It’s one of the most lucrative matchmaking events on the planet where realtors from 26 countries meet some of the wealthiest people in China. An invitation-only real estate trade show, highlighting elite properties from around the world, was held last December in Shanghai.
But American realtors have the upper hand. Overseas Chinese spent $22 billion buying homes in the U.S. from March 2013 to the same period in 2014. That was up a whopping 72 percent from the year before and California is their most popular market.
“Offers are coming in from Chinese nationals. They’re all cash. They can close in seven days,” Michael Repka, the CEO of DeLeon Realty in Palo Alto, said.
“There’s no loan contingency, no inspection and no appraisal,” Michi Olson from Alain Pinel Realtorssaid. “We just had one in the East Bay with 53 offers and the property went for $200,000 over the asking price.”
Olson said the one who bought the East Bay property was from China.
At these trade shows, potential buyers look at videos showcasing homes from the Bay Area. Some buy them sight unseen.
“So they watch these high-end videos that walk people through the property and they a sense both the neighborhood and the house and then they will just wire the money in,” Repka said.
Competition among realtors is stiff. DeLeon’s marketing strategy includes videos and a website in Chinese. They also bought a Mercedes van to take buyers to open houses and have a plane to show Chinese the splendor of the Bay Area. The plane has a lucky Chinese number on its identification markings — an eight, not one but two of them. Local realtors are doing just about everything to get a slice of the Chinese pie.
Realtors are even asking cities to change addresses of homes Chinese are interested in, with the number four. That’s because the number four means “death” in Chinese — a definite no sale.
Hillsborough realtor Stanley Lo, from The Green Banker, has represented Chinese buyers for some two decades. He sells luxury homes that can go for $7 million and include six bedrooms, two dining rooms, a pool and a two-story guest house. The seller is a Chinese who wants a bigger home. So who are his clients?
“It’s a combination of entrepreneurs, businessmen, developers and real estate tycoons,” Lo said.
Many of the homes they buy remain vacant most of the year. They’re called “ghost houses.” We saw one example that is $9 million property bought by a Chinese family.
“They actually came and purchased the home, but their purpose was only to come here next summer,” Olson said.
A burgeoning middle class is now looking to invest their money in a safe haven, away from China’s polluted air and political and economic uncertainties. Additionally, in China you never have home ownership.
“In China, it’s a 70-year lease, so there are uncertainties. Nobody knows what’s going to happen 70 years from now right?” said one realtor.
That’s another good reason to buy American.