Since the recent U.S. election, the media has been buzzing about Americans who are considering immigrating to Canada and buying property. What does this mean for you?CTV News recently reported on sharp increases in American interest in Canadian real estate. The article cited a Royal LePage study which revealed that American interest in Canadian real estate has increased substantially because of distress over the results. You can read more on this here: http://www.ctvnews.ca/business/sharp-increase-in-americans-interested-in-canadian-real-estate-royal-lepage-report-1.3249353.
For example, according to the study, U.S.- originated search sessions increased by 239% the day after the election and American web traffic increased 40.9% year-over-year in the fourth quarter of 2016.
As a mortgage agent or broker, are you ready to facilitate these deals? Americans who require mortgage financing will have different requirements when it comes to underwriting. These buyers will require larger down payments and deals will be largely based on the property being financed/security as opposed to the integrity of the buyer – income source/ability to validate income. How about credit? You will need to have the ability to look at their American credit report.
Fortunately, because the properties will be located in Canada, you will be able to rely on the same tools to validate property-related information, such as home value, as you would with your regular deals. Since deals based on property equity often involve appraisals, these deals especially will involve extra work to ensure that the value is there. Looking at an automated valuation is always a good measure to validate that the numbers are in line before going as far as ordering an appraisal.
How about marketing? Perhaps you want to diversify your marketing and look at campaigns south of the border to tap into some of this business? You can promote yourself by educating prospective buyers about your services and your ability to support them in their purchase financing before they get here.
The composition of this type of American buyer is different. Unlike many foreign buyers who purchase Canadian real estate as an investment, Americans are doing this research because they are considering a move – which is, of course, easier said than done. There are considerations with regard to immigration and sourcing employment, which has some speculating that while there is interest there, it may not translate into actual purchases.
As expected, some reports have explored whether this is merely interest (window shopping) or if it is going to result in an increase in actual purchases by American buyers. Only time will tell, but if you wish to serve this market it is prudent to lay the groundwork now to be able to effectively underwrite these deals in the months to come.
For more information about mortgage underwriting tools for mortgage agents and brokers please visit Purview at https://www.purview.ca/.