Chapter 7: In This Chapter Page 179 • • • • • • • • Introduction Foreign ownership Financing Commercial real estate Residential real estate Rental property MLSs Licensing and brokerage • • • • • • • Government Legal system Economy and business Taxes and fees What you need to know Beyond the basics Key contacts

Map of USA Page 180 Source: www.nationalatlas.gov

Introduction to USA • • Fifty states, District of Columbia, and five territories Immigration has created a multicultural, ethnically diverse nation Page 180-181

USA —The Rich Tapestry Page 180-181 Source: Wikipedia

USA —The Rich Tapestry Page 180-181 Source: Wikipedia

USA —The Rich Tapestry Page 180-181 Source: Wikipedia

Foreign Ownership of Real Estate • • • • Real estate and the USA economy Why USA real estate is a good buy Who buys USA real estate?

– – Investors Vacation home buyers – Immigrants US $68.2 billion in residential sales to foreign investors, recent immigrants, and temporary visa holders Page 181-187

Financing • • • •

Types of mortgages

– Interest-only – Buydown – GPM – Convertible and fixed-period ARM – Two-step – Option ARM

Mortgage payments Method of property purchases Foreclosures

– Judicial – Non-judicial – Title-theory – Lien-theory Page 187-192

Commercial Real Estate Page 193 USA Office Market Fundamentals Indicator Net Absorption (millions of ft 2 ) Vacancy New Deliveries (millions of ft 2 ) Asking Rents Investment Sales (billions) Source: Cassidy Turley 48.2

23.6

2012 15.7% $21.70 $77.6

50.0

15.1% 27.1

2013 $22.00

$85.1

60.3

14.3% 31.2

2014 $22.40

$125.3

Residential Real Estate • • Home prices on the rise on average Demand expected to wane due to rising prices and borrowing costs – Actions of Federal Reserve Source: Global Property Guide Page 194

Rental Property Page 195 • • • • • • Typically pro-tenant Laws vary by state and locality Deposits usually 1-3 ½ months of rent – Often held in bank account Leases and rental agreements Rent usually paid monthly Eviction procedures differ by state

Multiple Listing Service (MLS) • • • • Foundation of efficient market Brokers share listings – Blanket offer of compensation National Association of REALTORS® defines policies for REALTOR® Association MLS operations Commercial Information Exchanges Page 195-197

Licensing and Brokerage Practices • • • • Licensing applies at the state level – High degree of uniformity in regulations – Practitioners may be licensed in more than one state Compensation Agency Escrow Page 198-200

What You Should Know About Government • • Democracy with executive, legislative, and judicial branches Two-party system – Democratic Party – Republican Party Page 200-201

Page 201 Legal System • • • Common law system Federal and state courts Federal and state laws affect real estate professionals

Economy and Business • • • • Largest economy in the world Companies free of barriers Highly technological – Computers – Medical – Aerospace – Military equipment Challenges include rising health care costs and aging population Page 201-202

Real Estate and Business Taxes and Fees • • • • • • • Transaction costs Taxpayer identification number State and municipal real estate tax State and federal estate tax Federal income and capital gains tax 1031 tax-deferred exchanges Foreign Investment in Real Property Tax Act (FIRPTA) Page 202-206

What You Need to Know • • • • Financial information and transaction process for foreign buyers Real estate regulations and laws Property disclosure and due diligence Involvement of other professionals – Attorney – Inspector – Tax planner Page 206-209

Beyond the Basics • • • • • • Multiple cultures Egalitarianism Women in business Time is money Business dining Individualism and independence • • • • • Work environment Gift giving Communications and language issues Negotiations Federal holidays Page 209-215

Page 215 Key Contacts • • • • • Local REALTOR® Association State REALTOR® Association National Association of REALTORS® State government trade or economic development office USA Embassy or Consulate in home market