5 Myths about Canadian Buyers
Guest blog by Carla Rayman, CIPS, CRS, GRI, RSPS and Patricia Tan, CIPS, GRI, RSPS
Arizona ranked the fourth most popular state to invest as per the National Association of Realtors 2016 Profile of International Activity in U.S. Residential Real Estate. Fifty-eight percent of the buyers were from North America, meaning Canada and Mexico.
After Florida, Canadians preferred Arizona as their favorite state to invest in a vacation home.
When dealing with Canadian buyers, it’s important to note some myths:
- We are only seeing Canadian sellers now
- Canadians are saying they’re going to wait four-to-five years to buy
- There isn’t an opportunity for the Canadian investment buyer any more
- They understand our banking system because it’s similar to what they have in Canada
- Our mortgage process is familiar to them
Yes, it is costing Canadians roughly ten-percent more than in the past due to their currency.
However, lifestyle buyers who want to escape the cold weather are still purchasing.
This isn’t a currency issue, but hesitancy due to pending immigration laws that may affect travel to the U.S.
You have a huge advantage to market to the investors who were buying in Metro Vancouver. Due to the tax that British Colombia implemented last year (charging foreign buyers 15%), these investors are now looking south of the Canadian border for a secure place to invest in real estate.
Not so. Canada has roughly 28 domestic banks, the U.S. has close to 7,000. Despite our having more choices, Canadian banks are more conservative and therefore Canadians are more risk adverse.
While our process might be similar, a Canadian can be approved for a loan in less than 48 hours and doesn’t understand why it can take up to 45 days (or longer) in the U.S. In addition, interest on mortgages in Canada is not tax deductible, terms are typically shorter than 30 years, down payments are larger and pre-payment penalties are significant.
Thus, Canadians are less likely to take on speculative real estate propositions. For the most efficient and successful closing, refer Canadian buyers to a Canadian bank that does business in the U.S.
Related stories:
Canadians selling more homes than they are buying in Phoenix area – azcentral.com (Jul. 30, 2017)
Foreign U.S. Home Sales Dollar Volume Surges 49 Percent… – National Assn. of REALTORS® (Jul. 18, 2017)
Canadian tourists contribute $2.4 billion to Arizona’s economy – Phoenix Business Journal (Jul. 17, 2017)
Arizona’s ‘Mr. Canada’ confident relations will survive NAFTA changes – Phoenix Business Journal (Apr. 28, 2017)
Patricia Tan and Carla Rayman formed Your Global Consultants
in 2005 to serve clients in international real estate transactions.