The National Association of Realtors (NAR) in a recent survey found that the majority of foreign investors found viewed investing in US real estate as aprofitable and secure investment. We have considerable experience working with foreign buyers. Below are a fewtestimonials from our customers and information foreign investors need to be aware of.
The Role of Real Estate Brokers and Realtors in the US
Many Europeans and other foreign buyers have misconceptions regarding the role of a real estate broker in the US since it is very different from Europe and many other countries
You Work with Only One Realtor
Unlike Europe you work with only one Realtor. Your Realtor's job is to provide you with full information and guidance regarding all properties for sale. In the US Brokers have access to all information on properties for sale including the sales history of the property and other relevant information.. Realtors don't just sell properties they have listed themselves they sell all properties. Many brokers don't list properties at all. These Realtors are called Buyers Brokers and they work with the buyer to find the best property. Unlike Europe working with more than one agent is not a good approach it causes confusion and often complicates the process of finding the best property. The MLS allows Realtors to have access to listing information on all properties for sale.
Muliple Listing Service (MLS)
Real estate brokers in the US have access to all properties for sale including sales history, taxes and current ownership information through the Multiple Listing Services (MLS). The MLS system is accessed by professional real estate brokers and their agents. Brokers normally enter all of their property listings in the MLS system to share them with other brokers and the public. Any Realtor can provide you with full information regarding all properties for sale as well as past sales information. Realtors don't sell only properties listed by themselves but any home, condo, townhouse, vacant lot or business that can be accessed through the MLS system. The R.L. Bailey Website provides you with property listings from the MLS system. All brokers share the same database. There is no need to work with multiple agents. If you see a sign on a property or find it advertised in a newspaper or magazine any Realtor should be able to provide you with information regarding that property.
The difference between individual Realtors and brokers is a matter of depth of area and property knowledge, professional style and experience not access to property information.
Brokers are paid by splitting the commission paid by the seller between the listing and selling broker. The commission is determined by contract before the property is entered into the MLS system.
As a Foreign buyer it is important you understand the home buying process in Florida, and other issues related to US home ownership as well as the tax implications of owning a second home in Florida.
Foreign buyers, same as US citizens, will be subject to various state and county taxes at the time of purchase, annual taxes based on the value of the property, and on any value gains when the property is sold.
Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), requires that an amount equal to 10% of the selling price be withheld from a foreign seller of real estate. This amount is withheld to cover the potential taxes on the gain, but the 10% withheld can be much higher than the actual amount of tax due. The foreign seller will then need to file for a tax refund to collect the excess amount of taxes withheld. A foreign buyer should talk with a tax attorney or an accountant prior to selling a property. Foreign buyers are also eligible to defer the tax on gains when they sell, by doing a '1031 exchange'. A 1031 exchange may be available when you sell an investment property held for over one year, and then purchase another within a specific time frame. It permits the profit from the property sold to be deferred from taxes, until a future date that the new property is eventually sold. Very specific rules need to be followed, but several companies are available to help coordinate the 1031 exchanges for a fee.
Rental Income and Taxes
If you rent your Florida property as a vacation rental you will need to file a federal U.S. income tax return. You will have to declare your rental income, but you should be able to deduct expenses such as maintenance, utilities or mortgage interest. Since Florida doesn't have a state income tax, income from the property will only be taxed by the federal government.
Property insurance is expensive in a coastal area such as Southwest Florida. Insurance cost can be reduced by purchasing a newer property built meeting recent building codes mandating that structures be able to withstand higher winds. Insurance companies charge less to insure properties that meet the latest code requirements. Homes and condos that are not located directly on or adjacent to the waterfront or in designated "flood zones," also cost less to insure.
"We met Bob via the internet. We spoke at length on the phone and spent a couple of days with him looking at properties. Our experience with Bob was nothing like any other previous experience we might have had with a real estate agent. This is the highest compliment we could give him. What impressed us most about Bob was that he was responsive and listened to our specific needs.By the time we looked at properties, we knew our time wouldn't be wasted. There was no pressure to make a purchase.We felt he genuinely enjoyed his job and giving good customer service. We would recommend his services highly."
— Rhonda and Michael Fawson Toronto, Canada
"We have come across Bob on the internet when we were looking to buy a single family home in South Florida. Initially we searched at the East Coast but Bob stayed in contact with us over almost 18 months and convinced us to have at least a look at Marco Island before buying at the East Coast. We have followed his advice and were positively surprised about Marco Island as a location. The island is exactly what we were looking for and we are happy with the house and the purchase process.
What made a big difference to us as Europeans was Bob's willingness to work literally day and night for us. He was very responsive both by e-mail and phone and made the whole purchase process very efficient and customer friendly. "
— Wolfgang & Family, Germany
"In 2007 we made a trip to the United States to celebrate the fact that my eldest son became a doctor. So we travelled around from New York to Orlando and from there by car to Naples Florida. During that stay we had seen lovely houses in that very peaceful and quiet region.
When we went back home we started looking for a condo on different websites of real estate brokers.
That's where I came into contact with Bob Bailey. We went back in November of that year to look at different condos but we didn't find what we really wanted.
Back in Belgium Bob send us very regular messages of huge opportunities and indeed one day we felt in love with a condo in Lely Resort.
Bob never pushed us to buy anything; he only tried to understand what we really wanted. Frankly we don't like to be pushed in a sale.
What we want is professional advice and that is the difference that Bob Bailey provides to his customers.
We are sure going to do more business with him in that region. "
— Alexander & Ingrid, Belgium