UNDERSTANDINGTHE INTERNATIONAL REAL ESTATE BUYER

UNDERSTANDINGTHE INTERNATIONAL REAL ESTATE BUYER

Survey Methodology The survey was sent via email to a random sample in October 2013, and 218 valid survey responses were received. All eligible respondents closed escrow within twelve months prior to October 2013.

International Buyers aregetting a Bigger Slice of the Market than LastYear 9% 8% 7% 8% 6% 4% 3% 2% 1% 2008 2009 2010 2011 2012 2013 Q. Was the buyer an international buyer a person who was a citizen of another country who wished to purchase residential real estate in the U.S.? SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

Many REALTORS worked with International buyers in the 2013 % Who Sold to International Buyers 9 79% # of Properties Sold to International Buyers in the Last 12 Months 8 71% 7 6 2013 2012 5 4 3 2 14% 1 9% 6% 4% 3% 2% 1% 4% 3% 0 1 2 3 4 Q. How many properties have you sold to an international buyer in the last 12 months? 5+ # of Properties SERIES: 2013 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

China,Canada, and Mexico are still the major sources of international buyers 1 1 2 2 3 3 China 32% Canada 16% Mexico 11% Japan 6% France India Russia United Kingdom Brazil Germany 3% 3% 3% 3% 2% 2% Please tell us about your last closed transaction with an international client. What is your client s country of permanent residence?

Most international buyers are individual buyers 9 86% 8 7 6 5 4 3 2 1 8% 3% 3% Individual LLC Corporation LLP Other Was your last international client an:

TheTypical International Buyer 86% Individuals 81% College Educated 4 Asian $200K Median Income 7 Married 6 Males 46 Years Old

For half of all international buyers, it was their first time purchasing a property in the U.S. Unsure, 13% No, 3 Yes, 51% In your last closed transaction with an international client, was that the buyer s first home purchased in the U.S.?

Other Properties International Buyers Own 3 3 3 2 2 2 2 1 1 13% 1 7% 1 2 3 4 5 6+ How many other properties does your last international buyer own?

WHYTHE UNITED STATES?

Majority only considered the U.S. Considered Other Countries, 1 Considered only the U.S., 8 In which other countries did your last international buyer consider purchasing real estate?

Why the United States? Desirable location & climate To be closer to family &friends 2 2 Investment opportunities Changes in work & employment 9% 9% Educational opportunity 6% Affordable pricing Political stability & safety To obatain a visa, immigration 3% 2% 4% 1 1 2 2 Q. Why did your last international buyer choose to purchase in the U.S. as opposed to the other countries he/she/they considered?

International buyers purchased primarily for investment purposes Investment/tax advantages in U.S. 18% To rent out property 14% Changed jobs/relocated 12% Desired a better/other location 7% Affordable price Tired of renting Investment to acquire legal permenant U.S. resident 1 1 2 What was your clients main reason for buying now in your last closed transaction with an international client?

Traditional buyers purchased because Tired of Renting Investment/ Tax Considerations 21% 23% Desired Larger Home Desired Better Location 1 17% Change in Family Status Desired Smaller Home Changed Jobs Retirement/Move to Retirement Community Foreclosure/Short Sale/Default 4% 4% 4% 3% 2% Other 9% 1 1 2 2 SOURCE: 2013 Annual Housing Market Survey What was your clients main reason for buying now in your last closed transaction with an international client?

Reasons to Buy incalifornia Mild year-around weather Amazing outdoor environment Advanced Educational Opportunities Easy access to variety of entertainment throughout California

Climate incalifornia Moderate temperature year round Dry weather Clear Skies

AmazingOutdoor Environment

Advance EducationalOpportunities System # of Campuses Examples University of California 10 University of California, Berkeley University of California, Los Angeles University of California, Riverside University of California, San Diego California State University 23 Cal State University, Fullerton Cal State University, Northridge Cal State Polytechnic University, Pomona California Community College 109+ Santa Monica College Pasadena City College Private University Hundreds California Institute of Technology Pepperdine University Stanford University University of Southern California

EasyAccess to avariety of Entertainment

Most international buyers did not purchase their properties as a primary residence 7 Primary Residence 32% 19% Investment/Rental Property 33% Traditional Buyer Vacation/Second Home Other International Buyer 6% 31% 4% 1 2 3 4 5 6 7 8 What was the intended use of the property in your last closed transaction with an international client?

SouthernCalifornia is a popular destination for international buyers 7 66% 6 5 4 3 2 22% 12% 1 Northern Southern Other Where was the property in your closed transaction with an international client located?

TopCounties where International Buyers Bought 3 3 3 2 22% 2 2 1 14% 1 7% 7% Contra Costa County Santa Clara County Los Angeles County Orange County San Diego County Riverside County Where was the property in your closed transaction with an international client located?

International buyers are heavily concentrated in suburban and urban areas 41% Suburban 4 Central city/urban 9% Resort area 8% Small town/rural area 1% Other 1 1 2 2 3 3 4 4 Please select the category that best describes the location of the property in your last closed transaction with an international client?

Seven out of ten of international buyers purchased an equity sale 7 6 68% 5 4 3 2 1 1 1 2% Equity Sale REO Sale Short Sale What type of purchase/sale did your last international client(s) make? Other

Majority Bought a Single Family Home 63% Single family detached home 24% Condo/townhome Multifamily home 2% Comercial retail space Commercial office space Other 1 2 3 What type of property did your last international client purchase/sell? 4 5 6 7

A typical international buyer purchased a property with 4 Bedrooms 2,000 Square Feet 2.5 Baths 2 Car Garage

Square Footage of the Property 6,000+ ft 4% 5,000-5,999 ft 3% 4,000-4,999 ft 1 3,000-3,999 ft 29% 2,000-2,999 ft 44% 1,000-1,999 ft 6% < 1,000 ft 1 1 2 2 3 3 4 4 What was the square footage of the property in your last closed transaction with an international client? 5

Square Footage of the Lot 8% >50,000 ft 20,000-49,999 ft 7% 15,000-19,999 ft 7% 10,000-14,999 ft 9% 8,000-9,999 ft 9% 23% 6,000-7,999 ft 17% 4,000-5,999 ft 13% 2,000-3,999 ft 9% < 2,000 ft 1 1 2 What was the square footage of the property in your last closed transaction with an international client? 2

Number of Bedrooms 4 4 32% 3 3 2 19% 2 1 1 4% 4% 1% 1 2 3 4 5 6 7 How many bedrooms did the home in your last closed transaction with an international client have?

Number of Bathrooms 42% 4 34% 4 3 3 2 2 13% 1 8% 1 3% 1 2 3 4 5 6 How many bathrooms did the home in your last closed transaction with an international client have?

Garage Size 62% 7 6 5 4 3 1 11% 2 9% 2% 1 0 1 2 3 What was the size of the garage in your last closed transaction with an international client? 4

What amenities did international buyers want in their properties? 44% Designer kitchen 26% Wine cellar 9% Sauna 6% Putting green 4% Private beach 4% Heated floors Outdoor kitchen 3% Hot tub 3% Outdoor pool 3% 3% Workout room 1 1 2 2 3 3 4 4 Please check all the amenities of the property in your last closed transaction with an international client. 5

Initial Listing Price 8% $2,000,000 and over 3% $1,500,000 to $1,999,999 11% $1,000,000 to $1,499,999 6% 6% $900,000 to $999,999 $800,000 to $899,999 8% $700,000 to $799,999 4% $600,000 to $699,999 9% $500,000 to $599,999 14% $400,000 to $499,999 12% $300,000 to $399,000 7% $200,000 to $299,999 13% Less than $200,000 2% 4% 6% 8% 1 12% 14% What was the initial listing price of the property in your last closed transaction with an international client? 16%

Final Sale Price 7% $2,000,000 and over 2% $1,500,000 to $1,499,999 11% $1,000,000 to $1,499,999 6% $900,000 to $999,999 $800,000 to $899,999 8% $700,000 to $799,999 4% $600,000 to $699,999 9% $500,000 to $599,999 14% 14% $400,000 to $499,999 $300,000 to $399,000 $200,000 to $299,999 14% Less than $200,000 2% 4% 6% 8% 1 12% 14% What was the final sale price of the property in your last closed transaction with an international client? 16%

More than half of international buyers paid at or above the asking price 4 International Buyers Distribution of Sales by % Above/Below List Price 3 32% 3 2 2 22% of Sales Above Asking Price 1 Traditional Buyers % of Sales above Asking Price 5 5 4 3 2 1 6 26% Long Run Average = 18%: 12% 2 11% 9% 6% 1 Under - -6% to -1% to 1-1 - 1% to 6% to Over 1 1 2005 2006 2007 2008 2009 2010 2011 2012 2013

International Buyers vs.traditional Buyers International Buyers Traditional Buyers Squre Footage 2,000 1,659 Final Sale Price $525,000 $392,900 % of Sales With Price Above Asking Price 22% 5

THE BUYING PROCESS

International Buyers FoundTheir Properties from the MLS 71% MLS Another agent's private listing My listing Client found property Open house 3% Advertisement 2% Builder 2% From seller directly 2% Other 2 4 6 How did you find the property for your international buyer in your last closed transaction? 8

Weeks Spent Looking for Property 3 3 Median: 5 weeks 3 31% 2 18% 2 14% 1 1 6% 2 weeks or less 3-7 weeks 8-12 weeks 13-16 weeks 17 weeks or more How many weeks did you spend looking for a property with your last international buyer?

Number of PropertiesViewed 16% 14% 14% Median: 9 13% 14% 12% 14% 12% 12% 11% 9% 1 8% 6% 4% 2% 1 to 2 3 to 4 5 to 6 7 to 8 9 to 10 11 to 15 16 to 20 21 or more How many different properties did you view with your last international buyer prior to the client making a purchase?

Offers Made on Other Properties Median # of offers made = 2 4 37% 3 3 2 2 1 13% 1 12% 13% 12% 8% 1 2 3 4 5 6 to 10 11 or more How many offers did your last international buyer make on other properties (in addition to the one purchased)?

Properties sold to an international buyer typically stayed on the market for a month 6 57% Days on market (median) = 30 days 5 4 3 22% 2 1 1 4% 7% 1 to 30 Days 31 to 60 Days 61 to 90 Days 91 to 120 Days 121 or More Days How many days was the property on the market in your last closed transaction with an international client?

International Buyers vs.traditional Buyers International Buyers Traditional Buyers Weeks Looking for Property 5 10 # of Properties Viewed 9 10 # of Offers Made on Other Properties 2 3

All Cash International Buyers Obtained financing, 31% All cash, 69% How did your last international buyer pay for the property?

All Cash International Buyers All cash 10 Obtained financing 31% 8 73% 6 4 69% 27% 2 International buyers Traditional buyers SOURCE: 2013 International Client Survey, 2013 Annual Housing Market Survey How did your last international buyer pay for the property?

Source: National Association of Realtors

Down-Payment as Percentage of Sale Price International Buyer 6 Traditional Buyer 5 5 39% 4 27% 3 2 1 14% 22% 14% 8% 1% 1 or less 11-2 21-3 31-4 14% 4% 41-5 Greater than 5 How much was the down payment for the home purchased (as a percentage of the sale price) in your last closed transaction?

Sources of Down-Payment 6 Personal savings 12% Proceeds from a sale of previous property 6% Gift Sale of personal assets (other than real property) 2% Other 2% 18% Unsure 2 4 6 What was the source of the down payment in your last closed transaction with an international buyer? 8

Difficulty in Obtaining Financing 2 Median = 5 19% 2 19% 17% 1 1 13% 11% 1 6% 1 2 3 4 5 6 7 8 Please rate how easy or difficult it was for your last international buyer to obtain financing. 9 10

Difficulty in Obtaining Financing International Buyer Traditional Buyer 38% 4 33% 3 3 2 19% 2 1 17% 19% 1 13% 11% 11% 1 6% 6% 6% 6% 1 2 3 4 5 6 7 8 SOURCE: 2013 International Client Survey, 2013 Buyer Survey Please rate how easy or difficult it was for your last international buyer to obtain financing. 9 10

Only a few international buyers had difficulty in bringing funds from outside theu.s. 58% No 1 N/A, client had funds in the U.S. 8% Yes 18% Unsure 1 2 3 4 5 6 7 Did your last international buyer encounter any difficulty in bringing funds from another country into the U.S. in your last closed transaction with an international client?

What other problems did international buyers encounter? Difficulty in finding a property Problems with immigration Financing Challenges finding insurance Documentation Decide on which city to buy What, if any, other problems did your last international buyer encounter? Please select all that apply.

Most did not hire an attorney or a tax professional to facilitate their transaction Hired an Attorney Unsure, No, 88% Yes, 6% Hired a Tax Professional Unsure, Yes, 6% No, 88% Did the international client hire an attorney to help facilitate your last closed transaction? Did your international client hire a tax professional (i.e. accountant, financial consultant, etc.) to help facilitate your last closed transaction?

Many international buyers did at least some work on their properties, which typically costs them $10,000 Money Spent on Repair/Remodel Work Done on Property 4 4 41% 37% $100,000 or greater $50,000 to $99,999 3 3 $40,000 to $49,999 2 $30,000 to $39,999 2 $20,000 to $29,999 13% 1 2% 12% 19% $5,000 to $9,999 7% $10,000 to $19,999 8% 1 11% 13% Less than $5,000 None Major remodeling Major cosmetic repairs Minor cosmetic repairs 32% 1 2 3 What type of rehabilitation / remodeling was done on the property in your last closed transaction with an international client? How much money did your client invest in rehabilitating/remodeling the property in your last closed transaction with an international client? 4

Property Management 6 56% 5 4 3 2 17% 1 1 11% Owner Unsure Property manager Other Who will manage the property in your last closed transaction with an international client?

CLIENT/AGENT RELATIONSHIP COMMUNICATION

International buyers relied more on referral and relationship when connecting with their agents International Buyers Traditional Buyers 61% Relationships and Contacts 28% 21% Internet 63% 12% Advertising 9% 1 2 SOURCE: 2013 International Client Survey, 2013 Buyers Survey How did you find your last international client? 3 4 5 6 7

International buyers relied more on referral and relationship when connecting with their agents 2 Referral from a previous buyer 19% Client found me online 19% Referral from a friend 1 Client is a friend 6% Referral from another agent Open house 4% Prior dealings iwht my brokerage 4% Client responded to my ad "For Sale" sign 3% Client is a relative 3% 1% Social media 7% Other How did you find your last international client? 1 1 2 2

Primary Language of International Buyers 36% Chinese 26% English 9% Spanish 4% Russian 3% Japanese 3% French 2% German 1% Portuguese 1 1 What is your last international client s primary language? 2 2 3 3 4

but most of them were communicated in English 7 English 1 Chinese 8% Spanish 7% Other 1% Russian 1 2 3 4 5 In which language did you primarily communicate with your last international client? 6 7 8

Use oftranslators Yes, 3% No, 97% Did you use a translator in your last closed transaction with an international client?

Email Communication 6 58% 5 4 3 29% 2 1 7% 1% Email Telephone Text message Video calls How did you primarily communicate with your last international client? Other

Email Communication 7 6 5 58% 51% International Buyers 43% Traditional Buyers 4 29% 3 2 1 7% Email Telephone Text message How did you primarily communicate with your last international client? 1% Video calls Other

Devices of Communication 4 Smartphone 3 Laptop Desktop 7% Mobile phone 7% Tablet Landline 1% Fax machine 1% 4% Other 1 1 2 2 3 3 4 4 Which technological device did you utilize the most in communicating with your last international client? 5

CONCLUDING REMARKS

TheTakeaway California housing market will continue to draw interests from international buyers International buyers purchased primarily for investment purposes International buyers relied more on referral and relationship when connecting with their agents

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