I have been selling homes to Canadians for over 7 years.  Every winter, thousands of Canadians visit our beautiful Coachella Valley and look for winter retreats from the cold northern winters.  The strong Canadian dollar (or should we say weak U.S. dollar) combined with a slowly recovering housing market in the U.S. is providing Canadians with arguably as good of a time as any to buy real estate in the U.S. in the last 30 years.

If you are looking to move, invest, or purchase a second home, you should first have a basic grasp of the key differences between buying real estate in Canada versus buying real estate in the U.S.

TAXES: When it comes to taxes I will never profess to be an expert. This is too critical and the best is to contact a CPA (Certified Public Accountant)..

With that said, here for example are 2 key points that might be different than in Canada.

1) Here in the U.S. 1031 exchanges allow for capital gains taxes to be deferred from an investment property and rolled into another investment property several times over. From what I understand, this apparently is very different in Canada where this option is not allowed.

2) For a primary residence here in California, you are able to right down the interest paid on your mortgage as well as property taxes.

LENDING: Now 4 years  into the housing crisis here in the U.S., lending practices are changing daily.  If you are looking to finance a property here in California, check back home in Canada as well as with a local lender in the U.S. to see about the options you may have. The most recent that I have heard is that you would need at least 30 to 45% for a down payment and proven liquid funds for 6-12 months that would cover your payments.

ESCROW:  After you have talked with experts on taxes and lending (or if you are in the fortunate position to pay cash) and you have ultimately decided to look into a real estate purchase here in California, then here are some basics about the escrow process.

1) Escrow is simply the term we used to describe the time from when your purchase offer has been accepted to the time that you close sale on the property. Here in the Palm Springs area, CA. area, a "normal escrow" is around 30-45 days.

2) When writing up a purchase contract, you will need proof of funds (bank statement, letter from a lender etc.) that covers your down payment as well as earnest money (roughly 3% of the purchase price). I will provide you with the California Association of Realtors Approved Documents to Purchase a home.

3) Upon acceptance of your offer, your earnest money is cashed and deposited into a neutral 3rd party escrow company within 3 business days. So this is money that you will readily need available.

4) As a buyer, you have 2 major contingencies, the loan contingency and the physical inspections contingency. Generally these last 14-21 days from acceptance of your offer. During this time you will receive numerous disclosures about the property from the seller as well as other general disclosures. Also, during this time you will do a home inspection of the property and then based on the results of this and the disclosures you will hire experts to look into any negative issues/concerns about the property, go over potential requests for repairs, etc. Ultimately, this is the time to negotiate if needed and make sure you feel comfortable about the home you are buying. If you do not feel comfortable or can not reach terms with the seller under the contingency period, you can cancel escrow and your earnest money is returned to you.

5) Upon releasing contingencies, you will sign loan documents (if needed) generally within 4-6 days before the close of escrow. Money from you for the down payment or the entire purchase is generally needed within 36-48 hours before the close of escrow date.

Regarding Costs: As a buyer here in California, the costs you will incur are for escrow fees, lending fees, home inspection fees etc. There are no fees to work with a Realtor for the purchase of your property. Commissions to Realtors are paid for by the seller. For example, with a purchase price for a property of $250,000, you are looking at estimated costs of $850-$1200 at the time of close.

Regarding Property Taxes: Here in California, Proposition 13 has set property taxes as 1.02% of the purchase price of your property. There will be additional city and state fees, which makes the average property tax, 1.25%. So again with a purchase of $ 250,000, you are looking at roughly $2,600 for the year which is again a tax right down. Property taxes can be paid in full once a year or in 2 installments, due December 10th and April 10th.

Mello Roos:  In some communities in the Coachella Valley, the Builder has past the cost of the Inferstructure onto the homeowner in the form of a 25 year bond attached to the annual tax bill.  This amount may increase the taxes from the normal, to 1.45% and as high at 2.45% in on Indio community.  You should know this and consider how this may effect resale in the future.

For more information on How to Buy in Palm Springs, contact me at 760-534-1513.