The term “global marketplace” has never been more descriptive – particularly when it comes to real estate. According to the National Association of Realtors, international buyers purchased more than $68.2 billion in U.S. residential real estate from March 2012 to March 2013, across all 50 states. Property sales in the United States to foreign buyers amount to more than 6 percent of total U.S. home sales in value.
Whether you’re an international investor, a Canadian snowbird or a first-generation immigrant living in the United States, purchasing in an unfamiliar market can be daunting. While this guide will help you get started, it is no substitute for the expertise of experienced real estate agents, attorneys, mortgage brokers and accountants you will want to consult along the way.
- Determine HOW THE PROPERTY WILL BE USED
Before you start your property search, it’s important to think ahead to how you’ll use the home once the deal is done.
- Will this be a vacation home?
- A home to stay in while doing business in the United States?
- A home for your children while they attend college in the States?
- An investment?
- An eventual long-term residence?
SIMPLY BUYING REAL ESTATE in the United States does not give foreign owners any rights or privileges regarding legal stay or status. If you’re interested in staying in the states longer than allowed by a standard visa, contact an immigration lawyer.
By determining the primary use for your property and how long you plan to own it, you’ll be able to provide information to your real estate agent that will help guide the search and sale.
- Learn how THE U.S.REAL ESTATE MARKET WORKS
The way U.S. real estate transactions are carried out may differ from your home country. EACH STATE IN THE UNITED STATES has its own set of rules regarding the purchase of real estate, including the type of purchase contract used, the method of closing the sale and even the duties and titles of the individuals involved.
Several important U.S. real estate practices worth noting:
In the United States, real estate listing information is shared by agents using multiple listing services and consumers can access that same information using real estate sites such as Zillow. In many other parts of the world, real estate is a fragmented business and buyers have to go from agent to agent to find a property.
In some countries, it is typical to pay a fee to the agents who are scouting properties on your behalf and showing you around. In the United States, the sales commission is paid by the seller, so buyers don’t pay anything to have an agent work on their behalf.
In the United States, real estate agents need licenses to operate. The licensing laws of each state differ regarding how much education is required, the type and depth of licensing examinations, and whether continuing education courses are required once an agent becomes licensed. The licensing system was designed to ensure real estate agents are qualified to guide consumers through the maze of finding, evaluating and financing real estate. Many other countries like Costa Rica, Mexico, El Salvador and Belize do not require real estate agents to be licensed.
Foreign buyers will also want to give consideration to issues such as currency exchange rates, international wire transfers, banking systems, multi-national taxation and accounting issues, and import/export restrictions regarding currency and household goods.
- Work with LOCAL REAL ESTATE PROFESSIONALS
Foreign buyers, in particular, should take the time to find qualified and experienced professionals to walk you through the real estate purchasing process. Agents who have taken additional coursework may carry the Certified International Property Specialist (CIPS) Designation.
IF YOU’RE NOT FLUENT IN ENGLISH, or prefer speaking in your native language, choose agents, attorneys, inspectors and bankers who are conversant in your native language. While it may be possible to get translated copies of standard real estate documents, it’s likely that you will have to sign the English versions when it comes time to close the deal.
Assembling a qualified team will take some time – ask associates for referrals, do website searches, find locals in real estate directories and check references. In the end, the expertise these professionals bring should make the experience less stressful for you.
- Find FINANCING
Qualified foreign buyers with a 30 to 40 percent down payment can often obtain financing for their U.S. real estate purchases. MANY BANKS REQUIRE FOREIGN BUYERS to have a specific amount ($100,000 or more) on deposit with the bank while others set loan limits of $1 million to $2 million. You may also be required to present a minimum of three months of bank statements.
The U.S. home loan market offers an array of safe, affordable mortgages, including some that will allow Muslims to buy a home without violating Islamic laws against paying interest.
Before applying for a U.S. mortgage, you must first establish credit and earn a good credit score. You can start building your credit score by opening U.S. bank and credit card accounts. You’ll also want to be sure to report all income on your tax returns. Lenders use this income information to determine how much money they’re willing to loan you to buy a home. Want to learn more about investing in the US Real Estate Market? Contact Asset Quest today.