Canadian Buyers US Property Archives - The Phoenix Real Estate Guy

Canadian Buyers ”“ do buyer agents for Canadians exist?

November 15, 2010 By Jay Thompson

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

You can’t believe everything you read in the “Mainstream Media”

June 30, 2009 By Jay Thompson

I’ll be the first to freely admit that I’m not a journalist. But when I see shoddy reporting, it makes me cringe. And let’s face it, a lot of people have the propensity to believe anything they read on the Internet, particularly if the source is “trusted” or from the “Mainstream Media”.

Case in point:

Yesterday there was an article on Realtor.org ”“ a site many would think could be trusted. It is after all, the home of the National Association of Realtors. They cited another source ”“ U.S. real estate values present opportunity to Canadians from the Sierra Vista (AZ) Herald, a newspaper that has been published for over 50 years. I’m sure it’s a fine paper, but”¦

Here’s part of the story in Realtor.org:

Canadians Seek U.S. Property Bargains
Canadians are snapping up property in the United States. The Canadian “Loonie” is at par with the U.S. dollar for the first time since 1976””an exchange rate that makes homes and condos in the U.S. look like a real deal. (my emphasis)

And here is where R.org got their information from the Sierra Vista Herald:

What’s the strong attraction among the Canadians? For one thing, the Canadian dollar is currently at par with the U.S. dollar, something that hasn’t happened since November of 1976. The Canadians are experiencing the best exchange rate in nearly three decades.

Fact: The Loonie is not currently at par with the U.S. Dollar. “Par” means that one Canadian Dollar (a “Loonie”) is equal to one U.S. Dollar. The current exchange rate has one Canadian dollar equal to $0.86 USD. That’s 14% below parity. (source)

Fact: The Canadian dollar was not last at par with the U.S. dollar in 1976. On July 21, 2008 the CD/USD exchange rate was 0.9983 ”“ that is parity (or close enough), and it happened 32 years later than “reported”. (source)

One would sincerely hope that no one is making a decision the magnitude of purchasing a home based on what’s reported in either realtor.org or the Sierra Vista Herald. But people do read this sort of nonsense and they trust the people reporting it to do their jobs.

It took me literally 4 minutes to verify these facts. That professional journalists can’t be bothered to do this is rather”¦ disturbing? Frightening? Surely today’s journalist has access to the Internet, and surely they know some blogger somewhere is going to call them out if they make ridiculous and wildly inaccurate claims.

Surely.

Mortgages for Canadian Buyers Still Available

May 5, 2009 By Jay Thompson

For Canadian buyers of homes in the U.S., securing a mortgage has always proven tedious. Lenders that provide mortgages for foreign nationals seem to come and go like the wind.

Fear not. We still have a very active local lender that puts together loans for second homes for foreign nationals ”“ Canadian and otherwise.

They offer a 30 year fixed rate as well as a 15 year fixed rate product (current rates are 7.375% for the 30 year product and 6.75% for the 15 year). I’m not aware of any other lender offering a 30 year fixed rate for foreign nationals.

Typically 25 ”“ 30% down is required, though this lender has some flexibility on down payment requirements “in the right situation for the right borrower”.

The CAD ”“ USD current exchange rate is pushing toward a 180 day high, giving Canadians more buying power than they’ve had in the last six months.

Chart courtesy of exchange-rates.org

At the moment of this writing, $1.18159 Canadian will get you $1 US Dollar. Just two months ago, it took $1.30 CAD to get a greenback. “Big deal, 12 cents”, you may be thinking. Well, if you’re dropping $100,000 on a house, that amounts to $12,000”¦ Spending $300K? You can do the math.

Hit us up for info on the lender if you’re interested and we’ll get you hooked up.

Additionally, to save what can amount to very significant money, see this post about using a foreign currency exchange. While the Loonie is no longer at parity with the greenback as it was almost a year ago when that post was written, the exchange rate is still quite favorable for Canadian buyers, and we still see many of our friends from the north buying across the Phoenix real estate arena.

Canadian Flag Photo Credit: Creative Commons photo by Ian Muttoo

Canadian Dollar Falling: Time to Pull the Trigger?

August 19, 2008 By Jay Thompson

The Canadian Dollar / US Dollar Exchange rate has taken a beating lately (from the Canadian perspective). At this moment in time, the Loonie is worth 0.9421 U.S. dollars.

This is off from a high of about $1.08 in November of 2007.

Here is a 3 month chart:

CAD vs USD 3 Month

While the drop around the beginning of August looks precipitous, let’s keep it in perspective with historical exchange rates:

CAD vs USD 5 year

Even at $0.94, the Canadian dollar is still strong against the greenback (or the US dollar is weak, depending on your perspective).

Consider locking in exchange rates

None-the-less, when one is looking at the tens to hundreds of thousands of dollars a real estate transaction entails, a few cents in the exchange rate either way can have a pretty significant impact. Canadians contemplating buying US property would be well advised to keep an eye on exchange rates.

One thing our northernly neighbors may want to consider is “locking in” the current exchange rate. Globex Foreign Exchange, based in Edmonton, Alberta, offers “forward contracts” that allow you to do just that. They also offer better exchange rates than banks due to lower markups. For information, give Snow An at Globex a call. Her contact info is here (at the bottom of the article).

Saskatoon Paper Misquotes, but Gets the Gist of it

June 27, 2008 By Jay Thompson

The other day I talked at length with Jason Warick, a reporter with the Saskatoon (Canada) Star Phoenix newspaper. He was working on a story about Canadian buyers for real estate in Arizona.

In the article – Saskatoon Residents Find Arizona Opportunity — Jason (a heck of a nice guy by the way) talked to people ranging from agents such as myself and Jonathan Dalton, to some Saskatoon residents who’d bought homes in Phoenix.

For the record, I did not say we had, “found houses for scores of western Canadian buyers”. We have had many Canadian clients, but “scores” implies a number that lies between 40 and infinity. I’d say we’re closer to 0.75 score of Canadian clients this year.

I did indeed however say, “if it wasn’t for Canadian buyers, we’d be starving.” That was a bit tongue-in-cheek (though if you’ve ever seen a 16 year old boy eat….). You’d think I’d have learned by now you can’t be tongue-in-cheek with mainstream media reporters. All food aside, we absolutely adore all our Canadian clients. Without exception they have all been super people to work with.

As Jonathan pointed out, the most disheartening part of the article was a quote from Glenn Williamson, CEO of the locally based Canada Arizona Business Council:

You can get brand-new houses here for nothing. Nice three-, four-bedroom places for $200,000. There is a real opportunity,” said Glenn Williamson, CEO of the Phoenix-based Canada Arizona Business Council.

Sigh. We fight this battle all the time with buyers from Canada, (and locally, and from across the US). Yes, there are some brand-new houses available in the 200K range — if you’re willing to live on the outskirts (or beyond) of the Phoenix metro area. And there is nothing wrong with buying in these areas, just do your due diligence and understand exactly what all that entails. One good idea is to make the commute (in rush hour) between where you’re looking for a home and where you will be working. It’s far better to discover before you purchase your home if the commute is something you can tolerate (and afford)

There are many opportunities for homes of all shapes and sizes across the Valley. But to imply we’re giving away new homes everywhere is simply incorrect.

Canadian Buyers ”“ do buyer agents for Canadians exist?

Mortgages for Canadian Buyers Still Available

Canadian Dollar Falling: Time to Pull the Trigger?

Saskatoon Paper Misquotes, but Gets the Gist of it

Who is The Phoenix Real Estate Guy?

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