We have been assisting foreign buyers from places like, Canada, Argentina, Venezuela, Colombia and Chile to name a few, buy their first property in the United States. The needs that each investor brings to their search vary but there are somethings that they fail to ask their agent and I am writing this to help them know the importance of asking these questions. The best compliment that I have heard from a buyer after helping them with their purchase was compliment to their own decision to work with someone that was raised in the American Culture and understood the system rather than someone that they felt understood them…a fellow compatriot.
I don’t believe that the basic rules of investment change but I do know very well that in these countries there is no MLS system sharing information and gathering date, there are not many options for finance in most of these countries and so the importance of appraised values are not something that the foreign buyer may have to deal.
Let’s first address the MLS system. The Multiple Listing Service is where all the licensed agents that are members of the Real Estate Board share information regarding the homes and commercial properties that they are selling. There are no MLS or associates that operate them in most countries including European countries. This is where the majority of the homes are found and sold. As a buyer you should know that there are many homes that are in the MLS that do not appear on other real estate sites. Working with an agent will ensure that they see more properties.
When a home sells, the sale information is recorded in the MLS making it a great research tool. What a home is worth is based on the comparable properties that have sold in the same area that most resemble the subject.
Why is this important to a home buyer? If there is financing involved this is where a major part of the decision is made.
Appraisals. Banks will lend money to buyers based on the property’s value. As a foreign buyer you can buy a home with as little as 35% down and finance the remaining debt with an interest rate. In countries like Argentina, financing is not considered. Knowing all of the opportunities available to a buyer, whether foreign or not, is vital to getting them into a home or investment. Many will say NO, you need to know how to get to YES!
NEW Construction
If you are buying a new construction property be aware of some contract contingencies. First, there is no appraisal and so you are buying cash whether you discussed financing this with the developer or not. If you plan on financing and you do not get the money you need, the developer will forfeit your contract and keep your deposit. There are actually several conditions that allow the Developer to forfeit your contract just to sell it at a higher price to another buyer. Never sign a contract that you do not understand.
Before you make this purchase there are more details that your agent should discuss with you. Will the area your new home is being built in support the future prices that the developer is promising? If you are buying to rent as a short term or long term rental will the community support the prices that you need to charge in order to make a return on your investment? This is the information that is available in the MLS for the savvy agent to share.
These are just a few points in a series of important steps to buy this property. Make sure that you have a savvy experienced agent at your side so call me.
