Seven Steps To Purchase A Property Abroad
Many people I’ve spoken with recently are interested in purchasing homes abroad. Reasons vary widely from gaining a path to citizenship in another country, to a desire for a vacation home, to wanting to own something without paying U.S. prices, and more. If you’re in the United States and have your sights set on purchasing a property abroad, here are seven key steps and some pitfalls to be aware of.
Step One: Decide What You’re Looking For
Ultimately, you want to figure out your goal for the purchase before you even begin to do research. Too often, people get distracted by what they think is a good deal even though it doesn’t meet their personal criteria. Write out your specific goals and categorize them in order of importance. Here is an example:
Home is updated and will not require additional work.
Home is accessible by public transit.
Home stays within budget of $400,000.
Home is in one of your three top countries.
You are allowed to rent the home out when you are not using it.
Home is within one hour of a major airport.
Home has at least two bedrooms.
Step Two: Do Your Research
Once you’ve narrowed down your priorities, then you can start to browse and see what is available in your country or countries of interest, using tools like Realtor.com. Before falling in love with a particular home in your selected country, be sure to research the legal requirements for foreign buyers in the country of interest. You’ll want to make sure you understand the property laws, ownership rights, and potential restrictions because they may vary from those in the United States.
Step Three: Hire The Right Professionals
When it comes to purchasing properties abroad, it will be essential to ensure that you have a reputable team of people giving you advice. Here are some professionals you may need:
A local realtor will be essential to explain local trends, property values, and future prospects. This person will also be able to advocate for you and potentially show listings not publicly available.
Hiring a local lawyer may be necessary to ensure compliance with local laws and prevent issues down the road.
If you are considering building or renovating, consult a local contractor or builder to understand the process and associated costs.
Consider hiring a translator if you might not understand the language spoken in the country you plan to purchase in.
Consider consulting a tax professional to understand what your tax obligation would be in both your home country and abroad, both for current ownership and a future potential sale.
Consider consulting an insurance professional to understand what your ongoing costs and requirements may be for maintaining the property.
Step Four: Visit The Property
Once you’ve engaged a realtor and narrowed your search, you will want to visit the property or properties in person. You’ll want to get a feel for how this property accomplishes your goals, how you like the neighborhood, and the actual condition of the home.
Step Five: Finance The Purchase
If you’re hoping to buy a property abroad, the easiest way to make that goal happen is to have the entire purchase cost available in cash. If you need support with financing, you may be able to secure a mortgage from a local bank or an international mortgage. However, be aware that lending requirements for purchases abroad may require higher down payments or higher interest rates than purchases within the United States. You will want to get pre-approved for a mortgage to ensure that you are able to secure the funds to make an offer for the home you want to purchase.
If you’re involved in an extended purchase process, you may be subject to the whims of currency exchange rates. Depending on your country of interest, what you can afford could be rapidly depleted by the U.S. dollar weakening or the local currency strengthening. To mitigate this risk, you can work with a foreign exchange service to lock in a favorable exchange rate.
Step Six: Negotiate
Once you have found a home you’d like to make an offer on, you need to do due diligence to ensure that the title is clean and there are no legal disputes around the property. Having local reputable professionals will make this process seamless.
If everything looks good, you’ll want to work with your realtor and lawyer to negotiate the price and terms of the deal. Once you have a purchase agreement in hand, review with your lawyer before signing.
Step Seven: The Property Is Yours
Once you’ve gone through all these steps and signed the purchase agreement, all that’s left to do is securely transfer the money to complete the purchase. If you worked with the right professionals and did your due diligence, there should be no surprises or financial challenges down the road that you cannot handle.
This article was originally posted by me on Forbes.com.
This informational and educational article does not offer or constitute, and should not be relied upon as, tax or financial advice. Your unique needs, goals and circumstances require the individualized attention of your own tax and financial professionals whose advice and services will prevail over any information provided in this article. Equitable Advisors, LLC and its associates and affiliates do not provide tax or legal advice or services. Equitable Advisors, LLC (Equitable Financial Advisors in MI and TN) and its affiliates do not endorse, approve or make any representations as to the accuracy, completeness or appropriateness of any part of any content linked to from this article.
Cicely Jones (CA Insurance Lic. #: 0K81625) offers securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI & TN) and offers annuity and insurance products through Equitable Network, LLC, which conducts business in California as Equitable Network Insurance Agency of California, LLC). Financial Professionals may transact business and/or respond to inquiries only in state(s) in which they are properly qualified. Any compensation that Ms. Jones may receive for the publication of this article is earned separate from, and entirely outside of her capacities with, Equitable Advisors, LLC and Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC). AGE-7374827.1 (11/24)(exp. 11/28)
