8 BASIC PRACTICES...
...Every Foreign Buyers Should Know
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. This guide will provide you with as much information as possible to make your experience enjoyable and less stressful. We do recommend however to seek a professional help from expert real estate agents, attorneys, mortgage brokers and accountants knowledgeable in their area of practice.
1. Before diving into the real estate market, one has to assess the reason and the purpose of the purchase. This is very important as it will be a guiding factor into what you and your real estate agent will look for.
2. One should be aware that buying Real Estate in the US does not give foreign owners any rights or privileges regarding legal stay or status. If one is interested in staying in the states longer than allowed by a standard visa, contact an immigration lawyer.
3. The way U.S. real estate transactions are carried out may differ from your home country. Depending on the State you are investing in, Real estate transactions may be different as each State has its own set of rules guiding the process that includes but not limited to the type of purchase contract used, the method of closing the sale and even the duties and titles of the individuals involved.
4. In Florida, 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 trulia, realtor.com or zillow.
5. In Florida, Real Estate is very organized, regulated, and considered a career for many professionals unlike many part of the World where it is fragmented. The following process is the customary in majority of States:
B. Buyer signs an exclusive representation contract where it outlines the duties and compensation of the realtor. In some States, buyer does not need to sign a contract.
C. The sales commission is usually paid by the seller. Buyer does not pay anything to have an agent working on his/her behalf. Therefore, buyers are encouraged to seek representation.
D. Unlike in many other countries, Buyers in the US should have ONE Realtor guiding them through the maze of finding, evaluating, financing real estate. It is unethical practice to hop from one realtor to another or hire several realtors looking for the same thing. Buyer may change realtors only if the buyer’s interest is not represented to its fullest. Therefore, a thorough first time consultation is required.
E. Most Real Estate companies charge a fee “administrative or transaction fee” to the party being represented. This fee varies from $195.00 to $450.00. This is customary in Florida.
F. Although buyers do not typically pay the Real Estate agent commission, they are responsible for what’s called “closing costs”. This consists of title search and insurance, legal fees and recording fees, amounting to an additional 1 percent to 2.25 percent of the total cost of the transaction. On a $300,000 home, that amounts to another $3,000 to $6,750. In some instances, the buyer‘s agent may obtain concessions from the seller to help out with buyer’s closing costs depending on the specifics of the sale.
G. Other costs outside of closing may consist of an appraisal fee if financing which can be up to $450.00, inspection fee up to $400, and a survey for up to $300 depending on the provider. If the purchase is a row land, the buyer may consider a “feasibility study” which varies in price depending on the type of land and the zoning.
6. Fluency in English: Because Florida is a melting pot of different cultures and languages, foreign buyers do not need to be fluent in English to purchase a real Estate. There are numerous licensed Real Estate professionals that will speak your native language, choose agents, attorneys, inspectors and bankers who are conversant in a language of your choice. 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 finalize the purchase.
7. Currency Exchange: It is highly recommended that foreign buyers 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 before they have a contract in place. There are several websites that provide information to help buyers with these issues www.federalreserve.gov. Or a converter app for easier use. WPG is partnering with key businesses to help foreign buyers smoothly navigate through the system. Please send us a note for more information.
8. Financing OR Cash: Many foreign buyers use cash when acquiring US properties. However, Financing is available to qualified buyers with a 30 to 40 percent down payment depending on the lender. Many banks require foreign buyers to have a specific amount ($80,000 or more) on deposit with the bank while others set loan limits of $1 million to $2 million. Foreign buyer 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 buyers of Muslim Faith to own a home without violating Islamic Sharia laws in regards to paying interest. Before applying for a U.S. mortgage, many lenders prefer the buyer to have some sort of credit history with a satisfactory credit score. Please send us a request for specifics on how to establish credit in the US. Note: not all banks lend to foreign buyers and not all foreign buyers get financing. There are some restrictions based on the country of origin and treaties.
