Can Foreigners Buy Property in the U.S.?  The simple answer is yes.  Foreigners are buying a lot of property in the U.S. in this real estate recession, and the laws of the United States welcome buyers from almost anywhere.

One of the challenges can be financing.  If you are a foreigner and want to buy property in the the U.S., you may be required to put down a larger down payment, but in these challenging times for real estate financing, it is not uncommon for buyers, local or foreign, to put down 20% or more.  Depending on your financials, you may be required to put down as much as 50%.  If you’re a cash buyer, this simplifies everything.

Foreigners Buy Property Across U.S.

As a nonresident, you will still have to pay U.S. real estate taxes.  If you do not have an individual taxpayer identification number or U.S. Social Security number when you sell the property, you may be subject to 10 percent withholding tax.  There are some rules and procedures for buying and selling if you are a foreigner, but it is not bad.

Property can be searched in the entire Northwest region of Washington state at:  Search Real Estate Listings.

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We all hear about identity theft in the news and about fraudulent credit card charges, but don’t we really expect that it will happen “to someone else” and not to us.  Alas, a Sequim home buyer found out that it can happen to them.  In 37 years in real estate, I’ve never had a buyer get hit by fraudulent charges on their credit card, but it has happened, and the timing is most unfortunate.  The fraudulent credit card charges showed up during the loan application process.

Identity Theft

Identity theft raises two issues.  The first is the loss of your money and how to prevent that.  There is a lot of help on the Internet on how to protect your identity and your accounts.  I would recommend a service that helps to track potential uses of your identity 24/7 in hundreds of places.  That service is called LifeLock.  I receive no referral or affiliate fee for mentioning the company, but they are very good at protecting you from identity theft. 

Identity Theft and Your Home Loan

When you are buying a home in Sequim, this could kill your loan, but identity theft that steals money from your bank account does not necessarily mean your home loan will not be approved.  If the theft changed the formula on your income to debt ratio, your loan could be effected.  But if the amount of money stolen is small and the bank covers it as they should, your loan should proceed according to plan.

Identity Theft Resources

Learn more about identity theft at:

http://www.lifelock.com/identity-theft/types/

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Connecting Sequim utilities or transferring the electric and other utilities from seller to buyer can be confusing, especially if you’re trying to do it long distance.  Here’s a short primer to clarify how it all works for you as a buyer.

Sequim Utilities Company

Sequim Utilities Transfer Application

The Clallam County PUD will transfer Sequim utilities so that on the day of closing it will be done, but you have to complete the application and fax it to the PUD prior to closing, and it would be best not to wait until just before closing.  The PUD told me that it would be best to call them as early as you can, and I should think that two weeks prior to closing would be reasonable.  Once they have your completed application,  they can get it all done very quickly.  I would recommend getting your application faxed to PUD one week prior to closing so there is no delay in getter your Sequim utilities transferred.

Sequim Utilities – Make a Phone Call

You can call PUD and they will email the application (or fax or send by snail mail), and once you’ve filled in the information and faxed it back, you are done.  It’s not hard. 

What happens if you don’t get it done?  The utilities get disconnected, and the seller is charged a fee (about $30), and then you have to schedule an appointment to get the utilities re-connected.

You can call the PUD at 360-452-9771 to transfer your Sequim utilities.

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Contingencies are an important part of buying a home in Sequim or Port Angeles. In fact, once you arrive at mutual acceptance on the price, that just completes the first phase of your negotiations. Completing a home inspection, a septic inspection, a well inspection, and perhaps follow-up inspections will lead to the second phase of negotiations if there are items to be repaired or if major problems are discovered that were not previously revealed.  How you handle inspections and negotiate with the seller in this second phase could make or break your deal.

Contingencies Must be Identified

Contingencies Without Ambiguities

It is critical for your own protection as a buyer that the language used to describe the contingencies (and the request for repairs or a credit) be articulated without ambiguities.  The last thing you need is to get into a legal dispute over what was intended, and if you leave any ambiguities, you could lose your transaction in a dispute.  Notice how clean and concise and without ambiguities the language is in this Notice to the Seller.  There must be only one way to interpret every single sentence, so there will be absolutely no possibility that there could be a misinterpretation.  This language does exactly that.

Attached as Exhibit 1 is a copy of the Home Inspection Report.  Attached as Exhibit 2 is a list of the issues of primary concern to Buyers.  Attached as Exhibits 3 and 4 are two bids for window replacement in the Sun Room.  Attached as Exhibits 5 and 6 are the well report and the estimate to replace the well pump and repair the water softener. Buyers request that Seller address all items on Exhibit 2 to Buyer’s satisfaction, or in the alternative that Seller credit Buyers $3,000 at closing, which is less than the actual repair costs of all items in the Inspection Reports.

Contingencies Discussed in This Video

Contingencies can finalize your home purchase and bless you with a pleasant and exciting experience you will remember for the rest of your life. But if not handled correctly with great attention to detail and with the experience to draft legal clauses with precision, you could end up in trouble or find out after closing that you have some huge repair bills you did not anticipate.  Handling contingencies is just as important as reaching mutual acceptance on the price in the first place.

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The rule for buying real estate long ago was “caveat emptor,” meaning “buyer beware.”  Consumer protection has been one of the primary priorities for both state and federal governments.  Despite our governments’ best efforts to protect us, liars and cheats have not yet all repented, so . . . the rule of caveat emptor is not dead, certainly not to be ignored by a buyer of real estate.

As we enter the new year, we have some new major consumer protection activity regarding disclosures to consumers when buying a home and obtaining a loan.  The Real Estate Settlement Practices Act (RESPA) has been upgraded, so to speak.  Under the new rules, all lenders and closers must adhere to the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement which is intended to simplify the disclosure of loan fees and closing costs and allow consumers to shop around for the best deal.  I think more important to consumers than shopping around for the best deal is a little fundamental concept many consumers have called, “old fashioned honesty by lenders.”

HUD recently released a great guide: Shopping For Your Home Loan: HUD’s Settlement Cost Booklet. Loan originators are required to provide consumers with the booklet within three days of a loan application.  The booklet provides a basic overview of the home buying and mortgage lending process. It also explains in detail each part of the new Good Faith Estimate and the new HUD-1 Settlement Statement.

Frankly, I was impressed by this guide.  Whoever drafted it actually understands real estate, the mortgage market, escrow, and how real estate agents work.  The guide has some excellent consumer protection advice, such as this:

Frequently, the first person you consult about buying a home is a real estate agent or broker. Although these agents and brokers provide helpful advice, they may legally be representing the interests of the seller and not yours.  .  .   It is your responsibility to search for an agent who will represent your interests in the real estate transaction. If you want someone to represent only your interests, consider hiring an “exclusive buyer’s agent”, who will be working for you.

A word of caution bolstered by personal opinion:  The reform to RESPA requires that certain documents be given to consumers, including disclosures drafted by attorneys who spent months plying their trade, and mathematics regarding fees and costs associated with the loan and closing costs.  All this is good, but my opinion is that we don’t have a panacea here.  We have more paperwork that consumers are supposed to read . . . and understand?  I applaud the feds and their well drafted RESPA reform.  It’s all good.  But two thoughts occur to me.  First, does anyone really think consumers will be better protected by giving them more legalese to read?  Consumers are already swamped with disclosures of all kinds and mandatory consumer protection warning labels everywhere!   It appears that the burden of watching one’s backside falls upon the consumer again, hence the phrase “caveat emptor” at the beginning of this article.  Second, don’t expect this new law and guide to transform the less-than-honest loan reps into Priests.  They are still prowling about seeking whom they may devour.  What they are doing right now is working on a new strategy to steal money from you.

Having said that, I do recommend that you review this HUD guide.  I am a strong advocate of consumer protection, and my small part in this Universe to help protect consumers is education with helpful articles and the latest in news and helpful tips on this blog.  I realized long ago I don’t have the power to save the world, but I can help one client at a time, and I do that as a Sequim Buyer’s Agent and a Port Angeles Buyer’s Agent.  My job is not only to help my clients find and negotiate the best possible deal on their retirement home, but to help protect them all the way through closing.

The image above is from this guide, and you can see how nicely it lays out the buying process in a simple graphic.  You’ll find the guide at RESPA HUD Settlement Cost Booklet.

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Today we ask a real estate agent who has been through 30 years of market ups and downs, a real estate attorney of 20 years, and an advisor to real estate investors for two decades this question, “If you were advising a buyer thinking about buying a home in this market today, what would be the three most important tips you would share?”   The answer is full of rock solid knowledge, experience, and wisdom.

Steve:   Chuck, we know the market has slowed down, but we also know that there are a number of people who are still shopping for a home in Sequim or in Port Angeles.   We are seeing sales of homes here every month, even during the slowest months of the winter.   Many people are not confident that they know exactly how to find a home in this market, and when they find it, they’re not necessarily certain they know how to negotiate right now.   So, the question is, “If you were advising a buyer thinking about buying a home in this market today, what would be the three most important tips you would share?”

Chuck:   This is a very good question.   I learned as a lawyer that the answers you get are only as good as the questions you ask.   Here is what I see as the three most important tips in this market.   Use these three tips, and you are substantially increasing the likelihood that you will find the right home at the right price and that you will get the best possible deal.

I’m going to assume that our buyer (husband and wife) know what they want (for example, three bedrooms, 2 baths, an attached 2-car garage, at least 1,800 square feet, a newer home, at least one acre, Sequim school district).   You could consider this a pre-tip:   know what you are shopping for, otherwise we are all wasting our time chasing the wind.

The first key tip I would share is this:   Do your due diligence and find a knowledgeable, experienced, and trustworthy Buyer’s Agent.   Listen, this is not an effort to sell myself right now.   Sure I’d like buyers to work with me so I can make commissions, but there is much more to this recommendation.   As a real estate lawyer I made some pretty good money because many buyers and sellers tried to do their “own thing” without sufficient knowledge or experience.   (Why do you think there are so many rich lawyers?)   A year and a half of litigation, a small wheel barrel full of money, and a lot of stress later and my clients proved to me over and over again the incredible wisdom in finding the best and most experienced professional out there.   He or she does NOT cost any more than the totally inexperienced or incompetent licensee who smiles nicely and smells good.   In fact, when I represent a buyer as their buyer’s agent I cost them nothing, yet I bring them a lifetime of experience.   How cool is that?   So I strongly recommend that people take advantage of the experience and negotiating power a good Realtor can bring to the table.

The second key tip I would share is this:   When you narrow your search of homes down to one home, know precisely what to analyze and what to research on that home.   I’m reminded here of something many men can identify with.   If you’ve ever shopped for a used car, and if you know something about cars, when you find a model with the features and year that is a good possibility, you kick your due diligence into high gear by doing several things.   For example, when you test drive it, you are looking for any signs of problems, like the front end pulling to one side when you brake hard, any shaking or vibrating, signs that the transmission may have problems with jerky shifting or any clunking noises.   You may stick your head under the hood while it idles and while you rev the engine and listen to any pinging noises or any rough idling.   When you buy a house, you should also know what to look for.   There’s a lengthy list of things to examine, and some of these items are deal killers because the cost of installation or replacement is just too prohibitive, and some existing home designs (or heating and air circulation systems) simply cannot be changed without major construction.   There are foundation and concrete issues, framing and roofing issues, electrical, heating, and cooling issues, drainage issues,   potential mold issues, septic issues, water well issues, easement issues, and much more.   Of course, if you make an offer on a home, you’ll want a professional home inspection, but a home inspector is not your adviser on buying and cannot and will not advise you on all the issues you should be thinking about.   A buyer’s agent can, if they know.

The third key tip I would share is this:   Negotiate like an expert, and believe me there are levels of negotiating skill.   Negotiating a $300,000 or $750,000 deal is not exactly like getting a bargain at a garage sale, and it’s definitely not for beginners.   I love going up against an inexperienced or poor negotiator, because it’s such a great victory for my clients, not only in the money they save, but in the management of the stress throughout the process.   There is so much to negotiating effectively, and this isn’t the time or place to go on and on about how to negotiate like an expert, but let me make the point this way.   Negotiating effectively can mean $20,000 to $80,000 in your pocket.   Does that have your attention?

There’s more to putting together all the details of a good purchase, but these are the three tips I would emphasize as the most important.   I could go on, but if anyone has questions they can always email me.

Steve:   Chuck, I know your readers will appreciate what you’ve shared here, and let me add something for our readers.   When Chuck answers questions like this, he really doesn’t hold anything back.   What he shares is his heartfelt opinion and as he says a lifetime of valuable experience.   Thank you Chuck for sharing.

Chuck:   My pleasure.

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• How to Buy Real Estate and Consumer Protection