U.S. immigration regulations and procedures can be complex and rules change frequently. As a real estate practitioner, even if you focus on global real estate, you are not expected to, nor should you attempt, to play the role of an immigration attorney. However, foreign real estate investors want (and need) to know how U.S. visa regulations may impact access to their properties. The U.S. government places few restrictions on ownership of real estate by foreign individuals and companies, making it fairly easy for international investors to purchase U.S. properties. But before a foreign buyer makes a purchase, they need to understand that their access to the property may be limited in terms of permissible entry and length of stay. The type of visa a foreigner has been issued can make an enormous difference.
Real Estate professionals should not offer advice about immigration and visa matters; however, they should be aware of visa regulations. General knowledge of visa matters can help the real estate professional alert foreign buyers and sellers so that they can seek expert advice and make informed decisions. Below is information regarding different visa types. If you are working with global clients, this information should be on your radar.
Visa Waiver ProgramThe Visa Waiver Program (VWP) allows citizens of participating countries to travel to the United States without obtaining a visa, for stays of 90 days or less for tourism or business. Those who wish to stay longer need to apply for a visa. It is important to note that Canadian citizens do not fall under VWP. They may stay in the U.S. for up to six months.
The following are examples of activities permitted while in the United States on the VWP.
REALTORS® sell homes both to resident and non-resident foreigners. How have sales to non-resident foreigners been, given that major parts of the world have been in economic slowdowns and that the value of the dollar has been appreciating?
The Answer is “Holding Up Reasonably Well.” As part of the REALTORS® Confidence Index survey REALTORS® provide information on existing home sales to non-resident foreigners. The level of sales fluctuates from month to month, so the graph presents the data on a 12 Month Rolling basis.
Sales to non-resident foreigners are currently in the 100,000 per year range, down a bit probably due to the current strength of the dollar and economic slowdowns in some foreign countries. With international economies now recovering, the outlook should be for additional sales and somewhat higher prices.
International investment in U.S. real estate could soar to new heights in 2015, thanks to the reciprocal U.S./China visa agreement that will issue five-year, multiple-entry visas to students and 10-year, multiple-entry visas to business travelers and tourists. The policy changes went into effect Nov. 12.
Among other effects, the new visa agreement mitigates challenges for those investing in property abroad—namely, real estate purchased by Chinese parents for children studying in the U.S. For students participating in four-year degree programs, the five-year extension presents a welcome change.
“Chinese individuals on the fence about investing in the U.S. are encouraged by the new visas,” says Andrew Taylor, co-CEO and co-founder of Juwai.com, a global real estate information platform serving the world’s Chinese communities. “They make a big headache go away.”
Barring outside factors, Taylor predicts at least a 15 percent increase in Chinese investment in 2015. According to the NAR 2013 Profile of International Home Buying Activity, China and Canada have been the fastest growing sources of international clients. Transactions involving Chinese buyers account for 12 percent of total reported international transactions, with many opting for all-cash purchases.
“Mainland Chinese buyers have the highest average price range and pay in cash about 70 percent of the time,” Taylor says. Juwai users report an average budget of $3 million and a median property purchase price of $425,000—well above the overall U.S. median of $199,500. Top areas for real estate investment include New York City, Los Angeles, Philadelphia, Detroit and Houston.
For real estate practitioners, the new visa policy imparts an opportunity to carve out a global niche. Chinese clients, like any other client, seek an agent that maintains high standards of professionalism.
“International buyers have an exceptionally strong bond to their agent,” notes David Lauster, real estate specialist, U.S. State Department, in the Sept. 2014 issue of Real Estate magazine. “They display an admirable and long-lasted appreciation for the assistance and knowledge that agent brings to the transaction.”
That assistance and knowledge trumps all – including specialized skill sets. Fluency in a second language, for example, is not necessarily required.
“One of the biggest questions I get is, ‘Do I have to learn Mandarin?’ The answer is no,” Taylor says. “Just do your job well. That’s enough.”
“No special qualifications are needed,” says Noah Seidenberg, broker associate with Coldwell Banker Evanston in Evanston, Ill. Evanston is home to one of Northwestern University’s campuses, which collectively house over 5,000 international students, faculty, researchers, visiting scholars and staff from more than 110 countries. Seidenberg receives inquiries from foreign buyers on a regular basis, particularly during peak enrollment periods at the university.
“The process legally is often not the same in the U.S. as it is when purchasing property and obtaining title in their native country, so there is a period of explanation, walking the person through the steps, much like a first-time buyer,” Seidenberg adds.
With the policy changes propelling an already emerging segment, Taylor recommends taking advantage of the boost with a two-fold approach:
“Every [Chinese] family has its own situation,” Taylor explains, “but underlying all of them is a faith in the U.S. real estate market and a desire to own their part of it.”