The Phoenix Real Estate Guy » Canadian Buyers US Property

Canadian Buyers – do buyer agents for Canadians exist?

Jay Thompson — Mon, 15 Nov 2010 22:25:23 +0000

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 awhile will have worked with Canadian buyers. You (you the Canadian) should ask any potential agent you are interviewing what there 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

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

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

Jay Thompson — Tue, 30 Jun 2009 17:08:23 +0000

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.

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Mortgages for Canadian Buyers Still Available

Jay Thompson — Tue, 05 May 2009 22:36:30 +0000

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

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Canadian Dollar Falling: Time to Pull the Trigger?

Jay Thompson — Tue, 19 Aug 2008 17:02:18 +0000

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:

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

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).

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Saskatoon Paper Misquotes, but Gets the Gist of it

Jay Thompson — Fri, 27 Jun 2008 18:51:25 +0000

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.

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Canadian Buyers of Phoenix Real Estate: Consider a Foreign Currency Broker

Jay Thompson — Tue, 27 May 2008 19:52:48 +0000

If you are Canadian and considering purchasing real estate in the US, you should love this chart:

That would be a graphic representation of the value of the Loonie compared to the US Dollar. The more the line goes up, the more buying power in the U.S. you have. Right now, exchange rates are near historic highs (well, at least since the 1950s, which is as far back as I’ve been able to find on the Internet)

If you are a Canadian buyer of US real estate, at some point you are going to have to convert your hard-earned Canadian dollars into US dollars.

To exchange money, there are several options. You can go to your bank. You could in theory, do it with a credit card (you’ll need quite a credit limit to purchase a home – and the interest rate would suck), I suppose you could also turn to the black market, though I can’t recommend it.

A bank is the first (and often only) option most people consider. Yes, it’s safe, and you’ll likely get a reasonable exchange rate.

But banks are not in the business of exchanging foreign currency. Banks make their living by lending money.

Why not exchange your currency using the services of a company that makes their living by exchanging currency?

Enter the “foreign currency exchange broker”. These types of companies do little more than exchange various currencies. As such, they tend to get very good exchange rates. 2 – 4% better than banks in fact.

EDITED TO CLARIFY – whoops, I’ve been told that the currency broker doesn’t really get better rates than the banks, but that banks typically “mark up” the rates — ie: charge a premium — and the currency broker does not.

“2 – 4%, big deal”, you might be saying.

Well, when you’re talking tens to hundreds of thousands of dollars required to purchase real estate, it IS a big deal!

Here’s an actual example a currency broker emailed me on May 9:

As an example, based on rates at this very moment, on a $300K USD home:
- going through Bank of Montreal or TD Canada Trust, it will cost you $311,400.00 CAD (based on 0.9620 US)
- going through Globex, it will only cost you $305,400.00 CAD (based on 0.9820

This is a savings of $6,000.00 CAD.

Over the past several months, I’ve received numerous calls from currency brokers. To be perfectly honest, some seemed a little shady, and many were far too “hard sell” for my taste.

But Globex Foreign Exchange, based in Edmonton, Alberta was different. I like their attitude, and I like their customer service based philosophy. None of our Canadian clients have used their services, yet, but we are going to be providing them with the contact info for a Globex “Private Client Specialist” and suggesting they contact her. It certainly can’t hurt to explore this option. I’ve done my due diligence and feel comfortable recommending our clients contact Globex.

Globex does not make their money on commissions and fees. They make their money on the natural buy/sell spread in exchange rates. They trade money all day, every day, and pass their great rates on to people like you and me. They’ve been in business for 10 years and all client funds are guaranteed and insured for up to $2 million.

Since I didn’t ask her permission, I don’t want to post the specific contact info I have for the Globex rep for all the world to see. But I’ll gladly pass it on to anyone who would like it.

EDITED TO ADD: Permission granted! See contact info at the bottom of the post… She’s willing to talk to anyone, even if you’re just curious about how the process works. Be nice!

If you are a Canadian buyer, you should call these folks — even if you aren’t our client (though really, what were you thinking? )

If you are an agent working with Canadian buyers, you should call these folks. I’m telling you, they will not hassle you for referrals, but they’ll help you understand what they can do for your clients.

For the record, I’ve got no affiliation with Globex, nor am I compensated in any fashion for suggesting people call them. As I stated, I simply like the way they approach business, and if I can save my Canadian clients a little money, that’s a great thing…

If you’ve ever used Globex (or any currency broker) I’d love to hear about your experience.

Globex Contact Info:

Snow An

Private Client Specialist
Globex Foreign Exchange Corporation
100, 10336 Jasper Avenue

Edmonton, AB T5J 1Y7

Canada
P. 780.423.2217

P. 877.423.2217

F. 780.426.5920

F. 866.426.5920
san@globexfx.com

www.globexfx.com

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

From the Inbox: Why are we Seeing an Influx of Canadian Buyers in the Phoenix Real Estate Market?

Jay Thompson — Wed, 06 Feb 2008 07:03:45 +0000

Reader Michael asks, “Why are we Seeing an Influx of Canadian Buyers in the Phoenix Real Estate Market?”

Maybe because it feels like it’s -60 in Saskatoon?

While that seems like a plausible answer, I say it of course in jest. It’s cold every winter in Saskatoon.

So what has changed?

The value of the Canadian Dollar in comparison to the US Dollar.

From Yahoo Finance:

From this chart, you can see one Canadian Dollar (the Loonie) was worth $0.85 USD in March 2007. Today that same Loonie is worth $1.00 — a 15 percent increase in the value of the Canadian dollar.

In short, dollars in Canada are worth more (in term of US currency) than they were a few months ago — there is increased purchasing power for our friends up north.

That, combined with generally declining prices in the Phoenix real estate market, and yes — our typically warm winter weather, attractions, and strong economic outlook — makes investing in real estate attractive to many Canadian buyers.

Is buying real estate in the US right for all Canadians? Of course not. It’s not always the right time to buy for anyone. But in the right situations, it certainly might be.

Additional info:
Do Canadians Need a Visa To Purchase US Real Estate?
Financing Options for Canadians Buying US Property
.

[tags]Canadian dollar, Buying US real estate[/tags]

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Financing Options for Canadians Buying US Property

Shailesh Ghimire — Sun, 27 Jan 2008 18:55:50 +0000

Jay’s note: We are continuing to see a large influx of Canadian residents interested in buying real estate in the Phoenix area. Financing options for non-US citizens are a little different, so I asked Shailesh Ghimire, the Arizona Mortgage Guru, to provide us with a little lenders insight on mortgage financing options for Canadians buying US real estate.

There are many reasons to buy real estate in the United States. If you’re Canadian, parity of the two currencies (USD and CD) could be one of them. While I’m not going to make a recommendation on the wisdom of purchasing real estate in Arizona, I would like to inform you of the different mortgage financing options available to you as a foreign national.

The terms of the loan are bit more favorable if you are seeking to purchase a second (vacation) home in the United States. The definition of a vacation home is that you intend it use it for recreational purposes during a portion of the year and you do not derive any monetary benefits from ownership. Meaning you do not rent the place to a tenant. You will be asked to sign a disclosure statement to this effect.

If you are purchasing a vacation home then you will need a minimum of 30% down. So, for a $200,000 purchase the requirement down payment is $60,000. Additionally, you will be required to demonstrate that you have between 3-6 months of liquid reserves. This is calculated by multiplying your monthly payment by 3-6. Not all lenders require this reserve but many do, so if you have it the better it is for you.

As part of the approval process you will be asked to show 2-3 months of bank statements demonstrating that the funds for down payment and reserves are available. The lender is very suspicious when there are large depositions in your account (beyond your regular income) so be prepared to explain any such depositions. Finally, the assets need to be in a Canadian bank and the mortgage lender will request verification directly from your bank.

You will need to show a copy of your Canadian passport and/or driver’s license. Some lenders may request only one of these two but be prepared to furnish both if requested.

If you intend to purchase an investment property in the United States then the terms are somewhat more stringent. You will be required to put more than 30% down (determined on a case by case basis) as well as demonstrated more reserves (possibly up to twelve months). All other aspects of the loan are the same.

If you feel like these are conditions which you can fulfill then the first step is to complete a mortgage application with a reputable lender. In this step you will be asked information about such things as your employment and income, available liquid assets etc. In subsequent steps you will be required to furnish a letter of employment, relevant bank statements and a copy of the passport (or driver’s license). Once all the information has been verified the lender can then make a credit decision.

Be aware that with CTX Mortgage you do not need a particular property in mind to go through this process. We can do what is called a “credit approval” for you up to a certain price range. Then as long as the property you end up purchasing is within that price range all we need is an approval on the property/appraisal. After that we are able to close the transaction.

Finally, as you are aware, US credit markets are in a state of flux. This means loan programs have been changing more often than in the past. While these loan features are currently available, there is no assurance that these terms and conditions will remain in the future. I recommend you use this article as a reference point in evaluating loan options with the lender you end up working with.

[tags]mortgage info for Canadians, US real estate, Canada[/tags]

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.