standing tall with your hands on your hips is a sign of anger and aggression.
      • Showing the soles of your feet or shoes is incredibly rude as feet are considered to be unclean.

Asian Americans

  • Respect for Elders & Decision Making – Decisions are heavily influenced by family members, the group and especially elders.
    • When purchasing a home, the elders will often make the final decision, even if not contributing any money.
    • Always address/acknowledge the elders first whether involved in the transaction or not.
  • Negotiations – This is a very strong part of the Asian culture.
    • Clients may seek to negotiate price but are willing to pay top dollar for top service.
    • Steer away from “price” and concentrate on “value.”
  • Indirect Communication – Pay attention to facial expression, tone of voice and body language.
    • A head nod or “yes” may not mean “yes.” A “maybe” probably means “no.” You will rarely hear a “no” (so as to not offend or bring confrontation).
  • Hierarchy & Formality – Always use the person’s official title when addressing them (i.e. Dr. Chan, Vice President Lee, etc…)
  • Business Card Exchange
    • Give and accept business cards with two hands and a slight bow of the head.
    • Never fold or write on business cards.
    • Acknowledge the information on the card and place it on the table in front of you.

As we expand our cultural intelligence, we will at the same time open more doors of opportunity for ourselves in today’s real estate market. The foreign investor market here in the U.S. is growing, and those who better understand and embrace it will have the best chance at success.

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