You haven’t missed the “global marketing party,” but you sure are arriving fashionably late. Global buyers have been fixated on securing overseas property investments for years, leading some markets to implement bans and increase taxes to curb interest.
British Columbia, Canada is one example of where taxes have been implemented and increased. Initially introduced in July 2016, the “Additional Property Transfer Tax for Foreign Entities & Taxable Trustees,” was set at 15% of the property price and only applied to foreign nationals purchasing properties in Greater Vancouver. In February 2018, this tax was expanded to include additional markets in the province. In Vancouver, the tax amount was increased to 20% of the purchase price.
While we continue to see strong interest in key U.S. markets like New York, Los Angeles and San Francisco, these limitations in Canada, New Zealand and Australia have had positive effects on residential real estate markets in the United States, diverting consumer eyes to several emerging local markets. In the last 12 months, our team at ListGlobally, the world’s leading network of global property portals, has seen increased interest from global consumers for properties in emerging state markets like Michigan, Georgia, Tennessee and Arizona.
Why is now the right time for U.S. real estate firms to break out onto the international stage, to position your brand and properties in a way that attracts attention from consumers around the world? The simple answer is because global buyers continue to inject over $120 billion USD annually into the economy through the purchasing of residential properties.
If that isn’t enough to spark your interest, The National Association of Realtors reports in its 2018 Profile of International Transactions in U.S. Residential Real Estate Report that over 13% of respondents indicated that they have sold a U.S. property to a foreign buyer in the 12-month period between April 2017 and April 2019. From the same report, 23% of The National Association of Realtors respondents reported working with international clients, a decrease from 29% in the previous 12-month period.
Don’t let the 6% decrease worry you, there have been many economic and political drivers in the world over the last 12-18 months that have had temporary impacts on the movement of capital, including the Trump presidency and the Chinese government’s One Belt, One Road policy to start investing heavily in Southeast Asia.
As marketing directors and, in the case of brokers, business owners, if your agent teams are not securing 10-15% of their sales from global buyers, they are missing out on a “world” of opportunity… literally. Investment in global advertising can be made with measured steps, allowing for growth through the acquisition of new properties to sell, increases in global consumer inquiries and more homes being sold by your agents to international buyers.
Global attention around the influx of capital, specifically from Chinese consumers, has captured media headlines for many years, so much so that when we discuss global buyers, we have been conditioned to immediately think of Chinese buyers. The reality is that although Chinese buyers do make up a significant portion of the global buyer interest in the United States, there continues to be tremendous interest from Canadian, British, French and Australian consumers, to name a few.
Many marketers have been putting all of their eggs in one basket for too long by focusing their efforts on local market or “going global” by only targeting Chinese consumers. Global advertising should be truly global, reaching the right target audiences for your markets, in the consumer’s language and with the ability to provide support to both the consumer and the agent.
According to a 2017 PEW Research paper, the United States is seeing a 50-year high when it comes to the percentage of renters in the market. At 36.6%, this exceeds the most recent high of 36.2% in 1986. When you consider that the national average for a 30-year fixed interest rate mortgage in 1986 was near 10% or higher compared to today’s national average of 3.58% (statistics provided by www.HSH.com), there should be growing concern in the real estate industry that local buyers in many U.S. markets are not transitioning into homeownership.
The National Association of Realtors reports that foreign buyers purchased 266,800 residential properties in the United States between April 2017 and March 2018. Although the dollar volume of purchases from the top five countries investing in the U.S. declined year over year, the average price of properties purchased by foreign buyers was $454,400 USD. This is significant to note because international buyers are spending more on properties than domestic purchasers and a large portion of international buyers purchase properties in the U.S. with cash payments.
Having a defined global marketing strategy helps agents secure new listings. The ListGlobally website (www.listglobally.com) receives inquiries daily from property owners in the United States that are looking for ways to gain exposure for their properties among a global audience. Many of these homeowners are actively working with agents to sell their homes, yet the homeowner is doing the groundwork and looking into global exposure.
Agents that provide international marketing as part of their strategy to sell homes will reap the benefits through securing more listings. There are cost-effective ways for real estate companies and brokers to invest for the greater benefit of their entire agent team. To position your business for success with global marketing, your business first needs to be able to promote the fact that you provide global exposure as part of your service offering.
Nothing makes a selling client happier than securing multiple offers for their property. Through international marketing, agents are helping ensure their client’s listing reaches its potential by attracting the greatest number of suitors possible.
Will your buyer come from China or Canada? Possibly, but consumers are only able to inquire if they can see your property is for sale. International buyers are more likely to visit a local portal they are familiar with in their own country, one that allows them to search for global options in an international property section, than they are to visit Zillow or another U.S.-based portal. Promoting listings to consumers in their native language increases the chance of getting an inquiry, however this is not an option on most U.S. property portals. Property sellers want to work with agents that want them to succeed in their sale. Sellers do not just want “a” buyer, they want the best buyer possible, willing to pay the highest price. Advertising locally is akin to fishing in a pond, if you wait long enough a fish will bite, but you may only get one and it may not be the most desirable. International marketing is similar to fishing in the ocean. Bring the bait to the fish and hope to catch a whale.
Real estate is one of the most technologically creative industries and there is no shortage of start-ups offering the latest solution claiming to help agents sell more properties or manage their time and business more effectively. For global advertising, the recommendation is to keep the process simple for your agents.
Provide your agents with a clear solution, a global marketing strategy that benefits them and their selling clients with exposure for their property listings to a uniquely global audience while providing opportunities for individual agents to invest in enhancement and additional exposure where it makes sense.