Helping FSOs navigate the unique challenges of purchasing homes from overseas
When I left the Foreign Service (FS) due to family and health reasons, it felt like I was leaving a community that I knew and loved. A place where I belonged. Fast forward to 2016 when I launched my real estate business and my very first client was an FSO from my A-100 class. Since then, I’ve helped over 30 FSOs, individuals and families, buy and/or sell their Northern Virginia homes. It’s been an indescribable pleasure and honor to be able to serve the community of which I was a part!
As anyone in the FS well knows – whether through first-hand experience or observing colleagues’ efforts – the challenges FSOs face in buying (especially) or selling are manifold! For the outside world, buying a house sight unseen is unfathomable. It’s commonplace in the FS! The typical buyer expects to sit at the closing table and sign documents in person. That’s often not the case for FSOs who can’t travel thousands of miles to place their John Hancock on some papers! For FSOs selling properties from overseas, they can’t be physically present to manage contractors, pick paint colors/fixtures and ensure work is done to their specifications.
Over my many transactions for FS clients, I’ve developed a particular expertise – elements of which I’d like to share here in hopes it might benefit and inform my FS clients and anyone in the FS thinking about buying or selling in Northern Virginia.
Virtual showings only tell part of the story
Thanks to platforms like FaceTime and Skype, FSOs can now at least tour a property virtually with their realtor and “see” the homes they’re considering. These tours – in combination with the increasingly comprehensive photos that accompany listings – can be extremely helpful. But it’s the atmospherics and details that are lost in a standard tour. That’s where I come in. My value add is not only in the way I describe the features of the home as I show a client a property via FaceTime but also in the way I highlight the atmospherics. That might be the fact that a house is on a street with a steep grade (read: not ideal for kids’ play). Or, perhaps the neighbor hasn’t quite gotten around to mowing the grass. Then there is the all-too frequent challenge of road, highway and metro noise in places like Arlington. Sometimes there’s even a difference in noise level between the front and back of a house. If you’re talking about a condo, I always listen closely for any noise above or adjacent to a unit – you’d be amazed how many dogs I’ve heard barking loudly or music blaring!
My goal in these tours is not only to provide my clients with a good sense of the layout and condition of the home but also of the little (and sometimes big) things that might affect a client’s view of a home if they were there in person. For example, in a condominium building, it’s all good and well to have a garage parking spot. But, what if the unit’s designated garage space is practically a mile away from your unit. Perhaps not as useful! Or, if the property has only on street parking but the adjacent property has designated the spot in front as handicapped and you are not. Parking becomes a hassle.
You can be sure that the listing agent of a property has done everything possible to show a property in the best photographic light. That means omitting the tree branches that might be hovering menacingly over a roof, cropping out the commercial center that backs onto a property and angling a shot to avoid showing the speed bump in front of the house (usually a sign of a cut-through/high speed street).
My goal as a realtor is to get under the hood of a property. To the extent I can get ahold of them, I also always try to provide my clients with floorplans, surveys/plats, a list of updates, and any other relevant information that may be in the land records or otherwise obtainable. I always relay to my clients the good, the bad and the ugly – I do whatever it takes to help my clients understand all of the pros and cons so that, if they buy the home, they come in eyes wide open.
You love it! But will your renter?
I often tell my FSO clients that they have to wear two hats when looking at a property to purchase. First and foremost, of course they want to purchase a property that suits their needs. Yet, at the same time, they also have to consider the rentability of that property and whether it will be a wise investment during those times when they’re posted overseas. Sometimes, those two different priorities are in conflict with one another. My job is to help clients navigate that gap and help them to identify the property that serves both purposes.
I often find that the major points of conflict relate to price, condition, school zones, proximity to DC and access to public transportation. In other words, a client might be drawn to a house that is fully updated and in beautiful condition (which makes a house comfortable to live in) but may not feed to schools that are considered desirable (which many renters view as paramount). Or, another example of tension is when a house is close to DC in mileage terms but doesn’t have any easily accessible public transportation. Again, many renters will place a premium on access to public transportation even if it means a greater distance as the crow flies.
As soon as an FSO client tells me that they are serious about a given property, I always look into rental comparables in a given neighborhood and analyze the time it takes for those rental properties to rent. Most FSOs want to rent quickly and avoid prolonged vacancies.
Your lender can be a make or break
FSOs face a unique set of challenges when considering financing options, in large part rooted in timing and distance. Primary residence mortgages offer the best possible rates for borrowers. However, they also come with a 60-day occupancy requirement. That is, when a buyer closes on the purchase of a property, they are required to sign an affidavit that says they will occupy in 60 days. There aren’t crystal clear definitions about what “occupy” means but it’s generally understood to be that the owner will be living in the property. Buyers have asked me whether it suffices to move in some furniture within that 60 days or have a friend stay at the property or even just stop by and spend the night once or twice within that 60 days. I err on the side of caution. The last thing I ever want a client to do is commit mortgage fraud! In the best-case scenario, an FSOs timing is such that they’re looking to purchase no further out than 60 days from when they’ll be back in the Washington area.
Certain lenders with whom I work do offer loan products that either waive that 60-day requirement or provide as good a rate on a second home mortgage as they would for a primary home mortgage. Either case offers an ideal scenario for a borrower. However, those offerings often depend on top notch credit and other strong financial credentials. I always advise my clients to talk to at least one or two lenders very early on in the process to get a sense of their loan product options based on their timing. Rate and service shopping is important.
It’s also important that your lender understand the mechanics of FS employment. That is, as relates to issuance of your travel orders as well as the job or position changes. There is a certain vernacular with FS employment that is not always understood by lenders. Similarly, you’ll want to work with a lender that understands the one-off and sometimes extensive expenses that FSOs often incur around the time of their assignment transitions. Lenders don’t like to see major credit card charges or other expenses around the timeframe of loan applications and approval. That said, a lender well-versed in the FS transition rhythms will ensure their underwriter understands and overlooks such charges.
Last, assuming you are buying from overseas and can’t be physically present for the closing, you’ll want a lender who will allow all of the closing documents to be signed by an attorney-in-fact based on a signed and notarized power of attorney. In plain English, lenders still require wet ink on loan documents. That means they have to be signed by a person and cannot be signed electronically. Maybe this doesn’t sound too complicated but it often can be! Imagine buyers in Bogota, Colombia with a co-signer in Tennessee.
If you know you can’t be at the closing, you’ll want to make sure your lender will permit documents to be signed by a power of attorney. In addition, some lenders are quite strict about who can sign in that role – they may require it to be a family member or a paid attorney. Ideally, it could be anyone with whom you are close and that you trust. Just in the last six months, I’ve had five closings where the buyers could not be present for the closing. I’ve met clients’ aunts, parents, friends… you name it!
Keep those friends on the ground
Most every FSO has a friend or colleague who is in the Washington DC area. When looking to buy a property, I always recommend that my clients give that friend or colleague a heads up. While I do my utmost to be my clients’ eyes and ears on the ground, there’s no replacing the observations and perspective of a trusted friend. I welcome the opportunity to bring those folks on property tours with me. It can prove invaluable.
That same person may also come in handy for two other purposes. First, as is the case with many of my FSO clients, they are overseas at the time of closing. Assuming a lender allows it, you may want to have that friend serve as an attorney-in-fact and sign loan documents as a power of attorney on your behalf. The second role is to be a caretaker or custodian of sorts for the property once purchased. For those FSOs who purchase prior to their return to the Washington area, there may be a few months gap before they actually occupy the property. Many of my clients figure it’s a short enough time that it doesn’t make sense to hire a property manager and pay those fees. Hence, they’ll instead ask a friend or family member to check in on the house on a regular basis. On many occasions, I’ve passed over keys to those contacts.
Not all realtors are built the same. Because I practiced at top law firms and worked under the rigors of the FS, I know what it means to work and to work hard. My goal is to be as responsive to client needs as possible. To be available to them in near real-time, without sacrificing quality and accuracy. Not to let more than a few hours go, if that, without responding to them. Even if that means late nights and early mornings. I maintain that standard regardless of whether working for clients with significant time differences. Recently, I helped an FS client through three rounds of competitive offers, one each day over three days, until we got ratified. Given the 13-hour time difference, that meant early mornings and late nights to accommodate their schedule.
There are also times – especially in multiple offer situations when my clients are competing against other buyers – when I have to impose near real-time demands on my clients. I have had to wake up clients in the middle of the night for them to sign documents. I’ll never forget FaceTiming in the dark with my pajama clad clients in Malawi as they signed contract documents to get the house they wanted!
Time differences can also be meaningful when it comes to meeting contract deadlines. Most every contract contingency expires at 9 PM EST on a given date. When I have overseas clients, whether behind or ahead in time zones, I’m absolutely dogged in ensuring that we meet deadlines on time. Often, that means working on documents well in advance and ensuring my clients are prepared to sign in a timeframe that anticipates the time zone differences.
In a tough market – which Northern Virginia continues to be – FSOs need a realtor who is responsive. One who is willing to be available to you around the clock.