Working With International Buyers

By
Real Estate Agent with Keller Williams Capital Properties DC AB15253

Will working with international buyers affect your real estate transaction? Every buyer and seller - and every transaction - is different. That is what keeps us as Realtors on our toes since it is so important to manage expectations on both sides of the deal.   When you add to the mix an international buyer, it can take that roller coaster ride to a whole new level!

How Many Homes Do International Buyers Acquire Each Year?

According to the National Association of Realtors (NAR), about 209,000 houses were sold to resident and nonresident foreigners between April 2014 and March 2015. Foreign buyers spent more than $100 billion on U.S. homes, and realty agents who dealt with international clients reported an increase of 7 percent from the previous year.

International buyers purchased $153 billion worth of existing homes in the U.S. from April 2016 to March 2017.  They bought 284,455 properties, a 32% increase from the previous year. However, despite how impressive that sounds, it represents only about 5% of existing-home sales.

"The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases," Lawrence Yun, NAR's chief economist, said in a statement. "Foreigners increasingly acted on their beliefs that the U.S. is a safe and secure place to live, work, and invest."

How Do International Buyers Get a Mortgage? 

Different rules can apply to foreigners when they apply for a mortgage. Since verification of international credit and assets may be difficult, lenders often require a larger down payment or a guaranteed amount to be deposited in a U.S. bank as proof of the client’s ability to repay the loan.

What’s required for a foreigner to get a home loan can depend on residency status. Most international borrowers tend to be permanent residents (with a green card), nonpermanent residents (with a valid work visa), or “foreign nationals” (whose primary residence is outside the United States). For tax purposes, foreign buyers will need to obtain an ITIN (individual taxpayer identification number) if they do not qualify for a Social Security number.

Having said that, many international buyers are cash transactions.

Are International Buyers Different?

International clients often negotiate a deal differently based on their culture or tradition. While buyers from one country may be accustomed to negotiate right up to closing, another group may take a more personal or emotional viewpoint and accept the sales price with little or no haggling.  Both sellers and Realtors should be prepared for the buyer to approach the transaction differently based on their cultural differences - and be prepared to respect those differences.  After all, learning about a new culture and point of view can be educational and fun.

“International transactions are significantly different and more complex than domestic deals,” according to the NAR’s Web site, www.realtor.org, “and working with a Realtor who knows how to handle these differences can make or break the purchase or sale.”

International buyers may come shopping in the US with a list of potential properties in mind. They may have a limited time to spend in the United States and may need to make a decision quickly.

Foreign buyers will be subject to the same rules as U.S. citizens, but unusual factors — such as overseas currency transfers, nonstandard purchase agreements, and identity and credit verification — can complicate a sale unless carefully prepared for ahead of time.

Issues to Be Prepared for in Advance with International Buyers

Consider these complications, which are often involved in an international property sale:

●A nonstandard purchase agreement that may not contain all the provisions that a board-certified or NAR contract contains, such as a mandatory agreement to mediate in the event of a dispute.

●In the Washington metro area, approval by the US State Department will likely be required if the purchaser is a foreign embassy intending to use the property as housing for embassy personnel.

●Verification of the buyer’s identity and status.

●Clearance of international funds brought into the United States, especially amounts over $10,000.

●Provision for an out-of-town buyer of a valid power of attorney form or approval for electronic signatures.

●A request from the buyer for additional time to take advantage of a favorable currency conversion rate; for time to travel from overseas; or for time to process a foreign mortgage application that may involve added documentation to prove creditworthiness and confirm international assets.

If International Buyers Default

In the event of an international buyer’s default on a sales contract, sellers are entitled — under certain circumstances — to monetary compensation. Because it could prove difficult to take legal action against a foreign buyer — who may be out of the country or difficult to contact — sellers should consider asking for a sizable down payment or “good faith money deposit” to guarantee the sale.

If a buyer has no legitimate reason for canceling the sale — and backs out — the seller will usually be allowed to keep the deposit instead of resorting to legal action. Litigation can be expensive and a judgment can be hard to enforce when dealing across international borders.

For more information about the pros and cons of working with an international buyer, please contact the Lise Howe Group at 240-401-5577.  If you are an international buyer planning to invest in the DC metro area please remember that it is very important to choose a Realtor with experience working with buyers from out of the US.  Make sure that your rights are well protected under the terms of the contract and throughout the inspection process right up to closing. Please call us at 240-401-5577 or email us at lise@lisehowe.com for an initial consultation.

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Debbie Reynolds 03/12/2018 05:00 AM
  2. Gabe Sanders 03/21/2018 11:00 PM
  3. Joyce Marsh 03/22/2018 04:01 AM
  4. Sheri Sperry - MCNE® 03/25/2018 04:00 AM
Topic:
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Rainmaker
4,205,825
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Lise, it is more complex working with International buyers, I have had several - Austrailia, England and New Zealand.

Mar 09, 2018 07:06 AM #1
Rainmaker
825,358
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

We have always had a lot of international buyers as we have many different international companies in the area, do love working with these buyers and hearing about the differences in how real estate is done in their own countries. Helps you understand why they act as they do. Great article/post thank you very enlightening.

Mar 09, 2018 09:12 AM #2
Rainmaker
4,432,533
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

I have learned a lot from your post. Thank you for sharing 

Mar 09, 2018 04:41 PM #3
Rainmaker
3,037,849
James Dray
Fathom Realty - Bentonville, AR
Exceptional Agents, Outstanding Results

Morning Lise.

Have not had the pleasure of working with buyers from outside the U.S.  In fact I can't recall any of our agents, (in my area) doing so 

Mar 10, 2018 02:06 AM #4
Rainmaker
4,797,927
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning Lise.  Florida is one of the locations that many international buyers seek out.  This is good information to know.

Mar 10, 2018 05:21 AM #5
Rainmaker
2,704,903
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

I have worked with a few international buyers and they have been some of my favorite people to work with!

Mar 10, 2018 10:57 AM #6
Ambassador
3,984,175
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

This is fantastic information, Lise. It takes a certain expertise and you certainly have it.

Mar 10, 2018 06:09 PM #7
Rainmaker
3,741,800
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Lise. This is such a great post. Leave it to the lawyer in you to break it down so well.

Mar 12, 2018 06:35 AM #8
Rainmaker
5,577,226
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thank you very much for sharing your experience and you advice.

Mar 13, 2018 05:48 AM #9
Rainmaker
2,099,634
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

This is timely advice. I have been to a few recent educational sessions on this topic. Plus, I'm working on an interesting closing now with the International Community. 

P.S. I wrote a post today and featured you, another agent and a couple. 

Mar 13, 2018 08:54 AM #10
Rainmaker
3,475,918
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Lise, this is a very well-presented post and quite informative.  Excellent. 

Mar 13, 2018 11:20 AM #11
Rainmaker
3,276,633
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Hi Lise... I've worked with many an international buyer over the years and it hasn't been burdensome... except if/when they have no credit in the USA and can't qualify for a mortgage.

Mar 15, 2018 05:55 AM #12
Rainmaker
3,276,633
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Carol Williams ~ hi Carol... great post about everything one needs to know about working with international buyers. My suggestion for second chance Saturday.

Mar 15, 2018 05:56 AM #13
Rainmaker
2,029,314
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good afternoon Lise - when we talk about doing business globally we talk about the cultural mores, dilemmas, and how to resolve them.  It certainly applies in real estate sales.

Mar 15, 2018 11:24 AM #14
Rainmaker
1,525,084
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

Canadians are a big segment of our international buyers, and they are very easy to work with, if I can say that.  At least there is no language barrier.

Mar 15, 2018 07:11 PM #15
Rainmaker
5,180,125
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Good morning, Lise Howe we rarely see international buyers in our area!! I can fully understand why you have many in your marketplace....

Mar 17, 2018 05:14 AM #16
Ambassador
4,105,919
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi Lisa

This is a terrific resource on working with international buyers. There are lots of potentiallly different scenarios to deal with.

Jeff

Mar 17, 2018 05:10 PM #17
Ambassador
1,926,846
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

Lise Howe  I am sure you run into this scenario quite frequently in DC .. Very interesting  I am sure Endre Barath, Jr.  also found this interesting

Mar 19, 2018 12:51 PM #18
Rainmaker
1,148,025
Joyce Marsh
Regal | Christie's International Real Estate - Ormond Beach, FL
Regal Christie's International Real Estate

The majority of international buyers that I have worked with in the past have been all cash buyers so financing has not come into play. Florida remains a highly desirable location for International buyers. Thank you for this information 

Mar 22, 2018 04:05 AM #19
Rainmaker
3,318,486
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

It depends on where you are if this is a niche that works ....and DC would be a great one !

Mar 26, 2018 12:38 PM #20
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Lise Howe

Assoc. Broker in DC, MD, VA and attorney in DC
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