Navigating The International Real Estate Market
In this featured interview, Alexander Zakharin, a seasoned real estate professional at NestSeekers, shares his insights and expertise on the process of working with international buyers
With years of experience in the field, Alexander Zakharin has become well-versed in the unique challenges and opportunities that come with catering to an international clientele. From language barriers to cultural differences, he understands the importance of effective communication and building strong relationships.
One key aspect that Alexander emphasizes is the need for extensive market knowledge. International buyers often have different expectations and preferences when it comes to real estate, and being able to provide accurate and up-to-date information is crucial. From understanding local regulations to identifying investment opportunities, Alexander guides his clients through the intricacies of the international real estate market.
Another important factor is establishing trust and credibility. International buyers often rely heavily on their real estate agents to navigate unfamiliar territory. Alexander Zakharin takes pride in providing exceptional service, going above and beyond to ensure his clients feel confident and supported throughout the entire process.
Through this featured article first published on individuallypm.com, Alexander Zakharin shares his passion for working with international buyers and highlights the rewarding nature of helping clients achieve their real estate goals, no matter where they are in the world.
1. Acting as a buyer agent, could you share some insights into the unique considerations and processes involved when dealing with international buyers?
First and foremost, you act as a bridge between the international buyer and your market. Depending where they are coming from, everything might be completely different in their home country and so often you only learn that with experience. To give you some recent examples, my client from Eastern Europe was surprised his kids couldn’t co-own the apartment with him and his wife in New York and had to reach 18 y.o. for that, my other client from Middle East was puzzled why Manhattan doesn’t offer new construction apartments before they break ground as an investment, and my other client from Asia was fascinated that even with cash it would still take more than a couple of days to buy the apartment and get the keys. While global metropolises like New York, London, Hong Kong and LA might have similarities, they are still different markets and jurisdictions and you have to know that and – very important – the specifics of the market you operate in. Funny that sometimes to experience the differences, you don’t even have to go international – a few years ago I had a buyer from Indiana, US who was purchasing his first apartment in New York. He asked me about paying my commission and when I said that it is the seller who would cover that, he said: “Wow, where we are coming from, it works differently.”
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…
Second, when it comes to international buyers, it is important to remember that they might need your help with more than just buying a property. Especially if they just arrived to the country yesterday, you have 3 days to tour and pick up the property, and then they are gone while you have to arrange a purchase (yes, that happens!). 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, to CPA, to moving company, to international tax expert, etc.. Sometimes you will need to advice on which bank to use to open up an account, how to transfer their funds from abroad to here, how to set up the purchase structure – if they should buy under their name or LLC or trust, how the taxes should be handled, how to manage their property while they are away, and many many other things. I remember last summer we spent hours on Zoom with the buyer from Europe and a tax advisor working out the right way for him to own a property as a foreign national. Did you know there is an inheritance tax that kicks in even when it’s just 2 spouses who own the place? Did you know there might be potential ways of legally not paying this tax for foreigners?
Make sure you have someone to advise you on that.
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 then 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 “What are you going to do with your apartment after you purchase it?”, “What is your experience in buying properties outside of your home country?”, “What do you think might surprise you in New York?”
2. 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?
Cash real estate purchases can apply the following:
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 new developments, it really depends on the stage of the project and their specific situation). Also, the 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! 🙂