The DeLeon Team Expands Its International Marketing to the Indian Community


The confluence of a vibrant economy, ideal climate, and intellectual capital draw people to Silicon Valley from around the world. This melding of cultures, ideas, and approaches only serves to intensify the appeal of this area. As the demographic profile of the area changes, so does the real estate market. These changes can be seen in the increase in construction, all-cash offers, shrinking inventory, and resultant appreciation, especially in areas with top-performing schools.

In order to understand the shift in the local real estate market, it is helpful to consider the places from which buyers are immigrating. By and large, foreign buyers hail from large cosmopolitan areas with strong education and high-tech industries, places like Taiwan, Chinese cities like Beijing and Shanghai, and Indian cities like Bangalore, Hyderabad, Mumbai, and New Delhi.

Generally, these areas share a few similarities. First, “nice” is often synonymous with “new.” The most affluent and desirable areas tend to have a lot of new construction. As a result of this ingrained belief, many people who relocate to the States favor new or newer construction in very good condition. Thus, a grand dame of a home in Old Palo Alto that would appeal to New Yorkers and even many Europeans may be passed over in favor of a newly constructed home with an in-law suite in Midtown.

Also, the smaller lots in many parts of Palo Alto and the surrounding areas may not deter buyers from areas where land is very limited and housing is quite dense. Therefore, not surprisingly, the convenience of Palo Alto may hold more appeal than the rural charm of places like Woodside and Portola Valley.

Once foreign buyers have found the perfect house, they need to submit an offer that will be considered competitive in this hot seller’s market. Fortunately, foreign buyers tend to favor all-cash purchases for a combination of cultural and practical reasons. On the cultural side, many countries do not share the American acceptance of debt, especially long-term debt. On the practical side, it is simply harder for buyers to obtain credit when the majority of their income and credit history is outside of the United States. While some banks, most notably HSBC and Citi, have begun to lend based on international credit history and foreign income, the approval process takes considerably longer.

Although all-cash offers may be both more convenient and competitive for the well-heeled foreign buyer, this may not be possible for many foreign buyers. Therefore, sellers evaluating multiple offers should consider the reasons for a longer requested escrow period and weigh the offer’s strength in light of the circumstances.

In addition to the impact on the offer process, the shift in demographics over the past 20 years has reduced housing inventory. The typical “American dream” of homeownership has involved a consistent upgrading of homes throughout one’s life cycle. Generally, college graduates save money for a down payment, buy a condo or small house to live in, and then desire a larger home as they begin to expand their families. Most often, they will sell their first property and use the proceeds as a down payment on their next property. However, many foreign buyers utilize a buy-and-retain strategy. When it is time to upgrade, many foreign buyers retain old properties as investments. Thus, there are fewer and fewer properties coming on the market each year. Naturally, this reduced inventory contributes to the strength of local real estate prices.

While it is inappropriate and, in fact, illegal for a seller or real estate agent to steer people of a certain ethnic group towards one house or area, it is wise to remain cognizant of cultural factors that may impact the potential buyer pool. This can range from advertising in foreign language papers, staging the home to appeal to foreign buyers (e.g., considering Feng Shui and Vastu Shastra elements), and weighing offer strength and timing in light of all circumstances.

For years, the DeLeon Team has been the market leader in understanding and marketing to the international community. Recently, we decided to expand our outreach to the Indian community. To that end, Ken and I joined with two other DeLeon employees on a trip to Delhi, India in August. There, we participated in India’s top international real estate event, met many of India’s top agents, and distributed hundreds of our property brochures. Most importantly, we learned a lot.

Without question, the quintessential American melting pot is alive and well in Silicon Valley. Whether a buyer or seller, an understanding of the various factors that impact foreign buyers will help you best structure your transaction to achieve the best possible result.