Coaching Corner

By Maria Valentin, Real Estate Business Magazine, October/November 2006

Banking on Diversity: Understanding the Negotiating Factor

Market Potential

Given the changing demographics of the United States, tailoring our approach to a largely diversified customer base becomes increasingly important. It makes sense for real estate agents and lenders to understand the purchasing customs of the significant numbers of immigrants in the United States whose dream of homeownership make them great client targets.

It is estimated that by the year 2010, 60% of all first-time home buyers will come from emerging markets. With a population of 44.2 million Hispanics, the United States already ranks as the second largest Spanish-speaking country in the world and, according to the U.S. Census Bureau, 13.5 million adults identified themselves as Asian Pacific Americans. By 2050, Hispanics are estimated to balloon to 102.6 million and Asian Pacific Americans to 33.4 million. While 72.1% of Caucasians own their own homes, only 56.3% of Asians and 46.7% of Hispanics enjoy the pride of homeownership.

Purchasing Expectations

Targeting customers from diverse cultural backgrounds involves a mutual learning process, and many misunderstandings can be resolved when expectations are clear before a transaction. Bargaining styles are highly culture-dependent and should be discussed with clients. While the German culture is averse to bargaining in general, the Asian, Hispanic, Russian, Armenian and Turkish cultures, among others, see hard bargaining not only as a valuable and necessary skill but also as a way of life. People from negotiating countries must believe they received a good deal or they simply will not go through with the transaction. They take great pride in their bargaining skills, and if they believe that they are overpaying, they will start renegotiating. Since it is not uncommon to continue asking for concessions even after an agreement has been reached, sellers and agents can become quickly irritated. More often than not, clients from other nationalities are completely unfamiliar with the real estate process here and with home values in the area.

Education, Education, Education

To avoid endless negotiations, set realistic expectations with customers. A discussion of an agreeable purchasing strategy should address bargaining limitations and an understanding that additional demands will require mutual concessions. Prior to showing clients any property, and certainly before they find a home they like, make sure that they understand how pricing is determined. Once again, this conversation has to take place early on. If you do so after a client has become enamored with a home, your advice will be eyed with suspicion.

Investing time in educating your customers on the real estate business and process is a good practice. Show them actual listing sheets of comparable active, pending and sold properties to set realistic expectations. Point out listing dates, sold dates and time on the market to help the client understand the market dynamics. Talk to them about the appraisal process and the possible scenarios if a property does not appraise for the contract price.

Buyer and sellers often have the misconception that real estate agents and brokers do very little to earn high brokerage fees. Multicultural clients see this as an opportunity to negotiate and will do so consistently unless the education process by the real estate agent is thorough and constant. Make it transparent who pays your commission and list everything you handle throughout the transaction. If you don't, your fee will become part of the negotiation process.

Keep in mind that developing a person-to-person relationship is of utmost importance to the Hispanic cultures. Build a relationship based on trust. In contrast, Asian cultures tend to place a high value on credentials, titles, degrees and designations. Consistency in your communication is considered a vital part of integrity and under-promising while over-delivering demonstrates humility, which is a greatly admired virtue in the Asian cultures. Be aware that saving face and avoiding embarrassment play a prominent role in social expectations. Trust between parties is a decisive factor in successful negotiations, but establishing that trust varies from culture to culture. Some, such as Hispanics, rely on intuition and emotion, while others look to past experience and performance.

Even though each culture has its own business style, the most obvious difference in negotiating with diverse cultures is the pace at which transactions move. While businesses in the United States abide by the Protestant work ethic that "time is money," Asian and Latin American cultures prefer a slower pace when moving negotiations along. Although adjusting to a slow transaction process may be a harrowing experience for U.S. real estate agents, they must understand and be willing to make accommodations to multicultural clients if they want to complete a successful transaction.

Suggested Negotiation Tips

Research the demographics, homeownership rate and available resources around your local branches. Present the findings to the agents, building a business case for working with multicultural clients.

Discuss previous experiences the agents in the office may have had in working with diverse clients and determine what could have been done differently.

In a group setting, create a comprehensive list of the things real estate agents accomplish during a real estate transaction (to be used in educating and creating value while working with clients).

Determine if a Web site in another language, translated marketing materials or advertising in culture-specific mediums would benefit the office.

Cofounder and vice president/ director of diversity marketing for First American Title Insurance Company in Northern California, Maria Valentin is also a real estate broker. Valentin develops marketing strategies for real estate professionals who work with multicultural clients. She can be reached at mvalentin@firstam.com.

---

Additional resources at www.CRB.com

NEW CRB Course: "Managing Diversity for the Broker, Owner, Manager"

CRB Partner Product: "Insight: Focusing on your Hispanic/Latino Client Found in the CRB e-Marketplace."

Visit www.crb.com for details.