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Canadian Buyers

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FAQ’s for Canadians purchasing real estate in California

Have you been thinking about buying a vacation home or investment property here in California?

If you have then you’ve come to the right place. We are often asked questions from our Canadian clients about the buying real estate in active adult communities here in California. So in order to better serve our friends from across the border, we thought we would provide some answers that would help in your decision making process. 


The question I know you want the answer to is “Are there still deals out there”? The answer is YES and I’ve helped many Canadian’s like yourself find great deals here in the California desert area.

Questions

Does California offer buyer agency?

This is the most important question you can ask. The state of California allows for buyer agency (which I do) and the seller or builder pays the cost. It’s important because as a buyer’s agent I owe my fiduciary responsibilities to you and only you.

I’ve heard I can just call the agent that has the home listed?

You’re correct you could call them but that’s where some buyers get in trouble. If you are working with the listing agent, they represent the SELLER not you in this transaction. Why would you pass up representation especially since there is no cost to you?

Couldn’t just any agent help us find a home?

Again, that’s possible but we would recommend that you look for three things:

  1. An agent that completed their ABR (Accredited Buyer Representative) designation. This ensures the agent understands how to help you , as a buyer, find the home that right for you.
  2. An agent that has completed their RSPS Resort and Second Home Property Specialist) designation and specializes in luxury resort homes. Some agents try to dabble in this but then get themselves in trouble when they are not familiar with the special needs of this area.
  3. Look for an agent that has a CNE (Certified Negotiation Expert) designation. You can be confident that this agent will handle your negotiations professionally and competently.

If buying a new construction home, should I have an agent with me?

New home construction is not plentiful in our area but builders in our area are more than happy to work with agents and yes you should have someone there representing you. Buying a home, especially a new home, is an exciting time and your focus will be on the home rather than the terms, etc. and that’s where we come in.

Are there any restrictions for Canadian buyers purchasing a home in California?

There are no restrictions for foreign nationals buying property here in California that we are aware of.

Who will draw up the contract and can I get a copy of it prior to coming to California?

In California, real estate agents prepare, present and negotiate the offer on your behalf. Another good reason to have a competent agent representing you.

If I don’t want to pay cash can I obtain financing to buy in California?

Yes, there are many lenders that can help Canadians obtain a suitable mortgage when purchasing a home in California. If you want to obtain a mortgage in California you will need the following information before a lender can assist you:

  1. Copies of passport and visa.
  2. Last two pay stubs.
  3. Last two bank statements.
  4. Last two years tax returns, if self employed a letter from an accountant stating how many years you’ve been in business, and business tax returns.
  5. Verification of two years of employment history.
  6. International credit report-lender will order.
  7. Set-up an American bank account to transfer funds.
  8. Down payment around 25% to 35% of total purchase price of home.

What costs are involved with a Canadian purchasing a property in California?

Most of the cost involved in purchasing a property will be fees that you pay to the lender (Seller pays my commission), which is primarily done through a title company. California is a title state and we do not use Attorney’s to process our real estate purchase and sale contracts. 

You will also most likely pay for a home inspection, termite inspection, an appraisal, the escrow (title) fees, title insurance, recording fees, property taxes and homeowner’s insurance. A good rule of thumb is to figure your closing costs will be approximately 3% of the purchase price. This cost will be considerably less if you are paying cash. It will be around 1% of the purchase price for cash buyers.

What about property taxes in California?

You will be pleased to know how low our property taxes are. Each city and county will vary slightly, but taxes are usually around .8 to 1.25% of the assessed value of the property.

Are Canadian buyers subject to capital gains tax when their California property is sold?

The foreign Investment in Real Property Tax Act (FIRPTA) imposes a U.S. tax on income and gains from real estate owned by “non-resident aliens” at the same graduated rates applicable to U.S. persons. It is recommended you consult with an accountant or lawyer for more details.

Can I lease my property out when not in use?

Absolutely. Typically, our rentals are done either furnished for a short-term seasonal basis (1 to 4 months) or unfurnished (6 to 12 months) for a long-term basis. If your property is located within a Home Owner Association Community, you will need to review your Covenants, Conditions and Restrictions (CC&R’s) to determine the length of time you want to lease your property. 

We have a very large seasonal rental pool here and have clients from around the world who visit sunny California during the fall and winter seasons to enjoy our climate, golf, entertainment and recreational activities.

What is the best way to decide where to buy?

We suggest that you first consider what activities interest you, such as golfing, dining, shopping, hiking, tennis, arts or other entertainment venues. Then, concentrate your search near where those activities are located. For example, if golf is of the first priority, then golf communities maybe your first choice. Our job is to take your dream list and help guide you to the communities (Active Adult & Traditional) that best fit your needs.

Are HOA budgets and reserves readily available for my review?

Our real estate contracts are buyer friendly, meaning that you have an inspection period to not only review the condition of the property, but the HOA information before you move forward with the purchase of the home. This protects you from buying into a community blindly and gives you a better state of mind that moving forward is a safe and secure investment.

Please feel free to give us a call anytime at 214-663-6032 or send me an email at Debra@SellingDesertDreams.com and we would be happy to answer any of your questions and would be honored to assist you with your home purchase here in sunny California.