An interesting question was posed (and subsequently removed) recently on Trulia Voices a real estate “Q&A forum” by a Canadian regarding what to look for in a Phoenix real estate agent:
What credentials should I be looking for in an agent to assist a Canadian make a purchase ….is there a true buyers agent for Canadians ?
I am not aware of any agent that solely serves Canadian clients though that would be an interesting niche market. With the large influx of Canadian buyers into the Phoenix market, most real estate agents that have been around for a while will have worked with Canadian buyers. Apart from asking “What is my Toronto home worth?”, you should ask any potential agent you are interviewing what their experience is in working with Canadian home buyers. While the real estate transaction is basically the same whether the buyer is a U.S. or Canadian citizen, there are certain things that Canadian buyers need to be aware of when they are considering purchasing property in Phoenix (or anywhere in the United States).
Financing: A significant portion of our Canadian clients are cash buyers. But not everyone has the resources to plunk down tens to hundreds of thousands of dollars in cold hard cash. Financing can be tricky for “foreign nationals”. With the general tightening of the U.S. credit markets, not every lender has mortgage products for our neighbors to the north. Some however, still do. Typically they require larger down payments and the rates, while still very good, may not be as low as you’ll see advertised to U.S. Citizens. Financing through a Canadian bank is also an option. There articles here and here that have more information on how Canadians can get a mortgage in the U.S.
Foreign Currency Brokers: Even if you plan to finance your home purchase, you will be making a down payment and paying various closing costs. As such, even small fluctuations in the Loonie/Dollar exchange rate can have a significant impact on what you’ll be spending. We recommend exploring the services of a foreign currency broker. Here is an article on one that several of our Canadian clients have used. There are others.
FIRPTA (Foreign Investment Real Property Tax Act): While FIRPTA does not apply until you sell your U.S. property, you still need to be aware of and understand its implications when you buy. See Understanding FIRPTA for information.
Property Management: If you plan to rent out the property you purchase in the U.S. you need to understand the implications of property management, doing repairs yourself and other nuances particular to Canadian citizens. See this Q&A by David Ingram, a well known expert on Canadian tax and immigration law. It’s a complicated area, with potentially severe ramifications if you decide to work on property you intend to lease out.
These are some of the major areas Canadians considering purchasing U.S. property need to be aware of. Other things to be aware of are terminology and typical real estate practices that are different between the United States and Canada. We’ll save those for another post on another day. Suffice it to say that you need to work with a Phoenix real estate agent that understands the nuances of working with Canadian buyers. As always, we suggest interviewing three or four potential agents. Trust your instincts, ask LOTS of questions (including questions surrounding the four topics mentioned above) and you’ll find the right agent to help you.
Photo Credit: kennymatic on Flickr. CC License
The Phoenix Real Estate Guy was started by Jay Thompson, and I have a little blogging problem... he liked to say...
Jay the section on financing was interesting. We have a Foreign National loan with only 30% down for Canadian buyers. Many of the cash buyers are starting to take advantage of the financing when they realize the rates are in the low 4% range. We are also starting to see several buyers from Australia.
Excellent overview. Phoenix and Scottsdale are very attractive to many Canadians, especially those from Alberta and BC. Although financing is technically available to Canadians under a limited number of programs, 90% of our buyers will finance in Canada and then pay cash for their homes in Arizona. Most people can get a personal line of credit with their local bank in Canada for close to Prime (about 3%) which is much lower than what the foreign national programs charge. By doing that they also have a stronger negotiating position because they can make a cash offer, rather than financed offer. PS: Excellent recommendation for Snow An at Globex Currency Exchange. We have done over 2 dozen transactions with her and she gives excellent service!
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US property has never looked so attractive to Canadians before! The majority of canadians still can't afford to buy their own homes in cities like Toronto. It also give US economy some cash boosts and keeps real estate market going.
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Larry, you are one funny man…. wrote the deal up on a block of snow. That made me laugh.
The question wasn't "is there buyer agency in Canada?" is was "are there agents in Phoenix that only work with Canadian buyers?". That was more clear in the secondary part of the question, but I didn't have that text as the questioner removed it before I thought to copy/paste it.
"are there agents in Phoenix that only work with Canadian buyers"
Got that!
– methinks this is a 'Snow Princess' asking who needs to pull her head out of the snow bank if you get my drift.
Canadians have been buying Phoenix real estate for a long as you have had sunshine, cactus and beautiful women. I would suspect that most of you guys know your stuff when it comes to the do's and don'ts of owning some of your dirt. Thus, the question was to me obvious and bothersome. As you might say – she doesn't 'git' it!
What I do know is that we Snowbirds can count on you to show us the way home.
A thought for you to consider as a further note to your explanations above.
I think it wise if you were to add to this knowledge base the overall costs and problems associated with medical care. Though not directly real estate related it would be a major concern for Canadians, some of whom like this Snow Princess, may not be aware that you kids take care of this thing differently.
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Wow! Great post… I've worked with many Canadians in regards to purchasing real estate in Arizona and this information is exactly the kind of things I like to explain to them before moving forward with any kind of real estate purchase.
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As a Canadian REALTOR this post has thought me lots. You really seem to know how to handle these out of town and out of country investors.
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Awesome detailed analysis on the focus of niche marketing . There are few Canadians real estate agents who solely dedicate to do real estate in Canada. Whereas few do between many states. As an Real estate Realtor , its been really interesting to know all the thoughts.
Good article with an excellent FIRPTA summation link on how and who FIRPTA applies to.
I had two Canadian clients in Atlanta this year and one qued up for 2011 already.
Love 'em…great folks.
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what an awesome article? It is true that Real Estate/">Real Estate have got something to enjoy.
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Wonderful article with great information.
My recent post Nationwide Foreclosure Density
Wonderful article with great information.
My recent post Nationwide Foreclosure Density
Jay,
This is great information. Canadians looking to purchase U.S. property have to do their homework prior. Working with the right agent is very important. They need to ensure the agent is not just a “transaction broker” and the Realtor is truly looking out for their best interest. Although may Canadians are using the primary homes equity and paying cash for their U.S. property, that is not allows the best solutions. As a Canadian Lending Specialist with RBC Bank (USA) I review each client’s financial situation differently in order to determine the best financing options.
Purchasing a vacation home is one of the biggest financial decisions Canadians are going to make. Making sure they have all the proper information is key.
Chris Wyatt
Canadian Lending Specialist RBC Bank (USA)
407-244-6002 or chris.wyatt@rbc.com