Using the Web and social media to sell real estate

We have been living for a long a time in an Attendance Base Compensation society. It was enough to show up and get rewarded. While this was clearly the method of working for any white collar at a big or small company or any blue collar at a factory, it permeated thought our western culture and has become also the basic approach to life and business of more freely organized professions, like that of some salesmen and Realtors.

Realtor need change approach to selling

It was enough to show up at the brokerage office, or to show up at a house showing with a potential buyer or to show up at social events to network with other professionals and gain referrals by just exchanging business cards. Now that the ABC approach is falling apart everywhere (please read the book Linchpin: Are You Indispensable?
by Seth Godin on how and why it is falling apart – I don’t like the second half of it, with all the “Lizard Brain” discussion that doesn’t seem factual, but the first half is worth reading). We are now facing an increased majority of Realtors that just don’t know what to do to bring their income levels to a reasonable level.

We complain about the market, the financial credit crunch, the economy, the slow buyers and the unreasonable sellers. It is very true that many things have changed and doing business in real estate is much tougher than before, but just for this reason one cannot expect to continue being paid for just showing up.

People are looking for somebody and something remarkable. In real estate they are looking for someone who can truly answer ALL their questions. It is funny for example how many times I have personally ended providing sources for tax information and immigration information to my international buyers. These were central concerns that came before any discussion about the size of the house, its location ans so forth.

Their main concern is naturally to protect their investment, to be able to live or use their house in a foreign country, and to save on taxes as much as they can. And indeed many of them made the most profit in currency exchange or in tax savings other than just getting a good bargain price. And it is not just applicable to international sales. In any kind of transaction there is information and service that a salesman or Realtor can procure in oder to give the perfect or best experience to its customer that no one else would be able to replicate.

So let’s forget the ABC we have been taught for so long time and let’s start working on a new approach to our business. Let’s become artists in our field, people that are simply indispensable because what we offer cannot be found easily elsewhere. Let’s become the linchpin of our business model.

Roberto Mazzoni

Purchasing investment properties in the United States is a complex process that involves many steps that go beyond the initial negotiation and the selection of the property itself.

International investors need to overcome 5 hurdles.

Avoiding currency issues
A foreign buyer needs to convert his currency into dollars and deposit them in a bank account inside of the United States before he can perform the acquisition of the property. This step can be very tricky because exchanging currencies is a purchase process in itself. In the first place the investor needs to select the less expensive channel for the transfer, which means contacting several banks in his own native country and also contact international exchange companies to establish the least expensive way to convert. Banks usually charge a fee for the transfer, a fee for the exchange and an exchange rate that is less favorable than what is available on the free market.

On a major purchase this can mean several thousand dollars more in expenses if the investor hasn’t done a correct due diligence. Also the exchange rate changes daily and a major mistake is to wait until few days before closing before transferring the money: chances are the exchange has worsened and now the investor needs more of his own currency to get the same amount of dollars he agreed to pay which means the house is going to cost more to him and he might not have enough funds to complete.

An international investor who is looking to purchase real estate in the US is often not familiar with the peculiarities of the market and its systems, therefore it the duty of his Realtor or consultant to familiarize her with some key concepts like how the MLS works, the concept of agency, the agent and broker cooperation, the listing agreements, the elements of an offer and negotiations, the steps that involve the parties at closing and how she can perform them while being far away.

International real estate buyers require special attentions and information.

Many US real estate professionals give for granted that every body knows how things work, but the majority of other countries have totally different systems and very, very few of them have something which resembles the MLS and don’t allow cooperation amongst multiple agents and brokers. So the best way to explain the system is to put it into context with how it works in their original country, if you can, or at least don’t give anything for granted and be as clear as possible.

In my personal experience with foreign investors, the explanation of these concepts is usually the most difficult task to familiarize them with the process and the market. And they will never buy anything unless they feel reassured and in control.

The MLS system is the biggest change for them

It is extremely difficult to find, outside of the US, a country with a common system for marketing real estate and exchanging commissions. The typical rule is that you are shown only the properties that are being sold by a particular broker who will not cooperate in any way with any other broker in the land, except some few exceptions that are mostly based on personal relationships and are in no way regulated by some system. There are no listing agreements because the is no official list to advertise real estate.

When somebody wants to sell a house, the contact usually several local brokers and sign a non-exclusive selling agreement, letting each one the them market the property to their own private clients or to the clients who happen to walk by their offices. It is very similar to what happened in the US before the MLS became widely used.

Therefore, when a foreign buyer comes to you, he will suppose you will be showing him only the properties that you direct control and you will have to explain him carefully how the MLS works, what is a listing agreement and how the commission will be split. You don’t need to give them a figure, but they need to understand that you will be compensated for whatever property you will sell to them (if you are a licensed Realtor of course) and that gives her the opportunity of looking at the whole market with your help.

Abroad it is also common that the buyers pays commissions and not the seller, so it is usually a nice surprise to them to find out here it works the opposite way. And you also have the opportunity of becoming their agent and collecting a commission also on the buyer side by explaining them how the agency relationship works and the fact that, by becoming their agent, you can show them not only the properties that are on the MLS but also all properties which are being sold by their owner without a broker (for sale by owner).

The elements of the negotiation

Submitting and offer and signing a purchase contract is very similar from country to country. The wording of the contracts might be different, but the process is the same. What changes here is the way people approach the negotiation and what they expect out of it. A US buyer or seller is typically very direct and pays attention to what is written in the contract and to the contingencies that will allow her to get out of the contract if something goes wrong in the negotiation process. For the US buyer/seller the contract is the point of arrival, the end of the negotiations process and the fixed framework on which the closing will be performed.

An international buyer coming from South America, South Europe or Asia, considers the contract often just a starting point, that is the point where the negotiation BEGINS not when it ends. So be prepared in giving concessions as you move along the process and don’t be surprised or put off by the fact that they now want more concessions after you have a signed contract in your hand. Be rather prepared to have your seller willing to give concessions after the signing and even at closing! This will make life easier.

Comparable sales and closing steps

The US have a very transparent real estate market as compared to other countries world wide. You can check on the selling prices of comparable properties and you have a very detailed description of every expense in the closing statements. This is very unusual for an international buyer and it is a very good sale argument that will make her more comfortable in purchasing in the US, but you need to explain what the numbers mean and how you selected your comparable sales and why they are relevant.

Roberto Mazzoni

The Miami Association of Realtors states that 60 percent of home sales in South Florida involve a foreign buyer these days. It is a dominating figure that shows how the stage has been taken by foreigners who are taking advantage of extremely low prices and, sometimes, favorable currency exchange. Most of the buyers are coming from Europe and South America and are taking advantage of the constant flow of foreclosures that keep the prices low and will keep them that way still for some time.

The vast majority of houses sold in South Florida go to international buyers.

Being cash buyers, they usually have more negotiation power and can secure the purchase of the home even when there might be competitive offers from local buyers who need to go through the complex and unpredictable lending processes that are now common in the US (read the original article here).

To developing a direct correction with these international buyers you need to have more than just low prices, but you must be able to provide them qualified assistance on tax and immigration issues that are peculiar to their status and their country of origin.

This can mean the difference between making a sale and simply losing it. There are plenty of properties to choose from and there is only a correct way to buy them if you are an international buyer and most often the correct tax setup for an international customer is quite different from what you would do with a US citizen or corporation. Unfortunately, even in Florida, there are very few CPA’s that understand international taxation issues and that can save tens of thousands of dollars to your client. Make a specific effort to find them and to network with them if you want to be accessible to the 60% of the buyer market.

Roberto Mazzoni

A rapid display of the “Before and After” pictures of some remodeling projects we have completed in Florida.

7803 Charing Cross Way – Palmetto – Florida

119 N Highland Avenue – Clearwater – Florida