Hogar Dulce Hogar: Home Sweet Home
Latinos: A demographic explosion

by Mary Schaefer, IAR Director of Communications

Latinos are the fastest growing minority group in the United States and will account for 40 percent of first-time homebuyers by 2010, estimates the National Association of Hispanic Real Estate Professionals. This is expected to continue into the next decade and beyond, thus increasing the number of Latino households in the United States. And their pursuit of the American dream of homeownership is a driving force in Illinois home sales. If you live in the Chicagoland area, you may have a greater chance that you will work with a Latino client at some point in your real estate career. If you work in a smaller, downstate market, immigrant Latinos are finding their way there, too, where friends or families are moving in pursuit of jobs or where the cost of living and housing prices are lower.

Age demographics alone indicate Latino buyers will shape buying and selling trends for the near future. If you haven’t done so already, now may be a good time to identify in your business model what your plans are for working with this market whose population base already represents billions of dollars of spending power.

Barriers to Homeownership

Latinos may prove to be the fastest growing segment of first-time homebuyers because of their age, and also are right in line to be not only first-time homebuyers but repeat buyers. Lack of education about the homebuying process is the greatest barrier to homeownership for Latinos and far outweighs issues such as insufficient income or job stability, according to the National Association of Hispanic Real Estate Professionals (NAHREP). Though homeownership is a goal among most immigrant families, a survey conducted by the Toma´s Rivera Policy Institute found that the lack of trusted sources of information is a key barrier to homeownership facing Latino homebuyers.

REALTORS® have a role to play in developing that trust in the real estate transaction process and more than one REALTOR® in Illinois has made it their own personal mission. Alex Chaparro is a first-generation Latino whose parents immigrated to Chicago from Puerto Rico. Broker-owner of Hudson Street Realty in Chicago, he will be the first Hispanic REALTOR® to serve as the president of the Chicago Association of REALTORS® when he is installed this fall. He opened his own firm in 2004 with the mission to serve a diverse clientele placing a strong focus on the Latino community. Sixty percent of his clients are Latino and 45 percent of all his transactions are conducted entirely in Spanish.

Chaparro states the purchase of a home is a huge financial transaction that warrants a personal relationship with the agent they are dealing with. "Basically, you have to understand your client. Cultural beliefs and attitudes can differ widely among Hispanic cultures. There is diversity in many Hispanic cultures, whether it be Mexico, South America, Central America, Cuba or Puerto Rico . . . Agents need to understand cultural nuances," he says. "The respect and optimum service you provide to Latino clients will be returned to you ten-fold in terms of referrals."

"The Latino consumer is extremely loyal in that they take ownership of their REALTOR®. If I have a client who is Latino and I do a good job, he or she will make it their personal mandate to refer me to everyone they know." That typically means you remain friends for life and may get invitations to christenings, birthdays, weddings, etc. On the other hand, Chaparro explains if you do mess up, they may never seek you out and utilize your services again or refer you.

Is Speaking Spanish a Must?

Speaking Spanish is an advantage when working with Latino clients but if you don’t, it doesn’t rule you out of the process, Chaparro says, who is a founding member of NAHREP’s 400-member Chicagoland chapter. He encourages REALTORS® to build support mechanisms in the office for bilingual communication. Real estate offices can hire and retain bilingual support staff or agents can partner with other REALTORS® or service providers who are bilingual to assist them in the transaction. Chaparro also advises REALTORS® to invest in a good English/Spanish real estate dictionary. REALTORS® are also learning Spanish themselves because they see the wave of purchasing power coming. Some first-generation immigrants may prefer conducting transactions mainly in Spanish. In most cases, typically someone in the Hispanic homebuyer’s immediate family can speak English and can translate.

Getting to Know Your Client

Getting to know as much as you can about your Hispanic client is paramount to the process. Latinos want an agent who is willing to be patient and who can take the time to meet with them, build a rapport, return phone calls and is willing to give information that includes advice, states Mary Mancera, Director of Communications for NAHREP. She calls it a bit of hand-holding and high-touch in terms of acquainting them with the process.

"The key components of the transaction and operating procedures need to be explained in detail early. Explain things you take for granted especially when it relates to the financial aspects of the transaction . . . like when earnest money is due or generally what a contingency is. There are big misunderstandings that can occur whether you understand English or not so explain early and often," says Chaparro.

Chaparro advises REALTORS® to not let an opportunity pass by where you can offer assistance as well. If a Latino customer comes to your office and they don’t meet qualifying standards to purchase a home because of either poor credit history or no credit, if you hope to gain them as a future customer, Chaparro urges REALTORS® to not let them leave without giving the opportunity to counsel them or refer them to a credit counselor who can give them advice.

He counseled a couple who had never purchased a home before, and they came back in a year to ask for his services to buy a home. Ethnic minorities need more education and information on establishing and maintaining good credit. "People can do a lot in a year. Don’t judge the book by its cover," he warns. He is now receiving multiple referrals from this couple because he went out of his way to show them some basics about building their credit rating.

Home Sweet Home

In the Latino culture, home and family is the centerpiece and everything revolves around the home. Latinos are looking for a home that can be a social center for them and their family.

REALTOR® Betty Milam, CIPS, TRC of Chicago moved to the United States in 1979 from Ecuador to attend college at the University of Houston. She has practiced real estate in Texas, Venezuela and Chicago and also lived in Columbia, South America. While in Venezuela she opened her own real estate company and was considered the pioneer of real estate in the area.

Milam has lived in the Chicagoland area since 2000 and in 2001 obtained her Illinois real estate salesperson license. In March, she joined Zel Realty in Skokie to develop the International Hispanic Real Estate Department because of her background and niche with the Hispanic population. A majority of her clients are Latino. Her immediate personal goal is to continue working to assist her Latino clients in the Chicagoland area but also to develop the international market to Latin America, and will travel to Ecuador and Columbia to meet with real estate companies to establish bilateral businesses.

Personally, she has been a resource assisting other REALTORS® who may not speak Spanish with their Latino clients. And she tries to stay knowledgeable about different phrases and words of the Spanish language and has formulated her own Spanish dictionary to better communicate with her clients.

"It’s essential to spend time building relationships, making repeated calls or visits and maintain contact after the transaction for future referrals," she says. "Latinos can find purchasing a home a very complicated process because they are unfamiliar and become overwhelmed with the process. REALTORS® can minimize that fear by giving clients a complete picture of the process in a way that is educational, familiar and not intimidating."

REALTOR® Sylvia Rivera, ABR, CIPS, TRC with Coldwell Banker Residential in Bolingbrook knows firsthand the influence Latinos play in the residential real estate market today. She immigrated to Chicago in 1964 with her parents and five other siblings from the small farming community of Durango, Mexico.

Upon graduation from the University of Illinois at Chicago, Rivera became an adult-education English teacher. Her former students became some of her first real estate clients and purchased their first home with Rivera’s assistance. Rivera, who has practiced real estate since 1998, has identified her niche as assisting first-time homebuyers and states approximately 60 percent of her clients are now based on referrals from previous clients.

Once the process starts and you are getting down to the contract stage Rivera admits some clients feel overwhelmed because it is all in English. To allay fears they may have, she has individual service providers she can refer clients to who speak Spanish such as attorneys who can explain the contents of the contract in Spanish.

Misconceptions

Acculturation levels, language and country of origin make for unique sub-groups in the Latino population. One should not assume, for instance, that all Hispanics are Mexicans. The U.S. Hispanic market is comprised of subcultures of over 20 countries.

According to Chaparro another misconception is Latinos are exclusively first-time homebuyers. Latinos are also investing in luxury homes and the second-home market in the state of Illinois. "Many Mexican Americans living in Chicago also own property in Mexico concurrently," he states. REALTORS® have the opportunity to establish corporate relationships with Mexican real estate companies to establish a good base of referrals, although there is not an official law you must have a real estate license to sell real estate in Mexico, according to Chaparro.

Rivera agrees it is not uncommon for Hispanic Americans to be wage-earners in the United States and live here but also have second homes in their native homeland or have intentions on returning there once they retire. She recently obtained her CIPS designation because she wants to assist her clients with locating property in Mexico.

Rivera’s recent clients, Juan and Angelica Alcantara, have lived in the United States for approximately 15 years after immigrating from Mexico. With Rivera as their buyer’s agent, they recently purchased their first single-family home in Bolingbrook, a second home purchase after stepping up from their first condominium home in Woodridge. The Alcantaras will retain the condo as rental property assisting a relative who will pay expenses and rent. In return the Alcantaras will be able to transfer some of that equity toward the purchase of their new home. Rivera sees a growing number of Latino families reaping the benefits of owning more than one property as they begin to build equity and purchase their second home.

It’s a Family Affair

It definitely is a family affair when dealing with Latino homebuyers. "That means even the eight-year-old child may be involved in the decision-making. Agents need to understand unless you can facilitate having the children being there you aren’t going to have a client very long," Chaparro advocates.

It is not uncommon for the children, parents, aunt, cousin or grandparents to come to the showing and be involved in the transaction. "The children have to be happy. I’ve seen situations where on the surface the home fits the family’s parameters, but because the children did not like the home, the parents walked away from it," he says. When the parents see that you care about the family in its entirety, you are building positive relations with all members of the Latino family.

It’s generally a rule of thumb that the extended family is part of a nucleus that is many times pulled into the conversation and decision-making process. It is not uncommon in a loan transaction that every person in the family comes along.

Understand Their Housing Needs

If they want three bedrooms, a two-bedroom house that fits their price-range simply won’t do. "There usually is no negotiating in the process. Their needs are typically what they say," Chaparro says. That also means if you can’t find the property they are looking for you must present the reasons why in a very diplomatic manner so that other housing options can be considered.

For instance, if a Latino homebuyer wants to live in a certain area and qualifies for a $280,000 home and the starting home is $380,000 in that area, a housing option might be a condominium. The American dream for Latinos is typically the single-family home, Chaparro says. "Most Latinos start out in an apartment and view ownership as a single-family home or two-flat. A condominium is like an apartment."

He states it’s really only been in the last three years that more Latinos are now viewing condominiums as a viable housing option. Housing options and home prices are forcing that decision. The role of the REALTOR® is to educate the buyers that the first step is going to allow them to own property and build equity and leverage so they can move up the housing ladder into a second home in the future.

Aversion to Banking and Lending Institutions

Chaparro advises agents to establish working relationships with lenders who have access to a variety of loan products and experience in working with immigrant homebuyers. Some immigrant homebuyers from Latin American countries, depending on their nationality, may have misconceptions regarding the solidity of banks and are generally uncomfortable with the financial system in the United States.

Lending institutions are building trust with the Latino population in many of the same ways REALTORS® are by being involved in community outreach efforts and partnerships with community organizations as well as providing Spanish-language translated consumer brochures and telephone services.

Reaching Them

A way to reach out to the Latino population is becoming involved in the community by joining organizations and attending cultural events such as those sponsored by the Latino Chamber of Commerce and networking at these events. Making yourself visible within the Hispanic community is critical. Milam is involved with the consulate offices of Chile, Venezuela, and Ecuador located in Chicago. Consider participating in community housing fairs where future Latino homebuyers may be present

Closing Gifts

When the transaction is complete, it is highly recommended to pass along a closing gift that places significance on your relationship with your client. Chaparro will typically analyze the family’s needs before choosing a specific gift. If they are having a baby, a baby gift certificate would be customary, or a gift related to renovating the property, suggests Rivera, who also might give something to her client to decorate the home. A picture of the house that is nicely framed may be especially sentimental to the family. Make sure the gift you choose is a family gift, something the entire family would appreciate.

Typically after a closing, the family celebrates with a small lunch. If you don’t attend the lunch, the new homeowners may be insulted. Most of the time the homeowners pay for the lunch and the agent is well-advised to go, Chaparro advises. The personal attention you provide is long remembered by Latino clients.

May 2006 Illinois REALTOR magazine