Zsolt's Blog

Cheaper Airfare - More Investors?

Zsolt Kovacs, CIPS, TRC, CAM, MNAEA (Overseas) (Tyler Properties Inc.) — Mon, 31 Mar 2008 08:57:10 -0500

I know, that the title of this blog raises your eyebrow, specially with the oil prices being as high as they are. However despite the current situation, Trans-Atlantic flight is still relatively cheaper than domestic /U.S./ air-travel and since "Competition is always good for the consumer..." is the idea that many businesses live by. The agreement between the U.S. and EU /European Union/ called "Open Skies" will do away with the limits of airlines and number of flights between the two continents.

You might ask, "How will this affect me as a REALTOR?" I believe that the congestion of major U.S. airports will open up the possibility for smaller or "secondary" airports to start to receive flights from Europe. These flights will bring in many cases over two hundred tourists on any given airplane. Some will come for vacation, some for business and there will be some - about 20-30% who will come to "steak out" or "look around" for possible investment opportunities. The majority of foreign investors do not want to travel more than an hours drive from the airport they land at to look at investment opportunities, whether it is for a vacation or second home, income producing rental property or business opportunity. Most likely in the beginning the already connected areas will get the influx of low cost European carriersat the surrounding smaller airports. However many popular tourist areas, that until now had no direct international connection will probably have a direct flight to some European city in the next 6-18 month. But again, "How will this affect me as a REALTOR?" you might ask. The increased number of tourist in the area always raises the amount of possible buyers and it is our job to be ready to deal with these foreign nationals property buying needs. They are different from their U.S. counterparts. Many of them will start with looking on the internet to see what is there to do in the area. They will make contact with real estate professionals in their own country or with agents in the U.S. to get more information on the market conditions. But we can not expect to have them find us only through our normal ways of marketing efforts, such as Realtor.com, the broker's website or our own websites. Like most U.S. buyers, they will also start with their local internet sites, or magazines and publications to search for overseas properties, because as we are not familiar with their favorite property search sites that are geared toward capturing their attention, they are not familiar with ours either. Then there is the language barrier, not everybody speaks English, and you can have the most advanced marketing effort in the world, if they can not read it, they will move onto the next one that they can understand. By the way, most of the world also uses the Metric System, sounds familiar? That is the "failed" system that was introduced here stateside many years ago, but unfortunately our own unwillingness to change prevented it from making a foothold. So Square Footage does not mean much unless you can convert it to Meter Square /m²/ and not to mention, that many of them do not even care about that as much as how many bed- and bathrooms there are and "...Those bedrooms can sleep how many people?..."

So not to drag this out too much, but because of the U.S. Dollar having been as weak against foreign currencies for many years as it has and the fact that it is unlikely to change any time soon, not only "The British Are Coming" but many others will follow too.

The best way for anyone to tap into the international market is perhaps to start by joining the International Local Councils in their, or a nearby Association and start learning the many intricacies of doing business with foreign buyers.

This was my 2 Cents /3.28 HUF/, but what do I know......

Au Contraire Mon Cher! ...My answer to a blog post.

Zsolt Kovacs, CIPS, TRC, CAM, MNAEA (Overseas) (Tyler Properties Inc.) — Fri, 28 Mar 2008 15:37:18 -0500

Chris, I agree with some of your observations in your post, however you are incorrect in some of the other things. Many of the foreign buyers take longer time to decide on a purchase versus their U.S. counterparts, and they usually find their real estate agents from European websites that advertise "Overseas" properties. Also there are many foreign real estate companies that are setting up shop in the U.S. as well as working in partnerships with local brokers to market U.S. properties overseas. Many U.S. REALTORS are joining professional organizations such as FIABCI, AMPI, NAEA and AIPP to broaden their reach and to get to the buyers in other countries. Since the Dollar started its slide compared to the Pound Sterling, the Euro and every other currency out there and furthermore the U.S. real estate market is doing its biggest correction in decades /or in history/, the foreign press as well as local real estate agents in foreign countries are telling buyers that it is their best chance to pick up U.S. properties at "bargain basement" prices. The U.S. has jumped from being the 14th most popular place of investment in 2006 to the 4th in 2007 for the British and Irish buyers according to one of the leading property magazines in the U.K. /A Place in the Sun/:

Top 20 Positions from "A Place in the Sun Magazine"

1. Spain 6. Cyprus 11. Egypt 16. Montenegro

2. France 7. Greece 12. Portugal 17. Croatia

3. Turkey 8. Bulgaria 13. Morocco 18. Dubai

4. USA 9. Canada 14. Caribbean 19. Germany

5. Italy 10. Cape Verde 15. Australia 20. Thailand

This trend is going to continue in 2008, since most of these buyers are looking at the U.S. as the safest place to invest for the mid- to long term. The REALTORS who have NAR's coveted CIPS designation and many others who specialize in dealing with foreign buyers can tell you about the increased enquiries regarding properties in the U.S. The areas that benefit the most from foreign property investors are the ones where a direct flight from "overseas" airports is available. Most of these overseas buyers do not want to travel more than one hour from the airport they land at, therefore the concentration of this increased demand is easy to find. The average foreign buyer spent around $299,000 on the purchase, while the U.K. and Irish buyers purchased over 28,000 properties and spent $377,000 on average in 2007. Most of that money was spent in Central Florida /Orlando and the East and West Coasts close by/ and in the Miami area for the Europeans, Miami for the Central and South Americans and California and the West Coast for the Far East and Pacific investors.

While I agree that the foreign buyers are getting educated about the values of homes from their real estate agents via e-mail and CMA's, I disagree with you in the "un-necessity" of marketing properties in a different manner for foreign buyers than U.S. consumers. Keep in mind that the term REALTOR until recently only existed in the U.S. and now is being used in India too. Many potential buyers from other countries have no idea that http://www.realtor.com exist. They usually start the same way as we do, on their leading local internet sites that get their feed from property websites that many American REALTORS have never heard of - http://www.rightmove.co.uk, http://www.findaplaceabroad.com to mention a couple. I also agree that many of those buyers contact their local real estate professional, who then refers them to their contacts in the U.S. Also more and more of the REALTORS in the U.S. get their referrals from past customers from other countries, since they really tell all their friends and acquaintances that they know this "Wonderful chap/gal" who will take care of everything for them. And for some years now, many REALTORS attend NAR and other countries national association sponsored events like SIMA in Madrid, Spain.

Yes, the headlines "The British Are Coming", "International Buyers Flock to Florida", "Foreign Buyers Scoop up Florida Real Estate" are true, so is the fact that they will not overpay for overpriced properties. However to market properties to appeal to people from other countries is different from the U.S. buyers and for that reason NAR started the CIPS, TRC and AHWD programs.

As I say many times "..."The Worlds Most Famous Beach" is not really famous outside of Volusia County...", so we as real estate professionals can not sit back and wait for them to find us, but we have to go and meet them in their own countries sometimes.

So that's my 2 Cents /€0.012654/, but what do I know....

This Is Right Where You Want To Live! SUN, SURF and SAND!!!

Zsolt Kovacs, CIPS, TRC, CAM, MNAEA (Overseas) (Tyler Properties Inc.) — Sun, 02 Mar 2008 23:10:12 -0600

Beautiful and spacious, four bedroom, two bath, brick home in desirable Forest Lake Preserve. Bright and open flowing floor plan with extra large family room, living room, and formal dining. Breakfast nook overlooks heated and screened pool oasis. Oversized master suite with double walk-in closets. Double pane impact windows. Large utility and two-car garage. Professionally landscaped. Must see!

The Sky Stopped Falling?!

Zsolt Kovacs, CIPS, TRC, CAM, MNAEA (Overseas) (Tyler Properties Inc.) — Sun, 02 Mar 2008 20:58:54 -0600

As they say in Hungary, "One Swallow Does Not Bring Summer."

On the other hand, when one has made it to your neighborhood, the others are not far behind! You might ask what does this has to do with real estate.

Quite a bit, because in the last few weeks more and more news is in the media regarding how we are at or close to the bottom of the market. I am not a big fan of the media - since in my opinion - had a big hand in the current market situation, but that is a topic for a different post.

Now I am starting to notice more and more somewhat positive or actually encouraging news. The latest round came when I happened to find Blanche Evans' article on Realty Times, from there I just had to see for myself the articles that she was referencing. Articles like these were non-existent in the mainstream media in the past year. Despite that we as REALTORS® and the NAR tried to get the message out, it was not reported until their own reporters did not start to realize that the "Ice Age" in real estate coming to an end. Therefore, to say the least I was surprised to see Dan Kadlec's "Ignore the Headlines" piece published in TIME Magazine in February 2008. The other one was by Marko Djuranovic at Motley Fool on February 25called "Why Housing Prices Are Nearing Bottom". Even the occasional news reports on the "Big Three" broadcast stations stopped using one of 2005 - 2006 favorite buzz words "real estate bubble".

Are these contributors the first few of the little "birdies" who will bring "summer" back into a lot of people's lives? I hope so!