Driven by affluence and a thriving tourism and travel industry, increasing number of people are looking overseas. According to a Knight Frank survey, between 1993 and 2003, overseas home ownership by British households rose by 95%. While the rewards of buying foreign luxury property can be great, the risks cannot be ignored. So, before you buy a luxury property Jim Gillespie, president and chief executive of Parsippany, a New Jersey based Coldwell Banker real estate firm advises that you should know the place in more than a passing fashion. "Take several trips to the area and rent a house instead of staying in a resort", he advises.

For majority of British who have invested in Europe's luxury properties a decade ago, it turns out they had made a wise move since the euro has increased in value. But currency does not always increase in value. Currencies can take a nose-dive, taking the value of properties with them; political ownership laws can change and the buying process can seem very complicated. Hence, more research is required for people who have set their sights on luxury property abroad. Impulse decisions in these cases can be disastrous. So whether you're buying overseas luxury real estate to live in, diversify your investment or generate rental income, here are some important questions to ask.

Questions to ask when buying luxury real estate abroad

1. How much risk can I take? Putting money on a new luxury property overseas is risky. You alone know your tolerance for risk, your motivation to buy and your preferences. You might have researched the location and the house and known what needs to be known. But you should also look inward to determine your level of readiness. The decision to buy or not buy that luxury real estate might just be dependent on your gut feeling.

2. Why am I buying? The answer to this question usually determines your other considerations. If you're buying for personal use in retirement, you definitely have different priorities. One such thing might be waking up to a view of the sea from your bedroom window. An investor wouldn't care less about the views. If you're looking for rental profit, your priority would likely be price.

3. What's my budget? Now let's talk about price. The most practical advice you can get when buying real estate overseas is: be clear on how much you want to spend and don't consider properties outside your price point. Or you may, if you feel it won't really hurt your pocket. Having a budget and sticking to it, you won't waste time meandering aimlessly.

4. How far is my property to amenities? You don't want to drive long distances to shops, medical centers and eateries. Millennials might also need to consider the nightlife. Families will need to consider proximity to schools and the grade of schools around. You need to familiarize with locals and get as much information about the area and the city. Don't neglect to look at transport and traffic patterns. You might think it's the norm to have good transport. You will be surprised to find that some areas might be hard to access because of bad roads.

Everyone likes the idea of living in their own overseas luxury real estate. This would probably give a great retirement. But before you take the plunge, make sure you're ready.

Home values are decreasing, making it an ideal time for buyers to invest in real estate. This article explores the reasons behind the decline in home values and what it means for buyers.

Introduction

The real estate market has seen a significant decline in home values over the past few years. This trend is a result of several factors, including the pandemic, economic downturn, and changing demographics. The decline in home values is good news for buyers as it makes homes more affordable, and they can now get more value for their money. In this article, we will explore the reasons behind the decrease in home values and what it means for potential buyers.

Why Are Home Values Decreasing?

Several factors have contributed to the decline in home values. Here are some of the most significant ones:

Economic Downturn

The economic downturn caused by the pandemic has had a severe impact on the real estate market. The job losses and business closures have resulted in a decrease in demand for homes, which has led to a decline in prices.

Changing Demographics

Changing demographics have also played a significant role in the decrease in home values. Millennials, who make up a significant portion of the home-buying population, are delaying homeownership due to financial constraints. Additionally, baby boomers, who make up a significant portion of homeowners, are downsizing and selling their homes.

Oversupply of Homes

Another factor contributing to the decrease in home values is the oversupply of homes. Home builders have been constructing more homes than the demand, leading to a surplus of inventory. This has given buyers more options and bargaining power, which has resulted in lower prices.

What Does It Mean for Buyers?

The decrease in home values is excellent news for buyers as it makes homeownership more accessible and affordable. Here are some ways in which it benefits potential buyers:

More Value for Money

Lower home values mean that buyers can get more value for their money. They can purchase a more significant property for the same price or buy a property in a more desirable location that was previously out of reach.

More Options

The oversupply of homes has given buyers more options to choose from. They can now take their time and select the home that meets their requirements without feeling rushed.

Bargaining Power

Buyers now have more bargaining power as there is less competition for homes. They can negotiate a better price or ask for additional concessions such as repairs, closing costs, or upgrades.

The Pros and Cons of Buying During a Market Downturn

While there are several advantages to buying during a market downturn, there are also some disadvantages to consider. Here are some of the pros and cons of buying during a market downturn:

Pros

• Lower home prices
• More value for money
• More bargaining power
• More options to choose from

Cons

• Potentially lower quality homes
• Potentially higher repair costs
• Limited financing options
• Uncertainty about the future of the market

FAQs

Q1. How long will the decrease in home values last?

A1. It is challenging to predict the length of the market downturn. Still, experts believe that the decrease in home values may continue for a few more years until the market stabilizes.

Q2. Should I wait for home values to decrease further before buying?

A2. It is challenging to time the market, and waiting for further decreases in home values may not be worth the risk. You should consider your financial situation, long-term goals, and personal preferences before making a decision.

Q3. Will I get a good return on investment if I buy a home now?

A3. The answer to this question depends on several factors, including the current state of the real estate market in your area, the condition and location of the property you're considering, and your long-term plans. In general, if you buy a home in an area with a strong real estate market, and the property is in good condition and a desirable location, you may see a good return on your investment over time. However, it's essential to consider your long-term plans and the costs associated with owning a home before making a decision.

Buyers with a foreclosure history have more to prove to the banks; hence getting loans might be tough. Below tips will help them get through the hurdles and secure financing for foreign property investment.

Are banks scared to give loans to boomerang buyers?

Applying for a loan after a foreclosure, if you're a property buyer in the US, is not a piece of cake. The lender wants to be sure of one thing: You are able to pay the loan and have learnt from your mistakes. If you're planning to buy a foreign property, getting financing becomes harder. If you do get financing, you might be immersed in a lot of paperwork.

Banks will want you to prove your income. They will look closely at your bill payment records after the foreclosure (hence the need to rebuild your credit). If you have a traditional job for which you receive a W-2 form, your lender will want to see it and verify your income with your employer. Boomerang buyers (property buyers with a foreclosure history) who work several part time jobs or are self-employed will face more scrutiny. They will have to show their income with several years of tax returns and other documents.

Yes, you might have a lot to prove to the bank when applying for mortgage as a boomerang buyer. This is why Realtor.com recommends including a letter in your mortgage application that explains the reason for foreclosure.

What Most Foreign Banks Require Before Giving Mortgage

Requirements for mortgages will vary from country to country as each country flaunt different taxation structures. Some countries will require you to open a bank account, get a tax identification number or get approval from Government housing agencies before you'd be allowed to buy a home.

You need to be conversant with the taxes that apply in your destination country. For example, foreign property buyers in Spain have to pay a wealth tax (patrimono in Spanish). Countries like South Africa also mandate a building insurance for foreign buyers.

The important thing when applying for a mortgage either as a buyer with foreclosure history or not is your ability to document everything. Mortgage has come a long way from the crisis periods and banks are more proactive. They want to verify any financial information provided.

Tips To Secure Financing for Foreign Property Investment after Foreclosure

Having a foreclosure history shouldn’t stop you from your dream of owning property abroad, here are three tips to get financing as a boomerang buyer.

1. Get equity from your US home.

Your friendliest partner will always be your property of the United States. You could get a second mortgage with 2.8% APR, only a fraction of what you will pay overseas

2. Home Collateral.

If you own a property in the United States, lenders in some countries, particularly international banks, will allow you to put that into collateral. You will have to establish that the property is free from liens. A lien will be dissuasive to the approval of your mortgage application.

3. Focus on International Banks.

When you begin to explore your financing options abroad, you must first visit the branches of foreign banks in the area where you are buying. If the same bank operates in the United States, they will have a better understanding and access to the facts related to your financial situation back home. You can even visit their branches in the United States to know your options.

These options would be effective if you work on your credit. You need to improve your credit rating when applying for a mortgage in the United States after foreclosure. The same is true anywhere in the world.