Globalization has created a literal world of opportunity for brokers. SIORs with experience in the international arena encourage others to explore it but to be aware of common pitfalls. Below are specific recommendations.

ANTICIPATE PROCEDURAL DIFFERENCES

James Mulhall, SIOR, managing director of Murphy Mulhall in Dublin, works with many brokers from the U.S. and other countries whose clients want to lease or buy space in Ireland. The brokers who fare the best are those who are prepared for differences in engagement letters, fee structures, fee responsibilities, and legal documents. In Ireland, for example, the fee base is typically 10% of the first year’s gross rent rather than a percentage of the contracted rent over a period of years, as is customary in the U.S.

Furthermore, in the U.S. landlords typically pay the fees of tenant representatives.  That is not the case in many European countries, including Ireland, where tenants are responsible for paying their own brokers. Or in India, where, according to Diana Whisenant, SIOR, executive managing director of Hanna Commercial in Cleveland, the tenant and landlord typically divide the fee, with each paying the equivalent of one month’s rent.

Street Jones, SIOR, principal of Rich Commercial Realty in Raleigh, N.C., also notes that many brokers outside the U.S. are compensated through a performance-based pay structure. And Whisenant observes that U.S. brokers typically earn fees that are higher than those in other countries.

Differences extend beyond fees. In the U.S., landlords usually pay for tenant improvements; that is rare elsewhere. Lease regulations vary significantly. For instance, Mike Maroon, SIOR, managing partner of The Acclaim Group in Cranford, N.J., points out that tenants in India who complete a certain base term—typically three years—can terminate the remainder of the lease for little or no cost.

Closing procedures, too, vary from country to country.  Whisenant warns that environmental laws are not universal. Nor are laws governing who can use a tract of land. Consider the Mexican tradition of “ejido.” Gerardo Ramirez, SIOR, executive vice president of JLL in Mexico City, describes ejido as a special form of ownership in which a community has the right of the land’s usufruct. “There is a process to convert the ownership of the land from ejido to private property,” he says, noting that the process takes considerable time and resources.

FIND A CO-BROKER

To navigate such complexities, experts suggest partnering with a broker in the country where a client wants to buy or lease property. These brokers, many of whom speak multiple languages, can also recommend lawyers, contractors, and other critical support for a deal or project.

Jones seeks out co-brokers who understand real estate lingo used in the U.S. and the country’s transaction standards. Such brokers, he says, “help bridge the inevitable cultural gap.” Tobias Schultheiss, SIOR, managing partner of Blackbird Real Estate in Königstein, Germany, supports this objective. In instances where cultural barriers arise, he believes the job of brokers is to “translate different approaches between parties.” Baltazar Cantu, SIOR, industrial director at Colliers in Monterrey, Mexico, agrees. He states that it is the broker’s responsibility to explain how business is conducted in the market to avoid friction or misunderstandings.

Maroon works with SIORs whenever possible. To him they represent “the best of the best, senior-level, boots on the ground for any given project.” He also relies on them for education. Every overseas assignment begins with a kick-off call, during which his local SIOR partners provide an overview of the market, customs, procedures, and potential challenges. Jones endorses this step: “Circling up and getting a full download from your co-broker will allow you to better understand or identify potential hurdles or slowdowns in your process.”

Conduct Research

Those without co-brokers can still leverage the SIOR network for research purposes.  Mulhall suggests contacting someone at the chapter or committee level who has done business in the market you’re targeting. A quick five-to-10-minute chat can yield insights that brokers can then present to their clients.

Whisenant recommends the book "Kiss, Bow, or Shake Hands," by Terri Morrison and Wayne A. Conaway, which covers common traditions and behaviors in 60 countries. And you can learn from others’ mistakes. Cantu recalls arriving five minutes late to a meeting with people from China. The atmosphere was tense, and one of the Chinese participants told Cantu that tardiness indicates a lack of respect and advised Cantu and his team to arrive five minutes early to every meeting. “We started doing that,” says Cantu, “and they appreciated the gesture of learning their ways.”

On the flip side, Ramirez has observed some struggles with the Mexican perspective on time. He explains: “Mexico is more relaxed, so sometimes people from the outside do not understand that 'mañana' is not precisely tomorrow.”

Whisenant once made the faux pas of calling an overseas client by his first name. He asked her to call him “Mr.” Since then, she’s been careful to adjust to the formality that prevails in parts of Europe.

Negotiation styles differ widely. Schultheiss has encountered parties who continue negotiating price even after the notary has arrived. This scenario would not surprise Bryce Custer, SIOR, broker at NAI Spring Commercial Realty in North Canton, Ohio, or his client, Jade Gunver from the Turkish firm ADO Industries. Gunver warned Custer—who recently brokered ADO Industries’ purchase of a manufacturing plant in West Virginia—that the Turkish style of negotiating might begin with seemingly lowball offers, but that they represent “a starting point.”

Custer, who has represented many international companies, was unfazed. He keeps an open mind and frequently reminds his clients to avoid confusing ignorance with malicious intent. He also recognizes that in some cultures relationships themselves are the starting point. As he remarks, “international business is not a transactional business.” Gunver concurs. “Bryce is not just our broker,” she says. “He’s our friend.”

CONCLUSION

Doing business overseas or with companies based overseas is not easy, but it is fulfilling. “Know that international brokerage can be very rewarding and exciting,” says Whisenant. “Every day is a new adventure and there is so much to learn along the way.”

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CONTRIBUTING MEMBERS

Baltazar Cantu, SIOR

Bryce Custer, SIOR

Street Jones, SIOR

Mike Maroon, SIOR

James Mulhall, SIOR

Gerardo Ramirez, SIOR

Tobias Schultheiss, SIOR

Diana Whisenant, SIOR