The Impact of Globalization On Real Estate Brokers' Activities
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Globalization has had an immediate and powerful impact on real estate markets, making them an international working place. The rapid growth of the Internet has made the international market accessible to millions of consumers. A look at recent changes in homeownership rates illustrates this. Minority homeownership jumped by 4.4 million during the 1990s, reaching 12.5 million in 2000, according to the Fannie Mae Foundation. Foreign direct investment in U.S. real estate has increased sharply from $38 billion in 1997 more than $50 billion in 2002 according to U.S. 2000 Census data.
Most local real estate agents view the foreign market as a significant revenue potential and may have already worked with international clients in their local market, new immigrants or more sophisticated investors from different cultures and from other countries. For example, they provide value-added services that help overseas relocation employees figure out which inoculations their children need and how to register a car in the United States. Real estate brokers want to keep central to the transaction, protect the best interests of their members and address the unique needs of each multicultural global client by acquiring specialized training and designations. (See below for more)
In 2007 the Mexican Association of Real Estate Professionals in Mexico, AMPI, and the NAR, National Association of Realtors in the United States, signed a bilateral contract for international real estate business cooperation. Also at the local level, many other state and local associations are helping other countries achieve the same result. For instance, in New Mexico, a historically multicultural state, under the RANM, Realtor Association of New Mexico and the President's Advisory Council, is looking into forming an ambassador association to help a foreign country into signing a bilateral agreement with the NAR. In New Mexico, there are 4500 licensed real estate professionals and only 14 or 15 CIPS designees, out of whom, only six speak a language other than English.
A "Management Guide For Real Estate Associations" exists, which is a publication of the International Real Property Foundation (IRPF), which was funded by the National Association of Realtors (NAR) and the Reaume Foundation.The IRPF, in its Web site, regarding The Caux Round Table (CRT) principles, states that: "Ethical perceptions and international business is highly influenced by cultural differences. Because of cultural and ethical relativism, real estate business that is conducted across national boundaries may discover ethical conflicts. Major ethical issues that complicate international business activities include sexual and racial discrimination, price discrimination, bribery, harmful products, and telecommunications (enforcement of country-specific laws, copyrights, and questionable financial activities). A good document for reference in developing an association Code of Ethics in conjunction with such principles is "The Caux Round Table Business Principles of Ethics" (1995) (www.cauxroundtable.org).
Because of the particularities and the nature of international transactions between real estate agents of different countries, the Real Estate Code of Ethics of each country are excellent to regulate the ethics of each member in its own jurisdiction, but in the case of complex international real estate transactions were sometimes ethical conflicts arise, there is a need to have a group of principles more adjusted to international transactions were two or more real estate agents of different countries participate in real estate brokerage businesses. For example, in the NAR-FECEPAC memorandum of understanding of February 2003, a commitment was set to promote and adopt the respective code of ethics,standards and norms, but there is nothing specific mentioned for complex ethical matters in international transactions. There was surely a commitment to cooperate with a foreign agent to work in local markets different from the foreign agents market. As an example, it can be noticed that the NAR-CSBR Bilateral Cooperation Agreement of November 12, 2001 also created a commitment to promote and enforce mutually acceptable codes of ethics (Code of Ethics meaning those that been promulgated by the cooperating associations for use in their respective countries, each of which is acknowledged to be acceptable to the other). Again, as the IRPF says "Ethical perceptions and international business is highly influenced by cultural differences. Because of cultural and ethical relativism, real estate business that is conducted across national boundaries may discover ethical conflicts". There is also nothing specific mentioned for complex ethical matters in international transactions, whilst the agreements do provide to seek to facilitate business opportunities for members of the cooperating associations who may be working in each others markets, and also initiating and hosting trade missions. The bilateral agreement between NAR and CSBR also states that both parties agree to enforce their respective codes and advice the other of subsequent modifications to its code of ethics.
Some association members of Central American Real Estate Associations who are practicing agents and are involved in real life transactions on a daily basis have expressed their concern in the sense that at the moment of ethical conflicts with foreign colleagues, they have not had at hand any practical instrument that can serve to resolve ethical conflicts (even though agreements that make reference to code of ethics do exist).
Because the Caux Round Table principles are designed by corporate leaders and provide a model of how a good corporate citizen behaves in the countries and markets where it penetrates being a foreign entity, this principles could serve to reduce the fear of local brokers to foreign competition, provide an ethical framework against asymmetry of participants in free trade of services in our industry, and will permit that Central American association members that see an advantage in opening their country markets to competition, and that see advantages in having foreign strategic partners to work our their own local markets (e.g.: local Central American brokers partnering with United States brokers to work Central American Markets), keep promoting competition, globalization of business, and free trade of services.
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