International Real Estate in Dallas? You are Kidding!
International business should be on your radar as a REALTOR. Dallas-Ft. Worth is one of the major markets in the U.S. for foreign investors, and we have many investors here that are interested in properties outside the U.S. More DFW residents (20.4%) are foreign born than in most U.S. cities and DFW is a major hub for international travel and global corporations. Global business (foreign clients for US properties or representing a Texas client on a foreign property) is about 15% of the DFW market.
Why does this matter? There are a number pitfalls and hazards in global transactions, including language barriers, differences in customs and laws, different approaches to engaging agents and conducting a property transaction. Must documents be translated? When do negotiations conclude? When does the seller deliver the property to the buyer? Who holds the money? All are good questions to ask and understand whether dealing with foreign properties or foreign clients. What about currency conversion issues and money transfers? Running afoul of the legal issues can be almost as bad as having a foreign client misunderstand the Texas contract and closing process. Of course, there are also TAX ISSUES. If it is a property in the U.S., the federal government wants to collect income and capital gains taxes. If you and your client don’t know about FIRPTA (Foreign Investment in Real Property Tax Act) you could both be in for a shock!
With all of that, why would you want to take on these potential headaches? To begin, global property transactions are often in cash, often due to the difficulty of satisfying lending documentation requirements. Second, foreign clients tend refer friends and relations at a much higher rate than average, especially to an agent that can work with their particular needs. Finally, many foreign transactions are investments, and are often part of a continuing pattern of business for the buyer/seller, involving both residential and commercial investment properties.
Steve Trine is the MetroTex Global Business Council Manager and is here to help you understand the issues and opportunities available in global business. Sign up for the Global Business Council under MetroTex Committees for more updates.