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Navigating The International Real Estate Market
Alex, acting as a buyer agent, could you share some insights into the unique considerations and processes involved when dealing with international buyers?
Lastly, every question is a smart question and I always try to touch as many points as possible while talking to the buyers even before we meet in person – because you never know if foreign buyers know it. When it comes to buying real estate in New York, many people automatically assume that you can always rent your apartment through AirBnB for a few weeks while you are not here and them come back and use it – not the case, the standard lease term is 12 month and the city is very AirBnB negative. Another thing that might come as a surprise is high common charges and monthly taxes. You can buy a $6M apartment and pay another $7K-$8K every month which is a fortune in some countries. It helps so much just to go through that with your buyers and talk about pretty much everything. We all studied the art of open-ended questions – finally it comes to use lol “What are you thinking to do with your apartment here when you buy it?”, “What is your experience in buying properties outside of your home country?”, “What do you think might surprise you in New York?”
Having a list of A-class contacts is vital: from the real estate attorney you can call any time of the day and night, to mortgage banker, CPA, moving company, to international tax expert and more…
Navigating the international real estate market
To sum it up: be a connecting bridge and know your market, have a versatile team of experts, ask clients many questions and listen to many answers
With an increasing number of international buyers opting for all-cash real estate purchases, what strategies do you employ to facilitate smooth transactions and best practices?
Buying faster and at a better price – use it as a negotiation leverage with the sellers. Sometimes you can get a better price and terms since a cash purchase takes less time and effort than a mortgage purchase (though with the new developments it really depends on the stage of the project and their specific situation). Also, luxury market is booming (300% growth in New York after the summer) and cash buyers are getting great prices – in 35 Hudson Yards and 15 Hudson Yards there are deals happening at 25% discounts right while you are reading this article!
Getting bigger margins – when you are buying a $1M apartment and get 5% off, it means saving $50K, when you are buying a $20M apartment and get the same 5% off, it means saving $1M. There is a big difference and delivering it to your clients can actually make a huge difference. You can tell your buyer “Listen, if you buy all-cash, there is a chance we can save you $1M!” There was a penthouse on 180E 88 that was selling at the asking price at $33M and eventually sold to a cash buyer at $24.7M – that is a whooping $8.3M discount or 14.83% off!
Setting up a banking network – when it comes to facilitating smooth transactions, it is a challenge since you might have international banks involved. I recommend talking to the buyers about which banks they use (on both sides), referring them to the banks you worked with (it’s so crucial to have good people), perhaps checking if there are banks that operate internationally and have offices in the country where the buyers are coming from and the country where they are buying (CitiBank, HSBC, etc.) – that will ease the transaction. I still work with a client whose money got stuck in one of the Kazakhstan banks and takes time to be transferred to the bank in New York. Quite a situation! 🙂
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