Posted by: Daryl & Wendy Ashby | July 19, 2011

Working with Immigrants

In a country celebrated for its multiculturalism, you would be hard pressed not to have worked with an immigrant client during your professional career in Canada.

Immigrants naturally share many similarities to Canadian, whether they be buyers or sellers, namely the desire for affordable, comfortable housing in cities and towns that include good schools, shops, places of worship and other amenities.

But, of course, there are also differences. Language is an obvious one, although many newcomers know some English or French or perhaps they have friends and family that can translate. One of the biggest overall challenges a realtor is the lack of understanding among newcomers about how the Canadian system works.

In some countries, the land is owned when bought and you can do anything you want on it and they don’t understand that they need permission and permits here. Also, many are used to buying with cash and they don’t realize costs are too high here and also that cash raises flags with government agencies–especially if the clients are from the Middle East.

Developing relationships with some immigrant clients can be tricky, as many don’t really want one. Newcomers to Canada as a general rule like to make all decisions themselves without any help from a professional. The concept of ‘helping them to buy’ can prove foreign to them. Our job–in their minds–is to find the property they want, negotiate a low price, and then leave them alone.

When it comes to real estate investments, specifically student homes, the expectations of immigrants is often too high as they are accustomed to bargaining and paying considerably below list price and not just $5,000 to 10,000 below.

It would appear at times that some newcomers don’t value loyalty the same as Canadians. This could stem from dealing with corrupt agents in their home countries. Kickbacks are common place in many foreign countries and many expect the same here. Employing discounted commissions and rebates as valuable tools to gain some level of loyalty, is short lived.”

The financial aspect is very much a driving force and many will sacrifice loyalty for financial. Mandarin -speaking clients have proven very sophisticated. They spend time studying the market and know the price per square foot and they will understand what’s a good deal.

Toronto realtor Peter Powers has experienced this as well but in a different way. Since his out-of-country clients are well heeled, they are often exploring other options in desirable cities such as London, Miami and New York.

“It’s a numbers game like anything else,” says Powers who works in Toronto. “Sometime my role is to educate and help someone clarify that Toronto is not the place to go.”

“It’s a much cleaner process whereas in other situations there can be a lot of anxieties involved,” says Powers. “Let’s face it, every trade has some negative opinions about it. The clients I’m attracting are looking at me as someone who provides a service. When I provide this they’re at ease, whereas in other situations sometimes I have to make the decision about whether I want to work with them (because they’re difficult) and they’re making that very evident from step one.”

Newcomers generally settle in larger centres such as Toronto, Montreal and Vancouver, according to a 2007 CMHC report on the housing situation and need of recent immigrants. Recent immigrants also manage to achieve better homes considering their wages, especially in Toronto and Vancouver. Often, these more expensive homes are purchased by pooling incomes and by using savings accumulated in their country of origin.

The study goes on to say that immigrants who have been in Canada for more than 20 years are, arguably, better housed than their Canadian counterparts.

There are definite advantages to working with newcomers to Canada, says McNeill, and from a realtor’s point of view, the top reason has to be the speed with which they make decisions. “As long as they have all the answers in place and trust is established, they don’t ponder the decision as long as traditional markets,” says McNeill.

McNeill’s company recently conducted a study of its last 500 sales and found that Vancouver’s burning hot real estate market is driven by Chinese immigrants and not, as many speculated, by Chinese investors who have no ties to the city. This finding is significant because it countered common public opinion that the city was being taken over by foreign money. It also suggests that many of the Asians buying B.C. properties are doing so because they have long-term commitments to the cities in which they’ve bought.

They don’t tend to be as fussy as Canadians or long-standing immigrants. They’re happy the property is theirs because they want a stake in Canada and it doesn’t have to be their dream home, he says. Often, today’s immigrants, unlike their predecessors, are usually cash rich, but have difficulty getting mortgages because they haven’t been here long enough or been employed long enough.

Toronto independent mortgage planner David Larock explains that rules governing mortgage eligibility are designed to ensure that employees have passed the standard three-month probationary period with their new employer. Lenders, he adds, also want to see a history of credit repayment, so if your client can provide an international credit report from Equifax or Transunion, or bank references from their country of origin, that will strengthen their mortgage application.

Establishing a Canadian credit history is another important step, Larock says, and applying for a credit card is a good way to start this process. Bear in mind that lenders recognize that establishing a Canadian credit score can be difficult so they will consider credit history from other sources such as a landlord’s letter showing twelve months of on-time payments or copies of utility bills that show regular payments being made for at least a year. Remember that your client is only considered ‘new’ for thirty-six months after arriving in Canada, so any extra flexibility afforded new immigrants disappears after three years. 

Larock offers a word of caution to Canadian newcomers who may place blind trust in mortgage advisors because they happen to share the same nationality.

“In my time on the lending side of the mortgage business, I am sorry to say that I saw a small number of new immigrants who were exploited by their mortgage advisor. In the rare cases where this happened, people didn’t bother learning anything about the subject. In these instances, the advisor secured private financing at exorbitant rates in order to earn higher commissions and extra fees. To avoid this, shop around. Blind trust can be expensive.”

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