By Christian Kawas
Today, many buyers are more open to hearing about overseas investments, rather than only hearing about what the U.S. has to offer. One reason for this is that domestically, potential investors are oversaturated with options and bad news. As a result, today is as good a time as ever to identify key international developments and the benefits they can deliver to both you and your clients.
As you study the market for the best investment opportunities for your buyers, there are six keys to success that you should keep in mind.
1. Identify who is an international buyer. The domestic real estate industry has several types of buyers, but when it comes to buying real estate overseas, there are only two types: those who are proactively looking to buy properties outside the U.S. and those who will never buy outside the U.S. no matter how great of an opportunity it may be for them, primarily because of political and economic fear when investing overseas. It is well worth your time to identify which buyers in your sphere of influence are more likely to invest in real estate outside the U.S.
2. Give your buyer value. Buyers that are interested in purchasing overseas are generally looking for a great value. Currently, you can find oceanfront luxury property for your clients in the Caribbean from $190,000. For example, Playas Macao Resort and Residences, located in the Dominican Republic’s Punta Cana region, provides buyers with access to top golf courses, spas and restaurants – all starting from $190,000. In addition, for buyers who are looking for a tax haven, there are certain projects in the Dominican Republic that have tax abatement for 10 years, and even after the initial 10 years, taxes are extremely low compared to similar properties in the U.S.
3. Purchase directly. One of the biggest keys to success in brokering the international purchase is to deal directly with the development’s sales and marketing/brokerage. This will provide both you and your clients with more accurate and up-to-date information about the development and will help you avoid any misunderstandings at the time you get paid.
4. Benefit from high commissions. When it comes to commissions, they differ from country to country. The good news is that commissions are generally higher than the 3 percent you are accustomed to in the U.S. Playas Macao Resort and Residences pays the buyer’s agent 5 percent.
5. Secure the right financing for your buyer. Financing is handled differently when purchasing overseas than in a domestic transaction. The main issue is that there are fewer lenders in international real estate than domestically. To solve this problem, you can ask the developer’s sales and marketing agent which lenders they would recommend. Strong developments usually enlist the services of one or two international banks to write mortgage loans for the buyers. When it comes to rates and terms, at the moment you should expect a 25- or 30-year term and an interest rate of about 8 percent.
6. Understand the deposit timeline. Lastly, in international purchases, it is crucial to understand the deposit timeline. Each development has different timelines and as the Realtor representing the client, you want to make sure that the timelines are clear and your client understands and feels comfortable with deposit due dates.
Overall, investing overseas offers great benefits to the investor and the Realtor, as investors can enjoy high-quality luxury developments and upscale amenities for a fraction of domestic U.S. prices. With the downturn in the U.S. real estate market, purchasing property overseas has become an appealing alternative investment. From the Realtor’s perspective, they can offer the client a top-of-the-line product at a great price and receive a handsome commission. Keeping the above six recommendations in mind are important if you are thinking of entering a potentially-profitable international market.
Christian Kawas is a Real Estate Agent and Director of Sales for Playas Macao with Douglas Elliman Florida. In addition to his extended expertise in Dade, Broward and Palm Beach counties, Kawas, through the Douglas Elliman Florida reach, has an association with more than 3,000 agents in 70 Douglas Elliman offices in the metropolitan New York area including Long Island and the Hamptons. He can be reached at [email protected].
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