Set Expectations When Selling Cross Border With Canada

The world is increasingly interconnected, and global real estate opportunities are more accessible than ever. For neighboring countries like the U.S. and Canada, it makes good business sense to grow your cross-border business.

Navigating the differences in cross-border transactions comes down to one main thing: a strong referral network. It helps to have a support team of globally minded professionals. Remember: All good referrals begin at home!

Uncovering client preferences

The Canadian Real Estate Association (CREA) 2024 International Real Estate Business Survey reports that 51% of clients seeking a property in the U.S. are looking at Florida. The Florida climate suits a range of lifestyles; so it’s essential to understand your clients’ personalities, preferences and gain insight into their priorities, such as proximity to amenities and attractions, ease of travel home, access to other Canadians, and more.

Additionally, understanding the reason for the purchase helps you zone in on what area of the state will best suit their needs. These important conversations at the outset are the key to starting their referral journey off smoothly.

Understanding how transactions work

As Lea Legueux, a Realtor® with Future Home Realty in Tampa, explains, “Your [buyers] will likely know the ins and outs of buying in their country but less about how it works in other countries. Essentially, it’s up to you to listen and clarify the differences between what they expect and how it is.”

Set client expectations early by being familiar with differing real estate practices before making the referral, for example:

• • Buying restrictions: Are there restrictions to consider either at the federal, state or local level?  For example, in Canada, the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”), (laws-lois.justice.gc.ca/eng/acts/P-25.2/page-1.html) prohibits non-Canadians from purchasing residential real estate in certain areas of Canada, but there are exemptions and opportunities. So, whether you are the referring or receiving Realtor, it’s important for you to be aware of any restrictions and make connections with a trusted professional to help your client navigate them.
• • Legal and regulatory compliance: Work with an accountant and attorney to help you and Canadian buyers understand property laws, tax implications, visa requirements and other relevant regulations that may impact transactions involving international buyers or properties. For example, in the U.S., FIRPTA income tax withholding rates impact foreign clients on the disposition of property. This is an important factor to consider for foreign clients whether buying or selling.
• • Title insurance: In the U.S., title insurance is typically required and covers any issues related to the property's title history. In Canada, title insurance is less common, and title searches are conducted to verify ownership history.
• • Closing process: How closings differ is important to know—from terminology, fees or timing.  For example, in Canada a real estate closing can take under two weeks, but a typical closing time line in the U.S. is 30-60 days.
• • Financing: Mortgage terms and conditions may vary between the two countries, including interest rates, down-payment requirements and loan terms. Credit scoring systems may also differ between the U.S. and Canada, which can affect eligibility for mortgages and loan terms. Also, be aware of differences in tax rates, assessments and exemptions in relation to property taxes, capital gains tax and foreign buyer taxes.

Given the differences, the importance of a trusted global dream team of partner professionals can’t be emphasized enough. #

Sharon von Schoenberg, BCom, CAE, CIPS, is the associate director for Global & Commercial Programs for The Canadian Real Estate Association.