International Real Estate Investors – Don Pasek, CIPS, TRC Omniterra Real Properties, Chicago

 Volume  Increasing number of transactions in the USA involve international investors  24% increase  Approximately 1 of 12 transactions involve foreigners  Total 2011 Sales: $1.07T  2011 Sales to Foreigners: $82B  50% “green card” holders  50% non-permanent residents 2 International Real Estate Investors - A Growing Source of New Clients Source: NAR Profile of International Home Buying Activity 2011

3 International Real Estate Investors - A Growing Source of New Clients Source: NAR Profile of International Home Buying Activity 2011

 Intent  “A” clients  Know what they want, what they can spend  Have geographic area identified International Real Estate Investors - A Growing Source of New Clients 4 Source: NAR Profile of International Home Buying Activity 2011

5  High Liquidity  Most buyers use all-cash to make purchase  62% of purchases cash only  36% with mortgage financing  2% not known (?)  Typical sale price is higher than median  Median all U.S. = $170K  Median foreign investor = $200K  26% of all foreign investor sales over $400K International Real Estate Investors - A Growing Source of New Clients Source: NAR Profile of International Home Buying Activity 2011

6  Current Clientele: Your BFF for FII  Referrals  Do your current clients know that you practice internationally?  Home-country connections  Are any of your current clients recent immigrants?  Second generation?  Business Interests? International Real Estate Investors - A Growing Source of New Clients

7  USofA: We Speak Your Language, Pardner!  17.89% of Americans speak a foreign language  Top 10 Foreign Languages Spoken in the USA 1. Spanish/Spanish Creole (28.1M) 2. Chinese (2M) 3. French (1.6M) 4. German (1.4M) 5. Tagalog (1.2M) 6. Vietnamese (1M) 7. Italian (1M) 8. Korean (0.89M) 9. Russian (0.70M) 10. Polish (0.67M) International Real Estate Investors - A Growing Source of New Clients Source: 2010 U.S. Census Data, Tabulated by NAR

8  Illinois: Land of Linguae  19.23% of Illinoisans speak a foreign language  Top languages in Illinois (NAR Compilation of 2010 Census): 1. Spanish/Spanish Creole (1.25M) 2. Polish (185K) 3. Chinese (65K) 4. German (63K) 5. Tagalog (62K) 6. Italian (52K) 7. Korean (44K) 8. Greek (40K) 9. French (40K) 10. Russian (38K) 11. Arabic (35K) 12. Urdu (32K) International Real Estate Investors - A Growing Source of New Clients Source: 2010 U.S. Census Data, Tabulated by NAR

9  Professional Networks: Strength in Numbers  CIPS Network  Over 2,000 CIPS Brokers Worldwide  55 in Illinois  Local Association Network  Does your association have an International Section?  Global Real Estate Forum (CAR)  Chambers of Commerce  Neighborhood Chambers  Ethnic Chambers  Regional Chambers/Business Development Authorities International Real Estate Investors - A Growing Source of New Clients

10  Overseas Partners: Go to the Source  Consulates/Embassies  Have you met the Commercial Consul?  Have you met the Cultural Attaché?  Overseas Real Estate Associations  NAR Network  Global Alliances – more than 60 national associations  President’s Liaisons/Gateway Associations  Local Overseas Associations  Trade Missions – Host or Participate  Mentoring International Real Estate Investors - A Growing Source of New Clients

11  How does culture affect business decisions?  Decision-making styles  Risk-taking or risk-averse culture  Individual or group decision-making style  Opinion leader (vs. decision-maker)  Attitudes toward real property  Permanent or temporary  Family, investment, or business necessity  Perceived appropriateness for intended purpose International Real Estate Investors - A Growing Source of New Clients

12  Create an environment of tolerance  My way or the highway? NO WAY!  Awareness and sensitivity  Accept that there is no one “right” way  Understand and respect cultural norms  Lead clients using their frame of reference  Patience, respect, and support  Time may not be of the essence  Form over function – indication of respect  Mutual learning, mutual benefit International Real Estate Investors - A Growing Source of New Clients

13  Outline the process  Communicate clearly  Simple vocabulary, avoid jargon, idioms  Recognize possible alternate definitions  Use reference points based on home culture  Create a timeline  Establish order of events  Identify milestones to closing  Balance certainty/uncertainty (mortgage, inspections, etc.)  Handle objections sensibly  Sympathy, acceptance, validation  Mutual, cooperative resolution International Real Estate Investors - A Growing Source of New Clients

14  Carrying the transaction to closing  Keep the client informed – create a contact schedule  Be aware of potential pitfalls, roadblocks  Be prepared to provide direct assistance if necessary  Closing Day  Attend the entire closing!  Prepare the client to close (documentation, etc.)  Assist with explanations, misunderstandings International Real Estate Investors - A Growing Source of New Clients

15  Solidify the relationship  Transactional vs. relationship broker (“Podolsky decision”)  What will your client say about you post-closing?  Will your client return or refer others?  Recognize additional business opportunities  Property tax reductions, payments  Management services (maintenance, leasing, etc.)  Additional real property investments International Real Estate Investors - A Growing Source of New Clients

16  Country of origin: Poland  Transaction Facts:  Type of purchase: Residential Condo  Number of purchasers: 2 (husband/wife)  Location: Chicago Loop  Transaction Closing: January 2012  Prior client experience in USA  Husband studied in summer school at UIC  Both travel frequently to the USA  Both have business contacts in USA  Primary purpose: personal use, later rental  Daughter currently studies at UIC  Seeking less expensive alternative to dorm/hotel  Want good return after daughter finishes school International Real Estate Investors - A Growing Source of New Clients

17  Issues:  Location near UIC, but also near Loop  Investment value: adequate return after renovation  Parking  Money transfer PL to USA  Resolutions:  Location: South Loop  Predicted return at current rental rate: 11.2%  Arranged zoned parking permit at City Hall  Arranged bank transfer via Citibank  Outcome: Transaction Closed International Real Estate Investors - A Growing Source of New Clients

18  Country: Poland  Transaction Facts:  Type of transaction: Single family home inheritance/sale  Number of sellers: 1  Location: Near Jelenia Góra, (Silesia)  Transaction Date: TBD  Prior client experience with Poland  Emigrated post-WWII  Has no family in Poland, wife/daughter in USA  Primary purpose: liquidation of asset  Client does not plan to return to Poland (96 years old)  No family members remain  Would like to use funds for family in USA

19  Issues:  Verification of ownership by brother of deceased  Remote location  Interim protection of property  Resolutions:  Assistance in finding capable legal advice in PL  Referral to Association-member broker  Assistance in obtaining, providing documentation proving relationship to deceased  Outcome: Pending International Real Estate Investors - A Growing Source of New Clients

20  International transactions are increasing in USA  Find clients using familiar, traditional methods  Make contact with international organizations, representatives  Recognize culture as a factor in real estate investment  Adapt practice to the client’s cultural needs  Manage client expectations  Offer post-closing assistance International Real Estate Investors - A Growing Source of New Clients

21 Don Pasek, CIPS, TRC Omniterra Real Properties, Chicago