Working With Asian Home Buyers
Working With Asian Home Buyers
Like many Chinese immigrants, John Yen Wong’s parents rented a home long before they bought one. “They were renters in Chinatown for much of my life,” said Wong, CRB, broker-associate for Better Homes & Gardens Mason McDuffie in San Francisco.
The family settled in San Francisco in 1935. But by the time Wong’s parents saved enough money to purchase their first home, it was 1971. “And my parents were in their sixties,” Wong, a founding chairman for the Asian Real Estate Association of America (AREAA), says.
A Growing Share of the Market
Wong, who has been selling real estate since 1981, speaks Cantonese and Mandarin. Still, he says that no matter the agent’s background, real estate practitioners would be wise to start cultivating the skills necessary to serve a growing Asian-American market.
In 1965, Asian Americans accounted for 1 percent of the U.S. population. That number is now closer to 6 percent—more than 18 million people, according to a 2012 Pew Research Center study. That number is expected to hit 21 million by 2017.
In 2012, the California Association of REALTORS® reported that Asian-American buyers accounted for 26 percent of all residential properties sold in the state last year. And it’s not all about California, either. While one-third of the U.S. Asian population is based in California, Chicago, Honolulu, Houston, New York, Seattle, Washington, D.C., and Philadelphia all have growing Asian-American communities.
A Different Financial Profile
With higher educational levels (49 percent have a college degree as compared to 28 percent for all U.S. adults), and greater annual income ($66,000 compared to $49,800) and median household wealth ($83,500 compared to $68,529), real estate experts say Asian Americans are becoming increasingly important to the U.S. housing market.
The numbers look good, but because many Asians are cash-laden entrepreneurs, it can be hard to establish a solid credit history or pinpoint an exact budget.
Immigrant entrepreneurs tend to open a small business and then add properties over time. “When you look at their portfolio, they own five, six, seven, eight pieces of real estate, much of it free and clear,” Wong explains.
“Many of these buyers have all cash, and even those who need financing will have surprisingly large down payments,” he adds. But Wong notes that there may be cultural reasons for such tendencies.
“In some countries,” Wong says, “if the government knows what you’ve got, there is a chance that they might come and take it.”
Cultural and Linguistic Barriers
When working with a client who doesn’t want to disclose financial information, Tina Mak, a real estate consultant with Coldwell Banker Westburn Realty in Vancouver, B.C., and founding president for AREAA’s Vancouver chapter, suggests directing them to a lender they trust.
If you prefer to handle the question yourself, Wong says, “Rather than ask them, ‘How much money do you have in your bank account?’ I would say something like, ‘For this loan, this is how much you would need. Are there bank statements that show that amount?’”
For many first-generation Asian Americans, language is the primary barrier to home ownership. According to the U.S. Census Bureau’s 2010 American Community Survey, roughly 90 percent of Asian Americans speak a language other than English at home.
Broker of Houston-based Century 21 Southwest Real Estate and 2011 AREAA National Chair Kenneth Li, CCIM, CIPS, says that understanding Asian culture and speaking Mandarin and Cantonese gives him an advantage with some clients. “I can break the ice, get to know their needs, and build a sense of trust,” he says.
Even if you’re not fluent, you can still learn basic phrases to get engaged and develop a relationship with clients. Hire an interpreter to discuss contract details with clients.
“But make sure [the interpreter has] experience in real estate contract law,” Mak warns. “If the interpretations are not accurate, you could end up with a legal issue. So you have to be really careful.”
Know the Market
You should always listen closely to the types of homes your buyer clients say they are searching for. But also keep in mind common concerns for new immigrants.
“The type of homes many first-generation buyers look for are practical and suitable for housing their parents and aunts and uncles when they get here,” Wong says.
But don’t count out condos, he adds: “If you go to Asia—whether it is Japan or Taiwan or Hong Kong or mainland China—condominium-type living is quite commonplace.”
Some recent migrants may see owning a home at a young age as a uniquely American experience.
“In India, most people are in their 40s before they can afford to buy a home. But some of these clients are 24 to 25 years old. And most of them like the newer homes, not more than 10 years old,” says Shan Saigal, a broker for Referral Realty Silicon Valley in Santa Clara, Calif.
As with younger buyers of all backgrounds, be prepared for such clients to solicit help from their elders. One possible difference here is that younger Asian buyers are more likely to bring their first-generation parents more deeply into the transaction.
“When you have a younger person putting 50 percent down, it is often with help from the family. And if the family is going to assist, they are going to want some say in the process,” Wong says.
Li agrees: “You can have two or three generations living in the house, so they want to get the consent of everybody.”
When it comes to marketing your services to this community, be careful not to lump generations together.
“Second-generation Asians are high-tech,” Mak says, but their parents may be “still very much into looking at real estate ads in newspapers.”
Li hosts two-hour homebuyer workshops and commercial investment seminars every month to educate Asian clients on all aspects of real estate.
“I don’t just talk about houses or commercial properties. I will line up other professionals such as an inspector, a title company, or a lender. I give an overview and have some key points and have the other experts talk about their field,” Li says.
When hosting events, Li suggests using a neutral place like a house of worship or bank to attract a wide group of people.
To make inroads in the Asian community, work with your local real estate association, AREAA, and other groups that support minority homeownership. Also, attend local cultural events that are important to the community.
No matter the route, experts agree that it’s a good time to embrace minority clients.
“For a long time, organized real estate and the mainstream side and brokerages acknowledged the importance of ethnicity from the perspective of fair housing and the right thing to do. Right now, folks are realizing that there is a significant business proposition associated with the international segment,” Wong says. “It is no longer an afterthought… There is clear recognition that this market is here, it’s important, and it’s attainable.”