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What a foreigner should know when buying property in Palm Springs, CA

Smart Canadians (and other foreign nationals) have been flooding the Palm Springs market again, finding factors in their favor in acquiring Palm Springs properties.

Here are some things to take into consideration when purchasing property as a Foreign National in Palm Springs:

• Real estate prices are still down significantly from real estate boom years 2004-2007.
• There is still a good level of property inventory at all prices.
• Interest rates are still at a historical low … coupled with aggressive financing program for Canadian buyers – See available lenders here.
• No REALTOR® fees when you purchase as the Sellers pay commissions for both sides.
• A variety of ways to structure ownership for tax and estate planning.
• California has reasonable property taxes, currently set at ~1.25% of property price, per year.
• Strong rental market for property owners desiring to lease their property when not occupying it.
• Although we’ve seen fluctuation in the currency exchange rates, the benefits are still stronger.
• Teaming up with the right agent will make the purchase simple and painless – that’s where we come in.

Before You Buy

Your Due Diligence:

Always confer with your CPA and/or attorney prior to buying real estate in the U.S. In addition, a reading resource we recommends is called “The Canadian Snowbird in America” written by Terry F. Ritchie and Brian D. Wruk. This book addresses practical issues and details financial insights for Canadians looking to spend significant time in the U.S. and/or looking to purchase real estate in the U.S. The authors, Mr. Ritchie and Mr. Wruk, specialize in helping Canadians winterize in the U.S. with tax, financial and investment planning matters.

Buying – Initial Steps

Step # 1 – How Much To Spend?

Before you begin your home search, you need to decide on how much you want to spend. If you’re planning on an “all cash” purchase like so many Canadians are doing right now, it will be a relatively simple decision for you. If you chose to finance your purchase, you need to be aware that mortgage financing in the U.S. for Canadians is available, and the availability of such loans and rates change from time-to-time. Our Team of specialists can recommend lenders who provide financing to Canadian buyers.

If you’re financing, it is mandatory that you get “pre-qualified” or “pre-approved” with a letter from your bank prior to looking for a property. This will help you understand the lender requirements, acquire an estimate of your payments, and therefore determine what you can afford or wish to spend.

If you’re paying “all cash”, you will need to obtain a “proof of funds” letter from your bank verifying that you have adequate accessible funds in U.S. dollars for the amount needed to purchase the property.

Step #2 – Your Property Search

After you’ve contacted us, a highly experienced member of the team (a Market Specialist) will establish a dialogue and a comfortable working relationship with you. With your Market Specialist’s assistance, you will decide upon a set of initial search parameters, and from that conversation, he/she will begin the search – selecting communities and properties that meet your purchase parameters.

At this point, if you are already here in the Palm Springs area, your Market Specialist will begin showing these properties to you. Through a back-and-forth process, you will be able to narrow the focus of your search, so that they will be showing you properties which closely meet your specific personal preferences.

If you are not yet in the Palm Springs area, your Market Specialist can e-mail property listings to you, chosen to fit your search criteria, so that when you do arrive here in the Palm Springs area, he/she can provide a more targeted approach to your property search.

Step #3 – Your Purchase Offer

When you find the “right” property, your Market Specialist will prepare the written offer for you, have you sign it, and then present it to the Seller’s real estate agent.

As mentioned earlier, to accompany your offer, you will need to provide a “pre-approval” letter from your bank if your purchase is being financed, or “verification of funds” letter from your bank if paying with cash. The seller may respond with a counter offer. If so, your Market Specialist will review the seller’s response with you. Your Market Specialist’s experience, knowledge and skill as a negotiator will benefit you greatly in reaching a mutual agreement with the seller. With your offer, you must also include a refundable good faith deposit. The local industry standard for a good faith deposit is 3% of the offered price. Upon acceptance of your offer, you generally have three calendar days to wire transfer funds or to mail a bank-certified check directly to the chosen escrow company. All funds must be in U.S. dollars.

Step #4 – Offer Acceptance & Opening Escrow

After your offer is accepted, the purchase process will move along to escrow. With your Market Specialist’s assistance and with the involvement of the seller’s agent, an escrow company will have been selected as part of the terms of the purchase agreement. If the property is a foreclosure property, the holding bank will select the escrow company.

The purchase agreement, now signed and accepted by both you and the seller, will be submitted to the escrow officer, and the escrow process will commence. Escrow serves as a neutral third party to the transaction and coordinates the working parts of the sale, along with the assistance of your Market Specialist and the seller’s agent, to bring the purchase to a successful close.

Alex Dethier of the Paul Kaplan Group has worked with numerous Foreign Nationals, including numerous Canadian buyers.  We are available to assist you with the entire process, providing the help, knowledge, AND resources you need for a successful home purchase in Palm Springs and Greater Palm Springs.

What we offer at a glance:

  • Residential neighborhood expertise –  having worked in the Palm Springs market for over a decade, we can help you find the right neighborhood that meets your specific needs. Pictures of properties on the internet may look great-  but they don’t tell you anything about the neighborhood – that’s where we can help buyers make an  informed decision about neighborhoods for their investment dollars.
  • Help you with your financing options; providing lender counseling and pre-approvals that have experience working with Canadians
  • Refer you to information regarding property taxes and other particulars associated with owning in the US. *
  • Property Management and Rental Management information and assistance

Buying Process & Closing

Documents & Disclosures

During the buying process, there will be many documents and disclosures for you to review and approve. The purpose of the document and disclosure review/approval process is to ensure that you are fully informed about all the aspects of the property you are about to purchase.


Your Market Specialist will make certain that the purchase agreement includes specific contingencies in order to protect your interests during the due diligence process. Such contingencies include but are not limited to: having a home inspection, review of disclosure documents from the seller, review of disclosure documents from the Home Owner’s Association (if applicable), and a preliminary title search to ensure the seller has a right to sell and to define any unpaid liens on the property. You will normally be given 21 days after offer acceptance to conduct your due diligence pertaining to financing if you’re financing the purchase – and 17 days from offer acceptance to conduct all other types of due diligence, during which time the escrow officer will prepare escrow instructions and assist in obtaining the preliminary title report. Your Market Specialist will assist you throughout the due diligence process by explaining each document’s content and purpose.

Seller Disclosures

California real estate law mandates that the seller must disclose what he knows about the property at the time of offer acceptance. This straight forward obligation is in place for the seller to disclose everything known in the way of defects or risks to the buyer. If the seller knows about it, it must be disclosed on the appropriate disclosure document.

Home Inspections

One of the first steps to take is to arrange for a physical inspection of the property by a professional licensed home inspector. Your Market Specialist will provide you with a list of inspectors from which to choose. The purpose of this inspection is to find out all that you can about the physical condition of the home and includes inspection and/or operation of such features as plumbing, electrical service, gas service, heating and cooling units, flooring, exterior, and roof. If possible, you will want to attend this inspection so that the home inspector can show you what he finds. Once the inspection is complete, you will be provided with a thorough written report, usually the next day. The inspector will list and describe any defects he finds, and provide photographs to illustrate the findings. If you cannot be present, the report will be emailed to you. Typically the cost of the inspection is paid by the buyer. Home inspection fees are generally in the range of $350 to $700, depending on the size and type of the property.

Occasionally, the inspector will recommend that you call a specialist in a given category, such as roofing, heating/cooling, or pool, for further inspection.

California real estate law also requires a wood destroying pest inspection report be prepared for the property. If any evidence of termite activity is found, the pest control company will treat and certify the property as being free from termites prior to the close of escrow. This report will also indicate any other type of related issue that may be present. Your purchase contract will specify who is responsible for paying for the inspection, along with any repairs. Typically the seller will pay for this service. It is customary that they do so, but not mandatory. Armed with the inspection results and other seller disclosure documents, you can then decide what, if any, repairs/replacements or allowances you would like to request from the seller. The seller may agree to correct any specific issues you request, or they may offer you an allowance or may negotiate with you over certain items. When an agreement is reached in resolution of the issues, you proceed with the process. If an agreement cannot be reached, you could choose to cancel the offer and have your good faith deposit returned. Please note that sellers of short sales and foreclosures very seldom will pay for inspections or repairs. Distressed (foreclosures and short sales) properties are almost always sold in “as is” condition.

HOA Documents

If you are purchasing a property in a planned unit development or common interest subdivision, you will receive a copy of the Home Owner’s Association (HOA) documents. Make sure that you are familiar with all obligations, rules and costs associated with the community before you remove this contingency.

Removal Of Contingencies

After you’re satisfied with the results of the due diligence process (usually required to be completed in 17 or 21 calendar days), and you are fully informed as to the condition of the property, you can proceed with your purchase by signing the removal of contingencies form. At this point in the process, you are committed to the purchase and may put your earnest money deposit at risk if, at a later date, you do not complete your purchase.

Transfer Of Funds

At least one day before the closing, the funds must be received into escrow in U.S. dollars. The money may be sent by wire transfer (or bank certified check) to the escrow officer. If a certified check is used, an extra day or two must be planned to allow time for the check to be processed and the required funds deposited in the escrow account in time to post. Personal checks are not acceptable. The escrow officer will help coordinate the transfer of funds.

Closing Of Escrow

The escrow officer will finish the process by recording the deed with the County of Riverside Recorder’s office. The entire purchase process from offer acceptance to closing typically takes 30 days to complete in a cash transaction – and 30-45 days to complete when the purchase is financed. You do not have to be present at the time escrow closes.

Once your deed is recorded, the transaction is complete. You will receive from escrow a set of the escrow documents. Your Market Specialist will arrange to transfer the keys to you for your new desert home!

Home Owner’s Insurance

Before the close of escrow, you will want to make sure that you have purchased Home Owner’s Insurance for your new home, and that the policy will be in effect by your date of closing. Your Market Specialist can assist you in finding an agent experienced in insuring Canadians and second homes.

Purchase Transaction Costs

In general, the average transaction cost of buying the property will be the purchase price of the property, plus approximately an additional 1-2% of the purchase price to cover escrow and purchase transaction expenses. Additional costs include the home inspection, which will average around $250 to $600, depending on the size of the property. These costs are estimates. If a lender is involved in your purchase transaction, additional lender fees will be included – the total lending cost will be identified by your lender, specific to your loan. Additional estimated expenses include prorated property taxes to complete the tax year, and prorated Home Owner’s Association fees, if applicable. Your Market Specialist can arrange for escrow to provide you with an estimate of your closing costs. Then, just prior to when your funds are required to be sent to escrow for closing, escrow will also provide you with an updated buyer’s estimated settlement statement.

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To receive more information, please click here to contact Alex to start looking for your home in Palm Springs.