Ever dream about buying four acres of luxurious land in Costa Rico (for only $43,000)? What about finally making your dream of buying a cottage in Villefrance-sur-Mer, France a reality? With housing affordability in the US decreasing in many markets, many buyers are looking internationally for properties that give them more bang for their buck. According to CNN Money, during the financial crisis, property prices in some European markets fell 40-50% and still haven’t fully recovered. That’s making France, Spain, Italy, Germany, and Canada hot markets for American buyers.
So, whether you’re purchasing real estate overseas as an investment or as a new home, here are some tips to help you during the house-hunting process abroad.
Do your research
House hunting abroad comes with its own set of hurdles. Outside of the US, home financing is a very different process; interest rates or down payments can be higher in some places than others. You’ll also need to dive deep into the rules of foreign ownership. Some countries, like Switzerland, completely restrict foreign ownership altogether. Check out the U.S. State Department’s website to find out about the stability and safety of the country as well.
Get some help
Unless you know a country well or it’s not your first rodeo, we strongly recommend not going it alone. Find a good real estate agent or attorney who understands a country’s property, tax, and title laws, especially if you’re not too familiar with the language and legal system. For example, if you’re looking to buy property in Malaysia, you’ll need to know that if you sell your property, you must keep your money in a Malaysian bank account. In France, although you might start your search online, real estate agents only list properties online that they can’t sell right away. You have to instead get in front of the agents in the neighborhoods you like. Each country has their own procedures and rules, but the essential point is still the same: develop a relationship with your real estate agent.
Estimate with cash
CNN Money recommends that in order to figure out what you can afford overseas, assume you can only pay cash. Financing a property by mortgages are less common than in the US. In many countries such as Mexico, Greece, and Eastern Europe, new property is usually paid for in cash. It’s also important to be able to make an offer in cash because the good properties, in cities such as Paris, get snatched up quickly – even disappearing from your hands in a matter of 24-48 hours. If you can’t afford to buy a property overseas without a mortgage, you might want to consider former English colonies such as Singapore, Hong Kong or South Africa. However, even then, you might still have to pay at least a 40% down payment.
Get the best price you can
In the US, bribing is a no-go, but in many parts of the world, it’s normal. Be sure to research the negotiating and pricing norms in the area of choice. In France, if you make an offer at asking price, the property is as good as yours. Thus, you’ll want to see if you can get a cheaper deal. Your real estate agent should be your guide and tell you who’s who in the area. Don’t be surprised if he tells you to buy and distribute gifts in order to make the transaction happen quickly. According to CNN Money, a gift might be from $50-500 depending on the country.
Bottom line — research, research, research! Talk to as many native people in the area as possible, or do your best to burn out Google from over researching an area. Interested in international real estate, but don’t know where to start? Check out CBS New’s Top 10 International Places to Invest in Real Estate and kickstart your international adventure!
Until next time…Keep it Real!