Foreign Buyers



How Florida Real Estate Looks to Foreigners


How do we look from over there? – A View of Florida Real Estate from Abroad.

 

In my career I have traveled extensively to Europe, Central & South America, and Asia. I started out in my twenties being a little embarrassed by the brash loud spoken American that I saw sticking out in the crowds abroad because of his dress and his mannerisms, but quickly grew to be very proud to be American as I learned to see the American though the eyes of my host countrymen. Sure, I am still annoyed at the boorish behavior of some, but this is the case whether I am sitting in a nice restaurant in Fort Myers or if my neighbor is talking loudly on his cell phone, wearing a baseball cap and shorts or I am in the Grande Place in Brussels enjoying Mussels Provencal. I have learned a great deal about Americans from the perspective of foreigners in my travels and now I want to share with you what we are learning about our real estate market from the eyes of the foreigners.

Market America Realty Group is dealing more and more with Brazilians, Europeans, Canadians, Chinese, Australians, Latin Americans and Croatians.
You will note on our web site that we are addressing issues like taxation, visas, and remote property management. Perhaps one of the first impressions for foreigners is how open we are here in the US with information; previous purchase prices, owner’s names, law suits and with the internet there are really no secrets in the US real estate market. Even the MLS ( Multiple Listing Service) that we use here in the US is unusual. Most countries do not have a “one stop” location for homes on the market.


Before we get to even talk about product, we have to address trust. The regulations and laws that we have in the United States to govern how we deal honestly and fairly may seem second nature to us, but we field questions about how safe escrow accounts are to how the buyer can be assured that moneys are properly dispersed at settlement. We go a long way to assure clients that monies are accounted for properly. We also use video conferencing and we make every attempt to attach personality to our transaction leaders with pictures and biographies so our clients get to know us and feel more connected to us. We also will take smart phone videos of property tours, meetings and even the drive though the neighborhood.  People do business with people they trust. Once we have trust we get to other issues like taxes and the process of actually buying.

We help you to understand what property taxes, income taxes, ad valorem taxes, HOA fees, estate taxes, tourist tax, sales tax, capital gain taxes are rather then bewildering and can kill a foreign buyers enthusiasm for owning real estate in the USA if not addressed properly.

While most foreign buyers pay cash, there are foreign national loans available. Most of these programs have rather stringent documentation requirements and these requirements are not easy for the foreigner to understand such as Copies of utility bills, a credit report, three years of bank statements, three reference letters. Remember here in the US we are accustomed to such openness. But in some countries without a MLS (multiple list service) even the fact that someone is even SELLING their home is kept secret from their neighbors lest the neighbors think there is some sort of financial scandal going on.  So opening offering these documents may be against their culture. Better we should have these documents go directly to the banker. The programs we are using for Foreign Nationals that want to borrow are typically 60 to 70% LTV Loan to value), 6 months of payments on deposit in the lending bank, and interest rates are now 6.75%, 30 year amortization. We can do better with larger loan amounts – over $500,000 – but LTV’s shrink to 50%.

So, what am I hearing about how our Florida real estate market appears to the foreigners? One word: Opportunity. There is opportunity to acquire hard assets in Florida at rock bottom prices. The attitude about Florida real estate is generally very positive, they believe we will fix our economic woes but as that happens there will be high inflation and US real estate is a great hedge against inflation. A condo in Brisbane, Australia is $1200 per square foot. We are selling them here at $150. A home in Singapore is $2400 per square foot. You can buy a home here in Fort Myers for $200 sqft or less. But some are afraid of the market. It’s confusing to them. There are a lot of rumors, bad experiences, and “flipper stories”. Imagine if you can, reversing the rolls. Imagine going to China, where you do not speak the language or understand the culture, and you want to just buy a car, not a house. It would be pretty daunting, wouldn’t it? But, if you were to go with a trusted friend/advisor that could translate for you and guide you through the maze and show you proper paths then perhaps you can understand that the trust step is critical. Most industries build up a number of barriers to understanding like buzz words, abbreviations, and colloquialisms.  Add the language barrier and you can begin to understand the trepidation. Our real estate industry is perhaps a leader in these barriers. Terms like Fisbo, short sale, NIMBY, ARM, rate lock, HOA, GLA, Fee Simple, CAM, and closing just to name a few common terms. I just did a search for a comprehensive list and could not find one online. (I think I just came up with a future newsletter!)

Some of our foreign buyers will never live here. They want us to manage their rental property and are counting on inflation to take care of the rest. They know that a condo they can buy now for $150 to $300 a square foot has a global value that is perhaps triple this. If the investment can pay for itself then they will make their money on the appreciation. In their markets it is difficult to purchase rental property that makes economic sense. Due to our good rental market and low acquisition prices, it IS possible in Florida.