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Members Learn Nuts and Bolts of Doing Business with Chinese Clients


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Friday, October 3, 2014

"Doing Business with China," the first of a quarterly series of programs exploring different aspects of doing business with clients from other countries, was a sell-out. Hosted by SILVAR's Global Business Council at SILVAR yesterday, the program gave members the opportunity to learn the "nuts and bolts" from real estate professionals that have worked with Chinese clients and are familiar with the real estate rules and regulations of that country. They shared their experiences, including challenges they have encountered when closing a deal.

SILVAR Global Business Council Chair Davena Gentry served as moderator. Panelists Amy Sung, a REALTOR® with Pacific Union International Real Estate – Menlo Park, and Mark Wong, a REALTOR® with Alain Pinel REALTORS® – Saratoga, presented the REALTOR® perspective; Kenneth Chan, premier mortgage consultant with HSBC – Palo Alto, presented the lender perspective; and Jessie Wu, escrow officer with First American Title Company – Cupertino, presented the escrow perspective.

The REALTORS® discounted the myth that Chinese buyers prefer Chinese or Chinese-speaking agents. What's important is to show respect for Chinese buyers who are not well-versed in English. Sung pointed out that just because they don't speak English well does not mean the Chinese buyer is not educated. Wong said more important than knowing the language is to learn and respect their culture, the principles of Feng Shui, what numbers and colors mean to the Chinese.

The REALTORS® emphasized establishing personal relationships, being liked and trusted by their Chinese client will take an agent a long way, since Chinese are keen on referrals from friends and relatives. It is also important to be sensitive to their gestures. Since they dislike confrontation, the Chinese won't say "no." "Maybe" probably means no. A nod may mean that they are listening, but not necessarily agreeing. Never embarrass your Chinese client, and never ask them where the money came from.

Chan said transferring money can get complicated if you don't know the rules. The Chinese government limits residents to transferring $50,000 a year abroad. Also, lenders require two months of bank statements (60-day seasoning). Large deposits during that period are flagged. He said this requirement is the biggest challenge for lenders because the Chinese are very investment conscious and like to move their money around. Remember that unaccounted large deposits during the two-month period is a deal killer. Over-the-counter cash deposits are also red flags because of the potential for money laundering.

"The client needs to present clean bank statements," stressed Chan.

Wu said agents dealing with Chinese clients need to verify their client's legal name. She explained Chinese names are different from western names. It may not matter much when the client buys the house or in a cash transaction, where there is no need to verify the identification of the client, but it will matter when it is time for that client to sell the property.

With regard to money transfers, Wu gave the example of the sale of a property for $2 million, and receiving 40 different wire transfers of $50,000 from relatives, employees, friends of the actual buyer. The money transfers require a third party transaction document, similar to a gift letter. Moreover, with no escrow number, no name of buyer, and no property address, the money had to be returned to the senders. Such a situation can delay or kill a deal, especially one that requires an all cash seven-day closing. All this information needs to be provided for the escrow company to accept the money.

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The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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