Info For Buyers

Information For Canadian Buyers In Palm Springs

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The real estate purchase process for Canadian buyers in the U.S. and here in the Palm Springs area is fairly straightforward. Sheri Dettman & Associates are real estate agents that have helped hundreds of Canadians buy and sell homes and condos here in the Palm Springs area from affordable to luxury.

An Easy & Straightforward Purchase Process For Canadians

Investing in a second home here in the Palm Springs area is fairly simple for a Canadian citizen. Sheri Dettman’s goal is to make the process simple and straightforward as possible. From discovering your property to negotiating the best price and terms possible, you’ll soon discover why a growing number of Canadians have come to trust working with Sheri Dettman & Associates.

Canadian homebuyers usually don’t need a U.S. Social Security number, just a valid passport. There are a few forms that Sheri and her team will help you complete, but the process overall is fairly simple. An attorney is usually not needed in California since our Palm Springs area escrow, and title teams are trained and they have extensive experience in serving Canadian clients.

Historically Low Palm Springs Area Real Estate Prices

Play Video: Palm Springs Area Info

Properties in the Palm Springs area continue to offer great values compared to just a few years ago. And compared to most metro areas many Canadian buyers are pleasantly surprised by the values that available here in the desert.

Reasonable Palm Springs Area Property Taxes

Annual property taxes in the Palm Springs area (part of Riverside County, California) are 1.25% of the appraised value of the purchased property. The new appraised value of your property will be set at the new purchase price, even if the previous value of the property had been higher.

Annual property tax payments here are split into two equal payments and paid semi-annually. If you are purchasing your property with a loan, you can request that your lender add the property taxes to your loan payment each month (called impounding), thereby making the tax payments for you.

No Taxes On Real Estate Transactions
A few developments in the Palm Springs area may also add a supplemental tax called Mello-Roos, which funds new infrastructure for those communities. Your Realtor can tell you if the property you are considering is located within a Mello-Roos area.

A Variety Of Ways For Canadians To Structure Ownership
Canadian buyers have a choice of how they choose to title ownership to their Palm Springs area property. Cross-border trusts have become popular to help minimize taxes, especially for higher net worth buyers. Some buyers put their title in their personal names while others prefer to use existing corporations or LLP’s. If you’d like further assistance, Sheri is also happy to recommend local specialists that work with Canadian buyers on a regular basis.

No Realtor Fees For Canadian Buyers
In the vast majority of Palm Springs area sales transactions, the home seller pays our Realtor service fee for resale or new construction homes, condos and land such as golf course lots.

Mortgages For Canadian Buyers In Palm Springs
Mortgages are readily available here in the desert for Canadian homebuyers. When financing, a Canadian buyer will just usually need to establish a U.S. bank account before submitting an application.

The financed property must also be a second home or an investment property – not a primary residence. Sheri Dettman & Associates have several mortgage company referrals for Canadian buyer loan programs.

Additional Information For Canadian Buyers

• Choosing A Buyer's Agent To Help You: One of the smartest things Canadian buyers can do before beginning to look at Palm Springs area homes or luxury condos is to choose a local top-rated real estate agent to represent your best interests.
• Ready To Buy Your Palm Springs Area Home?: The California buying process for Canadians starts by your Realtor submitting an offer on a property. Submitting an offer and buying a home are really two separate things in California. Don’t worry, our team of specialists will explain it here and everything will be tickety boo!
• Comparing The Palm Springs and Phoenix Lifestyles: Many Canadians will likely compare the Palm Springs Real Estate Market with Phoenix, Arizona. In a nut shell would you prefer a metro area with four million people or a smaller desert area with about 90% less people?  You can discover additonal comparisons here.
• Home Owners Associations, Stratas and Condos: Canadian Strata Association can be similar to HOA's or Home Owners Associations here in Palm Springs.
• How Long Can Canadians Stay In Palm Springs (or the U.S.)?: The short answer is Canadians can stay 182 days, or about six months when visiting the U.S. More information can be viewed online at CBC News.

Palm Springs versus Phoenix: Comparing The Two Real Estate Markets

by Sheri Dettman, Resort Lifestyle Realtor

People from outside the area often share with me their quandary regarding purchasing a home in the Palm Springs Real Estate area or in the Phoenix market. At one time I had similar considerations as well. I’ll share with you what swayed my husband Bill and I towards the Palm Spring area.

 

Palm Trees & Golf Courses Abound

Both areas have abundant palm trees, golf courses, mild winters, beautiful desert mountains and many great communities to choose from. Phoenix has things Palm Springs doesn’t have and, of course, Palm Springs has amenities and activities which Phoenix does not offer. Before we invested in property here we did what most people do, we vacationed both here and in Phoenix.

If you are new to either area you’ll want to get out of the resort or rental home that you are enjoying and take a drive around. You’ll want to explore each area’s attractions, shopping, amenities, and, of course, you’ll want to consider traffic congestion and air quality, as well.

 

4 Million People or 360,000?

Hitting the Phoenix freewayThe Phoenix area has always felt larger and more congested to us, which it should.

• Phoenix is the 14th largest metropolitan area in the country.
• The population of the Phoenix area increased 45.3% from ’90 to 2000, and, in April 2010, totaled over four million people.
• Eight cities in the Phoenix metro area have populations of over 100,000 residents each.

In contrast, the Coachella Valley (which is often referred to as simply ‘Palm Springs’ although it includes the cities of Palm Desert, La Quinta, Indian Wells, Rancho Mirage and several other cities) had:

• An estimated population of 365,000 people last census.
• The Palm Springs area has less than 10% of the population of the Phoenix metro area.

 

Small Town Feel or Metropolitan?

After numerous trips to both the Phoenix and Palm Springs, we both agreed that the Palm Springs area seemed more relaxed. Most people find the atmosphere of the Coachella Valley more ‘small town-like’ than Phoenix. Also, a multitude of cultural experiences outside of the Coachella Valley can be found within a relatively short drive in the Los Angeles, Las Vegas, San Diego, and even Phoenix greater metropolitan areas.

If you love the ocean, you’ll want to note that Palm Springs is only a couple of hours away from numerous glistening beaches, which are a good seven hour drive from Phoenix. For us, our experience in Phoenix and Palm Springs was similar to many of our vacations in Hawaii. We’d start on crowded Oahu and then gravitate to Maui, which then also became crowded, so we wound up enjoying the less crowded Big Island of Hawaii or Kawai.

 

Consider Air Quality In Both Areas

An even bigger issue for us, however, was smog. The Phoenix area was ranked in 2010 as having the most polluted air year-round in the United States.

“Today, the American Lung Association released its annual report card “State of The Air.”  The news for the 4,281,899 residents of the Valley of the Sun (the Phoenix Metropolitan Statistical Area) is not so good. We are now the city with the most polluted air in the United States. The study measures the average fine particle concentration in the air of each city, a key factor in asthma, bronchitis and other respiratory and heart ailments.” Phoenix Sun® April 10, 2010 – VALLEY OF THE SUN SMOG!

To be fair, the Palm Springs area gets the occasional dust storm which can impair air quality, but usually nothing close to the massive dust storms that the Phoenix area experiences each year.

 

Flights and Transportation

Both areas offer direct flights from many cities in Canada. Although Phoenix does have more flights in and out of Canada since it is much larger, disadvantages include having to deal with more expensive airport parking, longer security lines, less friendly service, and missing out on relaxing post-security in one of the most beautiful outdoor manicured airport grounds in the United States, Palm Springs International Airport (PSP). Driving in the Coachella Valley is a breeze compared to most areas in the Phoenix metro area; Phoenix has major traffic congestion, particularly during rush hour.

 

Property Taxes

Property taxes in the Palm Springs area are generally valued at 1.25% of the current property value. The exception is small pockets of developments subject to a special Mello-Roos tax.  Recent Phoenix property tax rates ranged from .80% to 1.50% of property value. Here, the tax value is based on your purchased price and can be adjusted annually if the value increases or decreases.

 

So, Phoenix Versus Palm Springs?

After comparing both areas, it really comes down to personal preference. Small-town resort feel or the hustle and bustle of a larger metro area? Skyscrapers or Santa Rosa and San Jacinto Mountain views from the Palm Springs area and beaches two hours away? As you likely figured out by now, my husband Bill and I chose the Palm Springs area..

If you are still interested in a home or luxury condo in the Phoenix area, please contact me. I do know several great Phoenix area Realtors that I’m happy to refer you to.

 

Renting Your Palm Springs Area Vacation Home

If you’re considering renting out your Palm Springs area home or condo either short or long-term, there are some important issues you should be aware of and plan for ahead of time.

Palm Springs Area HOA Rental Rules

Some HOA’s may have restrictions on rentals. While most HOA’s allow rentals, a few do restrict rentals to periods of one month or greater. Other HOA’s allow daily, weekly and monthly rentals. Your HOA rules and regulations should cover these rental policies. If you live in a community without an HOA, you might consider checking with the city about possible restrictions, if any.

Short Term Rental Insurance – Are You Covered?

Many home and condo owners choose to rent their properties to short-term renters (less than six consecutive months). While this can be a great income opportunity, you'll want to check your specific homeowner policy and speak with your agent about coverage. If your policy won't cover your home for short-term rental usage, you'll need to switch to a policy that does.

Most insurers can now cover most rental homes and condos for short-term rentals at a very reasonable cost. This Comprehensive Property and Liability Insurance Program was created especially for homes and condos that are being used as short-term vacation rentals.

This program can be used by those who book their homes year-round or by those who only book their properties a few days, weeks or months per year. Owners can now have peace of mind knowing that they are properly covered at a reasonable cost. So, even if you think you are properly covered, you'll want to review your policy with your agent. Most vacation homeowners are simply not covered for the risk of short-term rentals.

Professional Rental Management And Booking

A professional rental management company can help you as a homeowner maximize the value of your property and shield you from the daily (and sometimes nightly) concerns associated with ownership of vacation rental property.

Licensed professional service companies can promote, advertise, book and manage your short-term vacation rental property while you enjoy the peace of mind knowing that your home is in professional hands.

Full service property management can include routine property inspections; maintenance; housekeeping; automated accounting functions; and, even concierge services for your renters and guests.

Most licensed rental companies will hold renters advance payments in an escrow account until the rental period commences, then they'll disburse funds to the homeowner. This protects both renters and homeowners.

Please Email Sheri for a referral to a licensed Rental Company that fits your specific needs.

Are You Ready To Submit An Offer To Purchase A Home?

by Sheri Dettman, Resort Lifestyle Realtor

 

Having your agent submit a purchase offer for a Palm Springs area property is only the first step in buying a home. Submitting an offer and buying a home are really two separate things in California where the purchase offer is not the final negotiation due to possible contingencies in the real estate contracts.

The Usual Steps In Purchasing A Palm Springs Area Home

1. Buyer’s Agent Submits Your Offer
2. Escrow Account Opened
3. Contingency Period Begins
4. Contingencies Removed or Purchase Canceled
5. Monies are Collected
6. Transaction is Completed
7. About Earnest Money Deposits

 

1. Your Agent Submits Your Offer

When your agent submits an offer for you she/he will generally give the seller a set period of time in which to respond, which is normally between one and three days. After your agent submits an offer one of three things usually occurs: your offer is accepted as is, the seller will counter your offer with a different price or terms or the seller ignores your offer.

 

2. An Escrow Account Is Opened

Once an offer is accepted, an escrow account is opened. In escrow, all documents and monies are held by a neutral third party for use at a later date to fulfill obligations as called for in the purchase contract. As an explanation for Canadian clients, escrow handles most of the duties that a Canadian real estate lawyer handles.

 

3. During Your Contingency Period

Your purchase contract will generally have a contingency period during which time you can change your mind and cancel a contract without penalty. Your agent will work with you to specify how long your contingency period is and what is covered in the contingencies before your offer is submitted. Exceptions to this include bank-owned properties or short sales in which the bank spells out the time frame for removing any possible contingencies.

Most buyer’s agents will include a contingency period when submitting an offer. A contingency period is a time frame which enables you to perform due diligence and basically cancel the contract without penalty and receive your earnest money (1) deposit back.  At the same time your agent will communicate the length of escrow you request.  For example, if you choose a 30-day escrow, there are 30 calendar days from the date your offer is accepted until the home is yours.

During your contingency period, buyers typically complete the following with the assistance of their agent:

• Appraisal: Buyers who obtain a mortgage will be required to have an appraisal conducted, which your lender will order. The appraisal needs to value the home equal to your purchase price or higher. If the appraisal comes in low, additional down payment monies would typically be required if the seller decides to move forward.
• Loan Contingency: When buyers finance, their agent will stipulate in the purchase contract that loan approval is a contingency. A buyer who is denied a loan at the specified terms can be released from the purchase contract.

 

4. Professional Home Inspection

Your buyer’s agent will always suggest that you invest in a professional home inspection.  For a few hundred dollars a professional home inspector will provide you with a complete report and photos documenting the home’s condition. If the inspection uncovers needed repairs, your agent can submit a request for repairs which can either be agreed to by the seller, negotiated, or denied.  In any case, the buyer is aware of the condition of the home from a professional standpoint and can then negotiate how the recommendations will be covered financially or cancel the sale during the contingency period.

• Termite Inspection: Even though the Palm Springs area is a dry climate, a termite inspection is suggested and may even be required when obtaining a mortgage.
• HOA Documents: Buyers are entitled to receive a copy of the community CC&R’s (codes, covenants, and regulations) as well as recent HOA financials and the latest meeting minutes.
• Seller Statutory Documents: In California, sellers are required to disclose in writing all known material facts to the buyer. Material facts commonly refer to anything which would affect the buyer’s decision to purchase the home due to condition, price and/or terms the buyer has offered. Simply put, if the seller has knowledge that there is a defect, it should be disclosed to the buyer. Also in California, sellers are required to notify buyers if a death has occurred on the property within the last three years.

The California Association of Realtors publishes a number of disclosure forms that your buyer’s agent will go over with you. Your agent’s job is to make the disclosure and contingency period straightforward and easy to understand.  During the contingency period you are entitled to cancel the purchase contract for any reason listed above, or if you’ve simply changed your mind.

 

5. Contingencies Removed or Purchase Canceled

Once all contingencies have been removed and you as the buyer agree to move forward with your purchase, you will sign off. From this point on escrow and the buyer’s agent will work together to ensure that all documents and disclosures have been completed. At this time the cash buyer or the designated lender will fund the transaction usually by wire through escrow. Escrow funds will be disbursed to pay either the owner or their bank (if they had a mortgage), the new title will be recorded with the county and the property is now yours!

 

6. About Earnest Money Deposits

In California and here in Palm Springs, earnest money is a good faith deposit. It is not a down payment towards a purchase. When your buyer’s agent fills out the contract they will specify how much money the buyer is initially putting up to secure the contract and show good faith. Earnest money deposits are typically 3% of the purchase price in California. During the contingency period a buyer may cancel a contract for any reason and be refunded their earnest money deposit.  Once the contingencies have been removed and the time period for them has expired, the earnest money deposit becomes non-refundable and is credited towards the final purchase price.

Earnest money deposits are made either by check or bank wire payable to a neutral third (escrow). The earnest money deposit which is held by the escrow company is either refunded (if the sale is canceled during the contingent period) or applied towards the purchase price of the property if the purchase is completed.

Disclaimer: The above information is an overview and it is not intended to be legal advice or a legal interpretation of California Buyer Broker Agreements. If you desire legal advice please consult a real estate lawyer.

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