How do we look from over there? – A View of Florida Real Estate from Abroad.

How do we look from over there?

In my career I have traveled extensively to  Europe,  Central and South America, and Asia. I started out  in my twenties being a little embarrassed by the brash loud spoken American that I saw sticking out in the crowds abroad because of  his dress and his mannerisms, but quickly grew to be very proud to be American as I learned to see the American though the eyes of my host countrymen.  Sure, I am still annoyed at the boorish behavior of some – but this is the case whether I am sitting in a nice restaurant in Fort Myers and my neighbor is talking loudly on his cell phone, wearing a baseball cap and shorts – or I am in the Grande Place in Brussels enjoying Mussels Provencal.

I have learned a great deal about Americans from the perspective of foreigners in my travels – and now I want to share with you what we are learning about our real estate market from the eyes of the foreigners. Market America Realty Group is dealing more and more with Europeans, Canadians, Chinese, Australians, and Latin Americans and Croatians.  You will note in our web site we are addressing issues like taxation, visas, and remote property management.  Because of the large number of overseas owners we have installed a remote access portal for our property management where owners can sign access info on their property we manage for them. You can take a tour of the system here.

Perhaps one of the first impressions for foreigners is how open we are here in the US with information; previous purchase prices, owner’s names, law suits – indeed with the internet there are really no secrets in the US real estate market. Even the MLS that we use is unusual; most other countries do not have a “one stop” location for homes on the market.

Before we get to even talk about product, we have to address trust. The regulations and laws that we have in the United States to govern how we deal honestly and fairly may seem second nature to us, but we field questions about how safe escrow accounts are to how the buyer can be assured that moneys are properly dispersed at settlement. Our owner sign on system goes a long way to assuring clients that monies are accounted for properly. We also use video conferencing and we make every attempt to attach a personality to our transaction leaders with pictures and biographies so our clients get to know us and feel more connected.   We also will take smart phone videos via QIK of property tours and meetings; even the drive thought the neighborhood.  People do business with people  they trust. Once we have trust we get to other issues like taxes and the process of  actually buying.

Property taxes, income taxes, ad valorem taxes, HOA fees, estate taxes, tourist tax, sales tax, capital gain taxes – all are rather bewildering and can kill a foreign buyers enthusiasm for owning real estate in the USA if not addressed properly; for a discussion on taxes click here.

While most foreign buyers pay cash, there are foreign national loans available. Most of these programs have rather stringent documentation requirements and these requirements are not easy for the foreigner to understand: Copies of utility bills?  A credit report? Three years of bank statements? Three reference letters?  Remember; here in the US we are accustomed to such openness. But in some countries without a multiple list service even the fact that someone is even SELLING their home is kept secret from their neighbors lest the neighbors think there is some sort of financial scandal going on.  So opening offering these documents may be against their culture. Better we should have these documents go directly to the banker.  The programs we are using for Foreign Nationals that want to borrow are typically 60 to 70% LTV, 6 months of payments on deposit in the lending bank, and interest rates are now 6.75%, 30 year amortization. We can do better with larger loan amounts – over $500,000 – but LTV’s shrink to 50%.

So what am I hearing about how our Florida real estate market appears to the foreigners?  One word: Opportunity.  There is opportunity to acquire hard assets in Florida at rock bottom prices. The attitude about Florida real estate is generally very positive, they believe we will fix our economic woes but as that happens there will be high inflation and US real estate is a great hedge against inflation.  A condo in Brisbane Australia is $1200 per square foot; we are selling them here at $150.  A home in Singapore is $2400 per square foot; buy one in Fort Myers for $200/sf or less. But they are afraid of the market; it’s confusing. There are a lot of rumors, bad experiences, and “flipper stories”   Here is one article from an Aussie that was recently here in Florida (HERE).

Imagine if you can, reversing the rolls. Imagine going to China, where you do not speak the language or understand the culture, and you want to just buy a car, much less a house – it would be pretty daunting, wouldn’t it? But, if you were to go with a trusted friend/advisor that could translate for you and guide you through the maze and show you proper paths – perhaps you can understand that the trust step is critical.

Most industries build up  a number of barriers to understanding:  buzz words, abbreviations, and colloquialisms.  Add the language barrier and you can begin to understand the trepidation. Our real estate industry is perhaps a leader in these barriers.  (Try: Fisbo, short sale, NIMBY, ARM, rate lock, HOA, GLA, Fee Simple, CAM, and closing, to name a few more common terms – I just did a search for a comprehensive list and could not find one on line – I think I just came up with a future newsletter!)

Some of our foreign buyers will never live here – they want us to manage their rental property and are counting on inflation to take care of the rest. They know that a condo they can buy now for $150 to $300 a square foot has a global value that is perhaps triple this. If the investment can pay for itself  – they will make their money on the appreciation. In their markets it is difficult to purchase rental property that makes economic sense. Due to our good rental market and low acquisition prices, this IS possible  Florida.

So, what are we doing about this, this OPPORTUNITY?  Read on…

I am  fond of my company’s tag line: Local Expertise, Global Exposure;  The tag line means even more now that the company has started ACTIVELY marketing Fort Myers real estate in Asia and Canada.  We know that Southwest Florida real estate is a global bargain and the international confidence in the United States recovery is very high.

There will be a series of sales exhibitions throughout Asia and we have  partnered with HHA Group out of Brisbane, Australia to market projects though out Australasia: Singapore, Kuala Lampur, Shanghai –   from now until the end of June Southwest Florida properties will be exhibited in these cities at specially advertised presentations using local brokers and existing connections developed by HHA Group and their principals. (We will stick to OUR expertise, thank you very much – Florida Real Estate).

In these markets the local prices for condominiums is over $1000 per square foot. Compare this with our local market at under $200 and you can see why there is excitement.

It’s pretty simple, the rest of the world is certain that we are in for sky high inflation and they want to own real estate when that happens.  The Asian and Canadian buyers are very sophisticated. Just because their prices are high over there, they do not expect to pay any more in China or Canada for a waterfront condo in Fort Myers than a buyer that walks in the door at a sales center here in town. If a condo is selling for $399,000 here, then that’s what we sell it for in China.  Please don’t call me and expect us to sell your project overseas and raise your prices to do so. This does not work and we will not do it. It is critical to keep reputation and trust foremost in any business dealing, but even more so when you are carrying the responsibility for the foreign buyer – communication and education are paramount.  Our role at market America will be to manage and handle the property while it is owned by our foreign client –and then deliver them an exit strategy.

We also need to deliver them a tight package – the property, the accounting and legal professional, the financing, the management, and the exit.  We are selling the relationship and expect to have these customers and their families for life.   

I know I am starting to sound like a cliché  – but it isn’t just about real estate when you are talking about foreign  buyers, it’s about the total opportunity.


Gregg Fous

800-439-1580  x 52

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