The Real Deal New York

Steering South Americans through New York real estate

By Tom Acitelli | November 27, 2007 02:00PM

In South America, real estate deals often unfold slowly, are highly negotiable, and are sealed with a handshake. When those buyers come to New York to do business, residential brokers say they are often surprised.

As a wave of South American investors look to the New York market for financial stability that their home nations may not provide, cultural differences sometimes make for a steep learning curve, say brokers catering to that clientele.

Daniela Sassoun of the Corcoran Group recently brokered a $1.6 million deal for a novice Brazilian buyer in the Gift Building at 225 Fifth Avenue. It was the second apartment Sassoun and her client looked at buying. On the first one, in the Orion near Times Square, her client dragged his feet and another buyer snatched it.

“Everything is negotiable in South America,” said Sassoun, who speaks both Portuguese and Spanish. “In a market like this there’s very little negotiability factor whatsoever. Unless they’ve done a deal here before, they have to learn A to Z.”

Many South American buyers come to the New York market cold, with little knowledge of the city’s property values or its neighborhoods. Usually, all they know is that they want to buy, and preferably in Manhattan. Brokers must often educate South American buyers on the breadth of both the city’s market by neighborhood and its buying process.

“The education is not only focused on the [property] values,” said Jacky Teplitzky, a Chilean native and executive vice president with Prudential Douglas Elliman. “The education is also focused on the process. Most South American countries, when you sell and buy a property, you basically do it through a handshake between the seller and the buyer. So, the process in New York is really a much more complicated process.”

Most South American real estate buyers prefer the East Side of Manhattan, according to brokers. Some will let a broker they’ve worked with shepherd them onto the Upper West Side or into Downtown, and some brokers are now nudging buyers into the outer boroughs.

Location can often be dictated by the buyer’s home currency, and South American currencies don’t go as far they used to, meaning buyers have less purchasing power.

For instance, one American dollar right now is worth about two and a half Brazilian reals. Back in the mid-1990s, there was a one-to-one exchange rate.

“It used to be one real for one dollar,” said Robson Lemos, a Corcoran vice president who started that firm’s Latin American division in the 1990s. “You used to be able to buy one-million- dollar apartments for one million reals.”

That’s why Lemos has been directing clients to areas like Long Island City and Astoria in Queens as well as to neighborhoods in western Brooklyn. There, currencies stretch further and make investing more lucrative, Lemos said, especially if the buyers plan to rent out their apartments rather than flip them. South American buyers generally prefer to have longer-term, fixed-rate mortgages because of fluctuations in their home countries’ economies, he said.

Whether in the outer boroughs or in Manhattan, the navigation of South Americans through New York real estate can ultimately become a matter of mutual understanding between broker and client, a dismantling of both a literal and a figurative language barrier.

“You really have to understand the mentality,” Teplitzky said. “It’s not just understanding the language. You also have to understand how the real estate industry is conducted in their own country.”

Comments are closed.