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63% of International Buyers Pay Cash

International clients frequently pay all cash compared to domestic buyers: About 63 percent of reported transactions were all cash, as reported in the recently released 2013 Profile of International Home Buying Activity, which captures transactions of respondents in the 12 months ended March 2013.

Mortgage financing tends to be a major problem for international clients due to a lack of a U.S. based credit history, lack of a Social Security number, difficulties in documenting mortgage requirements, and financial profiles that are different in some cases from those normally received by the financial institution from domestic residents. Financing-related issues accounted for about 26 percent of the reported reasons for not buying a property in the United States.

There is a good chance of having a foreign buyer, whose expectations and needs may differ from those of U.S. buyers. The site http://www.realtor.org/global provides a substantial amount of information that may be of help to REALTORS® not experienced in dealing with international clients. Information at the site may be useful in addressing reasons why clients don’t buy—and helping to convert no-sales into sales.

Jed Smith, Managing Director, Quantitative Research

Jed Smith is Managing Director, Quantitative Research with the National Association of Realtors®. He has worked on real estate issues for the past 20 years, providing input on a variety of housing, commercial real estate, tax, and planning issues. Recently he has been involved in several international studies.

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Comments
  1. Kirk D

    I think it is more shocking that 29% could not find a property!

  2. Marilou

    As a domestic buyers agent during the heated months, this is what I have observed and have experienced: International buyers heated the real estate selling side (in most premium areas in California) during the months of January to June in a big numbers! They outbid domestic buyers in a lot of deals closed, in shortsale categories and foreclosures or REOs. They paid CASH, or IF they use loan, they put down big down payments under the “realtives name” or corporation. They asked nothing from sellers: no repairs, no termites, no home warranties, no appraisal,no LGS… or nothing at all. These CASH buyers even pay literally the taxes owed by previous owners. Listing agents of those shortsales, foreclosures or REOs were even lured to accept their offers(by CASH buyers) with a promise that as soon as they have fixed the house they will be the listing agent again to re-sell it. Poor domestic buyers, they blamed their agents for not having any accepted offers even they tried hard to present a good clean offer. Those were the months where you just felt sorry for domestic buyers who only qualifies for FHA, or small downpayments using conventional loans and asking a lot from sellers. BUt now the tide is turning…some of those CASH buyers who have flipped the house and even hired staging companies, trying to re-coupe their expenses are staying longer in the market…where are the buyers? Dis-appointed with their expeirences, but I know soon they will come out again….or some are testing the waters again, watchful and very particular with the agents who are helping them.

  3. Based on the number of all cash buyers we have worked with this year in Boston I would say this number is even higher.

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