Certain spots in the USA have long been hotspots for Canadians who have the financial means of buying an owning a vacation property in the US. While there are exceptions, it tends to be that those from Ontario eastwards have always gravitated to Florida, while those Manitoba and westwards have done the same for Arizona. And the term given to them – ‘snowbirds’ – is pretty self-explanatory; they ‘fly’ south to get away from the snow and the rest of Canadian’s chilly winter temperatures.
It goes both ways too, as there are always American clients who’d like to own a vacation home in Canada. Often times, their prerogatives are exactly the opposite – instead of trying to get away from the snow they’re trying to be enjoy the best of it as they don’t have the same skiing or snowmobiling opportunities down where they call home. As a realtor you’ll be very thankful to meet these would-be buyers from south of the 49th parallel.
Effective client prospecting for real estate agents means putting out feelers as far as possible, and that can include doing so for Americans interested in Canadian real estate opportunities. Here at Real Estate Leads, our online real estate lead generation service is an excellent way to meet would-be buyers of ALL different interests, and it’s true that some of them may not call Canada home.
Currently, discrepancies between the dollar’s worth for each country is going to mean that American interest in Canadian properties is going to outstrip Canadian interest in American properties quite handily. That might be to your benefit, so let’s have a look at why fewer Snowbirds are looking at purchasing U.S. real estate these days.
CDN $ at 13-Year Low in Comparison to U.S. Greenback
With the value of the Canadian dollar hitting a 13-year low, a Canadian’s purchasing capacities down south are seriously constrained right now. Cross-border travelers and snowbirds face higher expenses for everything from groceries to rent due to an unfavorable exchange rate. To put it in a real estate-perspective, if a Canadian was to buy a $200,000 home in all cash then the current exchange rate would have them spending an extra $66,000 to buy that home.Easy to see why the numbers are very down right now
Professional Advice for Clients Determined to Buy in USA
Some people will still insist on forging ahead and buying the vacation home in the USA they’ve wanted for years, and nearly all of will have some pressing reason to be willing to overlook the very tilted market dynamics.
If you are serving one of these types of real estate clients, here are some tips to help improve the experience for them AND see to it their money goes as far as it possibly can:
• Advise them on how to get the best exchange rate – tell your clients that rather than exchanging money several times throughout their visit to the U.S., exchanging it in one lump sum will usually mean a lower exchange rate paid. Tell them not to be dissuaded by paying a higher one-time processing fee for the transaction.
• Make them aware of the possible benefits of refinancing their home – many Canadians bought their U.S. home between 2009 and 2013 when the CAD $ was near to or equal with the U.S. dollar. Naturally, many of these homes will have appreciated over the years. Those who are already U.S. homeowners in popular snowbird markets are in a unique and favorable position to take advantage of their property’s appreciation and the strong U.S. dollar.
Refinancing may allow them to take the surplus earned on the currency exchange, and use it to repay debts or make new investments back in Canada. Money kept in USD can be spent on renovations to their U.S. home or placed in a high-interest savings account in the U.S. where it will grow more than it would in Canada and remain FDIC-insured.
• Buy, Don’t Rent – It’s a fact that rent is expensive during certain times of the year (if not all year) in popular snowbird hotspots. If property values weren’t still comparatively affordable in comparison to similar housing in Canada then it might be wise to rent until the loonie gains strength. But property values are comparable, so you can be confident in telling clients to still go ahead and buy if they find a property that really works for them.
To give an example, renting a condo in Fort Lauderdale, FLA might cost $3,000 in monthly rent during peak season. However, the monthly mortgage payment when purchasing the same property would only be $1100 or so. Unlikely that they’ll find ANY type of acceptable accommodations for anything less than $1100, or the even higher number that would include strata payments and maintenance.
Tell them to keep in mind as well that while rent payments continue to climb each year, monthly mortgage payments stay consistent. And they can rent the property when not using to cover their mortgage, homeowners’ association fees and property tax.
• Suggest They Take a Mortgage on Their U.S. Property, Even if They Can Buy It Outright – It’s wise to advise clients to consider a U.S. mortgage instead of paying for the entirety of the home’s price in cash. By applying for an adjustable rate mortgage with a fixed term, they’ll be able to avoid the one-time cost of currency exchange in a large amount now. Plus it creates the possibility of paying off their mortgage without any prepayment penalties if the Canadian dollar improves.
• Clients Will Pay Less for U.S. Purchases with a U.S. Credit Card – this is one piece of advice that most clients will be able to figure out on their own, but if not you should go ahead and make them aware of the fact that obtaining a U.S. credit card will let them save foreign transaction fees on purchases made in the U.S
If you’re newer to Real Estate and you’ve never helped clients with buying out of country you’ll almost certainly be challenged by it, but in truth common sense and a willingness to learn as you go will work out just fine for any realtor. Use these suggestion tips to build a rapport with your clients, and be sure to dig deeper and learn more on your own.
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