Friday, 9 November 2018
Sometimes you take a trip abroad so magical and memorable that you start wondering if you can live in a new country.
Maybe you've seen the “for sale" signs and envision buying property. Perhaps you've even crunched numbers and started to figure out how to go about owning a piece of the land you love. Or maybe your company has tapped you to open the first overseas location and your family needs a home.
Buying a home in a foreign country isn't as exotic as it sounds. According to the National Association of Realtors, between April 2016 and March 2017, foreign buyers and recent immigrants purchased $153 billion of residential property in the United States, which is a 49 percent jump from 2016. Meanwhile, more than 6 million Americans live overseas, according the Association of Americans Resident Overseas.
As with any life-changing purchase, it's wise to do your homework, have a plan, and enlist the help of others with expertise. Here are some tips to keep in mind if you are considering buying a home abroad.
Before you dive in by calling the number on the real estate sign, or start Googling agents in that country, take a breath and pause, says Vicky Silvano, the National Association of Realtors (NAR) global liaison.
She advises potential buyers to start the process by securing an agent with experience doing business in that country. Ask for personal referrals from trusted friends or colleagues in that country.
If you don't have anyone in your network, ask for recommendations from a trusted real estate office in your native country. It may have agents who represent foreign buyers. You can also try to tap into an expat community (there's usually at least one in every country).
Live and Invest Overseas has a good overview on how different countries do business. You can also connect with that nation's real estate association (such as AMPI for Mexico) or go through NAR's Certified International Property Specialist database to find an agent.
While American states have their own relatively strict rules around inspections and how to process real estate transactions, some countries don't apply the same rigor to their real estate deals. “Some of the countries have licensing laws, but most of the countries don't have licensing laws," Silvano said.
Finding an attorney who has a practice in that country is critical, Silvano said. “If you're in a different country, there may be different forms that you need to sign in that language."
If your workplace has an international presence, ask if there's a colleague or relocation specialist who can help you learn the ropes and gather resources.
Once your offer is accepted and you're asked to put down earnest money, double-check with the agent and/or an attorney to make sure the deal is legitimate. Wire fraud is rampant, and most of the time, if you've been duped, you'll never see a dime of what you lost.
As in any transaction —whether you're buying gum, sandals, or a beachside villa— paying with cash makes it simpler.
Silvano says you can finance properties in foreign countries, but most places will require a large down payment – 20 to 30 percent or more.
What you can do is approach an international bank or lender with a presence in the country where you want to buy. And if you don't get the low rate you want, or if for some reason the property doesn't qualify for a traditional loan (for example, if it doesn't meet structural standards or is in a hazard-prone area), it may be worthwhile to consider an equity line of credit from a bank to pay for the property outright and then repay the line of credit.
Finally, Silvano says, make sure you've gotten the full download on owning property and living in that country. Even if you have a friend who has had a great experience, it doesn't mean yours will be identical.
“Just be careful. Just because one friend recommended you to buy in that particular development or particular area, it doesn't mean that it will be good for everyone. Just be on the lookout for other people who may be scamming you for big bucks or commissions," she says.
The content provided is for informational purposes only. Neither BBVA Compass, nor any of its affiliates, is providing legal, tax, or financial advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA Compass or any of its affiliates.
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