Posted: Jan 13, 2014
When foreigners buy Florida real estate with cash
James Bond Hideaway - Ballast Key

Florida is the #1 state for foreigners buying real estate.  These sales are 84% in cash.  But not in Greenbacks.  Sales are in Canadian Dollars, Bolivars, Reals, Pounds, Euros, ... The relative value of currencies shifts only pennies a day but, when multiplied by hundreds of thousands and millions of dollars and spread over 30, 60, 90, 180 days, the resulting change in the price of the property in the non-dollar currency can be significant.  How would your buyer feel knowing the price of the house rose 12 - 15% from acceptance date to closing?  How would your seller feel if the buyer opts out of the deal because of that?  I control the shift in currency value by using the top currency exchanger in the world - Moneycorp.

My contact at Moneycorp is Darren Connor 407.352.5890

At 30%, Canadians are the biggest foreig...

I was talking to Darren the other day and he related this story:

 

"We had been working with a couple from Canada since late November. They had a closing date set on their Florida property for the second week of January 2014.  They needed to convert Canadian dollars to purchase around USD $300,000 and then to be sent to the title company in Florida.

 

Once their account was opened with Moneycorp, their own personalised currency dealer called to introduce himself and discussed the clients' requirements. The dealer made the clients aware that the Canadian Dollar (CAD) was predicted to fall against the US dollar in the upcoming weeks. The clients took advantage of this and decided to lock in the exchange rate on December 16th before the rate fell any further. Moneycorp clients can lock in the exchange rate for anywhere up to two years by putting down 10% - in this case the clients only needed to lock in for three weeks or so. (Generally banks will not offer this to their clients).  The exchange rate the clients achieved on December 16th was 0.9430.

 

Between December 16th and the closing date in January the CAD/USD rate dropped as predicted by the dealer. The rate the day before the clients closing on their property was 0.9170. If the clients had not locked in the exchange rate at the time they did, they would have paid CAD $9020 more than if  they had just received the rate at their closing date."

 

Well done Moneycorp.

What about foreigners buying in Florida?

For the twelve month period ending July 2013, sales of existing homes in Florida totaled $74B.  Over the same period, sales to foreigners totaled $6.4B or 8.6%.  Beginning January 2011 and continuing on a monthly basis, residential sales in Florida to non-resident foreigners have averaged 8%.

 

"Prices paid by non-resident foreign Buyers tend to be higher than those paid by domestic Buyers, for foreigners buying real estate in the US are typically wealthier than domestic Buyers and are looking for above average properties for recreation and investment purposes" - 2013 Florida International Buyers Report.  Overwhelmingly, property in Florida is available at a lesser price than in the foreigner's home country. Other benefits to owning US real estate are; property rights are well-defined, real estate is not directly correlated to other investment options and often times property can be rented when not used by the owner.

 

 

Old Town Key West

What are foreigners buying in Florida?

 

  • Single family 47%, condo/townhouse 45%
  • Central city 35%, suburbs 30%, resort area 27%
  • Use as vacation property 35%, rental property 26%, retirement home 4%
  • Plan on using the property for 3 - 6 months per year 31%, over 6 months per year 13%.

 

Where are foreigners buying?

 

  • Miami - Miami Beach 21%
  • Orlando - 13.5%
  • Ft Lauderdale - 8%
  • Cape Coral & Fort Myers - 6.7%

Problem Areas and Solutions

Key West - The Meadows

Language and culture remain the largest hurdles to overcome when working with foreign buyers.  Unless you are a native speaker, the translation of the language of real estate can be complex.  Among these complexities are taxes, insurances and condo fees.  Fortunately, many if not most foreign Buyers are well educated so their English is very likely going to be better than your Portuguese, Spanish, Russian ...

 

The second hurdle is time, as many Buyers are in the US under a time constraint. Making the deal now and closing it later is not the best but often the only option.  If not possible, then establishing and maintaining trust will create a deal later - with others to follow.

 

And third; show me the money.  Here Moneycorp, with offices in the UK, Spain, Ireland and the USA, steps in and deals on an international currency exchange services basis, bank to bank. Easy.

Conclusion

550 offices, 38 countries, 6 continents.

The Engel & Voelkers Florida Keys (EVFK) office in Key West, Florida has native speakers of English, German, Spanish and Russian with some Hebrew, Thai and Italian on the side.  As one of 550 offices worldwide, EVFK Sales Advisors are well versed in international sales and most of all, the service that goes along with it.  If we do not speak your language in Key West, then we will find someone in our global company who can.

 

Key West is a resort destination, a small and vibrant town blessed with historical and architectural significance and a seacoast town with moderate temperatures and year-round water sports.  We have historic homes from the 1800's and early 1900's, waterfront condos and vacation properties that can generate investment worthy rates of return. 

 

If you have any questions or comments please contact me here.

 

Good luck!

 

Additional Resources: