There’s a dark secret lurking in the throats of the National Association of REALTORS® employees. I personally uncovered this closet skeleton on a reconnaissance mission in the Chicago Association of REALTORS®’ professional development wing.
I walked up to the desk and announced that I was reporting for duty to cover the Certified International Property Specialist (CIPS) class. Except here’s how I said it:
Meg White: Hi! I’m from REALTOR® Magazine, here for the “sips” class.
Patsy Smith Wyant: Oh great; we’re so glad to have you! Except it’s C-I-P-S.
Meg: Really? Not “sips”?
Patsy: Yep! It’s C. I. P. S. [flashing hugely welcoming, forgiving smile]
Meg: [blushing] Oh geez. I’ve never heard anyone at NAR pronounce it like that. I’m sorry.
Patsy: No problem! Happens all the time, really. David [Wyant, Patsy’s partner and the instructor for my class] always jokes, “It’s not a drink that you sip!” And, you know, people don’t talk about being a “gry” [GRI, Graduate, REALTOR® Institute] or a “cree” [CRE, Counselor of Real Estate].
Meg: Makes total sense, now that you mention it. But I imagine hearing “sips” all the time would have the same effect as it does when the rest of us down at 430 N. Michigan hear “real-it-or” or “nahr.”
Patsy: Haha, yeah. It is kind of like that!
So, as you can see, I started at the absolute bottom when it came to the knowledge required to become a certified international property specialist. With that baseline set, let me share a few other items I learned from the globetrotting Wyants during Global Real Estate: Transaction Tools. While some of these information nuggets won’t be a huge surprise to global experts out there, there were others that had the whole class in disbelief, saying, “Really?”
Q: Do you need a social security card to purchase property in the U.S?
A: Nope, nor do you need a tax I.D. number (ITIN). All you need is a passport or driver’s license. However, if you want to make money from that property (renting, selling, etc.) you do need some way for the IRS to identify (and tax) you.
Q: Does that mean foreigners have to pay double taxes (here and in their home country) on property-related income?
A: Depends on where they’re from. The Internal Revenue Service’s Publication 901 is a constantly changing list of tax treaty agreements between the U.S. and dozens of other countries that can help prevent double taxation if there is a treaty in place. But reference it often; Wyant doesn’t even bother printing the publication out for students anymore because the IRS updates it so frequently.
Q: What’s the difference between a resident alien, a foreign national, an immigrant, and a non-resident alien?
A: “Foreign national” is a general term that applies to immigrants, investors from abroad, and vacationers alike. An immigrant generally has a green card and is taxed like a U.S. citizen. A resident alien hasn’t gotten their green card, but has been in the U.S. for more than 182 days. If an alien has been in the country for less than 182 days, they’re a non-resident. But beware: If your client has built up a “substantial presence” in the country by being around for a cumulative 182 days over the past three years, they too could be classified as a resident.
Q: How do foreigners pay for property they buy in the U.S.?
A: The days of title companies accepting suitcases full of money are over, according to Wyant. Money transfers may seem like a good plan, but you need to think about the timing. “You might miss the closing date because it takes you longer to make the funds transfer,” Wyant warns.
And when you rely on wired funds, they can take a big chunk of change for themselves. “When I ask how much they charge, students usually say $15, [but in actuality] they charge a hidden percentage. They don’t give you the exchange rate they’re getting. The bank has made 4 percent of the transaction for 15 minutes of work.”
Wyant said that lower-cost wire transfer companies such as Moneycorp can be a solution. Oh, and if you’re abroad learning more about the country whose citizens you’ve chosen to work with, don’t bring traveler’s checks, because no one will take them anymore. Wyant suggests you check with your bank to find the exchange rates they charge at ATMs around the world. He added that he usually uses his REALTORS® Federal Credit Union card, because it only costs him a half percent charge when he’s traveling abroad.
Q: When’s the last time it rained in Lima, Peru?
A: Wyant told us the mist-enshrouded city hasn’t seen measurable rain since 1972. So, if your prospective clients are moving here from Peru, you might consider a nice umbrella or two as a closing gift.
Recommended books for aspiring CIPS designees:
Going Global: Are You Ready?
Traveling Via Paperback