For those of you who have sold a Luxury Home you would have heard real estate agents or brokers telling you that their marketing has global reach. They might have said that international buyers are plentiful and willing to pay well over fair market price to purchase a home they fall in love with. Now is this true and have you ever fallen for this line?
We need to consider this concept in a number of ways. Firstly, Australia is an extremely long way from other countries. We are a huge Island and Sydney is around 23 hours from London, 14 hours flying time to Los Angeles and around 12 hours to Beijing. In other words it is unlikely that someone from overseas would purchase a home in Australia to visit every weekend – the distance makes this unrealistic.
We also need to consider Australian Foreign Investment laws. To summarize them foreigners are able to purchase property in Australia so long as it is a brand new property. This lends itself to the purchase of brand new apartments – obviously not houses in the same way. To purchase an existing dwelling or property as a non-Australian requires approval from the Foreign Investment Review Board (FIRB) which is not guaranteed and depends on a host of factors including how much money you have.
So when a real estate agent or broker tells you that international buyers are abundant it might be worth asking them what they understand of the FIRB requirements. If they look at you blankly then you might have a problem. Put simply to purchase an existing home requires foreigners to jump through a series of hoops that can make it almost impossible to get through before an auction – like all Government processes it takes time.
I have also heard many times that expatriate Australians are buying property in Australia at higher than ever levels and are prepared to pay higher than market value. This entire concept is ridiculous. Both expatriates and foreigners wanting to buy Luxury Homes in Australia have made their fortune by working hard and showing a strong sense of business. In other words they are not stupid and are probably not easily deceived or tricked into paying anymore than they have to.
Wealthy people make money by making good decisions. Just like any person choosing to purchase a home they can choose to have a valuer visit the home to assist them in deciding at what price level to make an offer. The valuer will inevitably be a local and will tell them the truth – what the property is actually worth. So why would they be so stupid as to vastly overpay for an Australian home? It’s a question that simply cannot be answered because they rarely ever do – it’s a myth!
I’m not saying that expatriates do not buy homes in Australia. Nor am I saying that foreigners do not choose to purchase property in Australia but when they do they have a series of legal requirements they must satisfy and they are generally very smart people who have been successful – they make decisions that make sense and don’t come racing to Australia to overpay for their chosen home.
The final part of the International buyer myth is just how real estate agents and brokers con their clients into believing that all internationally based buyers will find their home using that agent’s website or other Australian sites like realestate.com.au or domain.com.au. If you were looking to buy a home in Canada, Indonesia, Poland, Germany or the UK what website would you use? You probably couldn’t answer that question and expecting foreigners to know where to look is just as stupid.
At Marquette Turner Luxury Homes we are able to list our properties on the world’s most viewed Luxury Real Estate website – luxuryrealestate.com. That site enables us to reach an international audience that otherwise wouldn’t find homes on our local Australian websites. So next time an agent or broker starts talking about international buyers you have a lot to ask them and hopefully they can answer the questions – but don’t hold your breath!
Marquette Turner Luxury Homes on MarquetteTurner.com