The home-purchasing process for foreign nationals isn't always smooth sailing.
Chinese buyers are an undeniable growing force in American real estate, racking up over $300 billion in sales between 2010 and 2015.
Some are just looking to invest their money, but many are families drawn to the United States for a variety of reasons, including excellent schools and universities, lower cost of living (compared to Beijing and Hong Kong), and business opportunities in booming tech cities like San Francisco and Seattle.
But buying property in the U.S. as a foreign national isn’t simple. Chinese buyers, just like any foreign citizen, face many challenges in the American real estate market — language and cultural barriers aside.
For many, the quest to simply find the right resources and real estate agents to help them through the mortgage and purchasing process is the greatest hurdle.
Navigating the system
Tony Jiang maneuvered his way through the American real estate market when he moved to Seattle after graduating with an MBA. He had come to the U.S. from China specifically for school, but was able to stay afterwards through the H-1B visa program.
After renting for a year, Jiang decided that he was ready to buy a home because he wanted a house with a “nice big yard” and was tired of his “rent check not going toward an investment.”
“I downloaded apps for open house information and looked at other houses available in the market, but I thought ‘I can’t do this by myself,’” Jiang says.
He spoke to local agents and brokers, but was unable to get through the entire home purchasing process because they would underestimate the time and resources it would take to get Jiang a loan at a good rate.
“Not many brokers here understood my visa situation. They asked ‘what is your credit history?’ I do have a credit history, but it’s only for three years, and [that’s] quite a short amount of time,” explains Jiang.
Eventually Jiang’s friends, who had recently purchased a home in Seattle, recommended their broker to him. The broker spoke Chinese and had experience working with other Chinese buyers.
“The broker asked me for additional supporting documents and working documents in China in order to make a strong case for a lower rate,” Jiang says.
After working with a broker who could explain the home-buying process to him and work with lenders who would accept his working documents from China, Jiang was able to purchase a home.
Challenges in getting financing
Many Chinese buyers like Jiang who want to purchase a home in the U.S. face obstacles when it comes to getting it financed. These challenges vary depending on the buyer’s English language proficiency and his or her residency status in the United States, according to Poching Shen, a real estate agent in Rockville, MD.
“Some people who are already here for college or graduate school do not have a language barrier, so [buying] is really just like for all other American people. The challenges they face are much less significant,” Shen says. “Some buyers in the U.S have a language barrier, and they definitely need a Chinese-speaking real estate agent to help them get the loan process going.
“The challenge is very difficult for foreign nationals because they do not have a credit [history] in the U.S.,” she continues. “They do not have income in the U.S. so it’s very difficult to get a loan.”
Shen recommends that buyers who are having trouble getting financed consider making a higher down payment — from 30 to 40 percent instead of the typical 20 percent.
In addition to all of the financing barriers, buyers who are trying to buy property remotely from China may have trouble accessing information about U.S. real estate due to government censorship of the Internet. There are exceptions, however — some sites, like Zillow, are accessible in China.
Overcoming the obstacles
Shen says that when it comes to resources for Chinese buyers, she finds that the popular Chinese social media site WeChat is infinitely helpful. Shen will send her clients listings and answer questions about loan rates and school districts through the site.
Mostly, though, many Chinese buyers rely on good old-fashioned word of mouth to find out which real estate agents to use and in what neighborhoods to purchase.
“A lot of people already have acquaintances or friends here,” Shen notes. “By the time they come to me, they have a general idea of where they want to live.”
The best resource is a knowledgable agent. Chinese buyers should make sure that their agents can walk them through the home-buying process in a way that they understand.
“If the agent can speak with you in Chinese or Mandarin, it’s very appreciated,” Jiang remarks.
Jiang adds that he spoke English to his broker during the closing process, but they conversed in Chinese when speaking about his needs for a home, which made Jiang feel more comfortable.
Hot markets for Chinese buyersBuyers from China are most interested in moving to large cities, like San Francisco, Los Angeles, Seattle, and New York.
“Seattle is one of the hot regions. It is constantly ranked in the top livable cities in the U.S., and this is going viral on the Chinese Internet,” Jiang says. “A lot of my friends and family members are looking at the Bellevue and Newcastle [areas].”
Though Shen has many clients who she helps in the Washington, D.C. area, she confirms that the statistics point to the West Coast as the preferred location for Chinese buyers.
“The West Coast is closer to China,” she explains. “It’s about five or six hours less travel time than the East Coast. The weather is nice, and Chinese people feel more comfortable there.”
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