Palm Springs Area Home Buyer’s Guide – For Canadians
Canadians Love Palm Springs And The Desert Cities
Surrounded by four majestic mountain ranges and long sought-after by travelers for its incredible scenery and sense of adventure, Greater Palm Springs is Southern California’s most storied resort oasis. Greater Palm Springs encompasses nine cities — Palm Springs, La Quinta, Palm Desert, Rancho Mirage, Indian Wells, Indio, Cathedral City, Desert Hot Springs and Coachella — each offering its own blend of experiences as endless as its blue skies.
Brad Schmett Real Estate Group Can Simplify The Buying Process
If you’re Canadian and you’re considering a real estate purchase in the Palm Springs area, you owe it to yourself to contact Brad Schmett Real Estate Group. Brad and his team spend a considerable amount of time working with Canadian buyers– and they have the necessary processes, systems and support team in place to make your purchase a simple, pleasant and successful experience.
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 Brad Schmett Real Estate Group 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. Brad and his team of Market 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 Brad Schmett Real Estate Group, 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.
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.
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.
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 $250 to $600, 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.
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.
Brad Schmett Real Estate Group provides all of these services to you, the buyer, at no cost. Brad Schmett Real Estate Group will receive a commission for their services from the seller as a part of the seller’s selling expenses.
Here’s What Brad’s Canadian Clients Are Saying
“Brad Schmett Real Estate Group is the best real estate group in the Coachella Valley. I met with them and knew immediately they were the team I wanted to work with. I enlisted them to locate and purchase rental properties. I was impressed with how professional, accommodating, thorough, personable, compassionate, and efficient they were in dealing with me and in locating the properties I was seeking. They are wonderful to work with from start to finish. They truly look out for your best interest.”
David Melnick – Toronto, Ontario, Canada
“Brad, my wife and I truly appreciate all the hard work you and your team put into helping us locate, research and purchase our new vacation property. The exceptional service you provided should be highly commended. In addition, your advice and direction throughout the due diligence process was notably valuable, especially with regards to concerns pertinent to us as Canadian citizens. You definitely have our recommendation.”
Geoffrey Watson – Calgary, Alberta, Canada
“Brad Schmett is the consummate professional. Brad knows his business and the Palm Springs area. He gives generously of his time, his knowledge and himself. Brad showed us countless homes and has spent countless hours with us. Brad is smart, represents his community extremely well and he has a wonderful engaging style and manner. His team members are cut from the same cloth…are warm and knowledgeable and helpful. I cannot imagine a better REALTOR® than Brad. I firmly believe that all clients who work with Brad recommend him as well.”
Rodger & Gail Edmunds – Vancouver, British Columbia, Canada
“Brad, Eric and I wanted to thank you and your team for the wonderful service you provided to us when we were looking for a 2nd home in the Palm Springs area. As a REALTOR® myself for the past 15 years in Edmonton I had high expectations of the service I wished to receive during our home search. Brad, you exceeded my expectations! From my original email contact with you, to the closing and recent follow up even two months after we have closed, your continued help has not gone unnoticed. You are a true professional who understands the meaning of service, listens to the needs of the buyer and have impressive knowledge of the local inventory. It is no wonder you have been so successful. We wish you continued success!”
Eric & Susan Johannson – Edmonton, Alberta, Canada