What you should know to maximize your success when entering the international real estate market.
Practicing real estate in Canada and the United States has become a fine-tuned business. While not all agents and brokers are successful, the tools and practices that define the Canadian/US real estate industry are highly developed and there is general agreement on how we transact real estate business. To top it off, there’s industry consensus for cooperation with each other through the structure of MLS and clearly defined terms of compensation for selling brokers.
When an industry has clearly defined standards and best practices, and participants agree on how business is conducted it provides a common canvas for all of the supporting industries and technologies. This common ground results in outstanding companies competing with each other to deliver technology and peripheral services to the industry. It’s still a tough business, but the challenges are not created by a confusing market place or inconsistent real estate practices as we see outside of North America so often.
International is Much More Than Translation
Many that seek to enter the international real estate space, from either the real estate or the supporting technology side, often seem to believe all they need to do is take their finely tuned North American model or technology and translate it for a new target country. Nothing could be further from the truth! While translation is necessary, of course, even that can be harder than anticipated as individual countries may have many different dialects and your success will depend on your ability and knowledge to understand and manage these nuances. This is true for the real estate company or the technology vendor or any service provider. Locals quickly dismiss new comers when it is clear, through inappropriate use of language or poor translation, that they really don’t understand your culture and market.
But the complexities go way beyond language! Understanding the local culture in terms of general business practices is crucial. What is acceptable in North America may be totally taboo in another country and things that seem totally harmless may totally derail your efforts. One mistake and your great product or service could be quickly dismissed!
The real estate transaction itself can be totally different country to country and, unlike North America, those entering international markets often find there is a “stated” way of doing business and conducting transactions and the “real” way they are conducted. If you are a franchise, for example, you may find out the hard way that a significant percentage of transactions never get reported, which means you aren’t receiving royalties on them. While this would be impossible in North America with the transparency created by MLS it is a common practice to this day in many international markets and exists at all levels of the transaction. Consumers don’t want to pay taxes on a sale or at least the full taxes. Agents may not want to report the sale so they don’t have to pay a royalty fee and companies, in turn, may decide to withhold reporting a portion of their sales to avoid royalty payments. Without MLS it is very difficult to hold these stake holders accountable. This requires a clear and solid upfront strategy to manage against these practices before entering the market.
Pay For Experience!
Your best chance of success when you make this leap is to find experienced partners that already have this market knowledge and already have the local culture experience that will take you years to learn. Whether this is a technology partner or someone to localize and deliver your training or marketing services don’t try to re-invent the wheel. You will spend more money, making mistakes, than you would outsourcing these critical services. There are countless failed examples of franchise that tried to bring their North America technology to international markets, only to abandon their efforts, after millions have been spent unsuccessfully.
It’s a different real estate world, outside of North America, with different rules and different drivers for success. Understand that getting local experience should be part of your planning and budget when you make this leap!