How To Engage Chinese Buyersadmin
In 2018, Chinese buyers remained as the top foreign buyer of US real estate, despite any capital outflow restrictions imposed by the Chinese government according to the latest report by the National Association of Realtors1. Chinese buyers spent $30.4 billion on US residential real estate and accounted for 15% of foreign purchases during the 12-month period April 2017-March 2018. Chinese investment in the US commercial real estate, however, fell to $7.3 billion2.
Rising prices and dwindling inventory of homes (at below $250,000) did not affect Chinese buyers. This is because Chinese buyers were typically buying upscale properties with a median purchase price more than 50% above the overall median foreign buyer price.
California still attracted the largest number of Chinese buyers, which accounted for 37% of Chinese purchases in 2018. However, research is positive that Chinese buyers are also interested in real estate throughout the US, particularly near hospitals and universities.
Recent survey in China and the US indicates that Chinese buyers’ interest in US real estate is expected to continue growing. The main factors for the Chinese interest include diversification, lifestyle, education, vacationing, pollution and food safety issues at home. We believe that to many upper-middle-class Chinese owning a piece of US real estate is a necessity and aspirational investment.
Positive Factors of Working with Chinese Buyers:
Chinese buyers look for upscale properties. On average, Chinese buyers purchased a property valued at $831,800, the highest among the top five international buyers for the U.S. real estate market.
The second positive factor is that Chinese buyers often pay in cash. Approximately 69% of Chinese purchases were reported as all-cash purchases, according to data from the NAR.
The third positive factor is that Chinese buyers are usually fast decision makers; they don’t dwell. Once Chinese buyers have their money ready, it can be a fast decision process. Three quarters of surveyed Chinese that have viewed properties in the US end up buying one during their trip.
The Challenges that we are facing:
There are several challenges working with Chinese buyers.
The first challenge is hard for us to know how ready they are. Way before they make a purchase decision, Chinese buyers start talking to local real estate agents in the US, sometimes on Chinese social media. Chinese clients ask questions and sometimes require to see listings. It’s a challenge for agents to handle such client requests to show them properties in the city during their visit without knowing if the client is ready to make a purchase.
Language is the second challenge. Many wealthy Chinese buyers tend to be middle-aged and speak little English. Even though their children may speak good English, the parents are the final decision makers. Chinese buyers are comfortable with Chinese speaking agents who can explain the US system of buy/sell brokers as well as the nuances of property ownership.
Thirdly, Chinese buyers make no distinction between a buyer broker and a seller broker. It is a common practice in China that the buyer and seller use one agent in a transaction. The concept of conflict of interest is still murky among many. This is one of the reasons that Chinese buyers use different agents at the same time, until making an offer.
How Cindy Chin and her Team can help
Cindy Chin & her team offers bi-lingual real estate professionals who speak fluent English, Mandarin and several Chinese dialects. They engage Chinese clients, answer their questions and qualify them in terms of their readiness and timing of making a purchase. When the client is qualified and ready, we will help move a fast move.
Familiar with real estate practice in China as well as in U.S, Cindy and her team members are capable of qualifying Chinese buyers without upsetting them.
Cindy and her associates educate Chinese clients about the US Real Estate market and system, the benefits of selecting and using a buyer broker and provides a steady stream of communications that will lower the chance that these clients talk to multiple agents.
Upon learning the benefits of using a buyer broker in a regulated and professional industry; many of our Chinese buyers will not speak to more than one agent at the same time and most of them wind up with becoming our long term loyal clients.