If you are a foreign buyer interested in South Florida, then it could make a lot of sense to purchase real estate for investment. Due to the diminished value of the dollar, foreign buyers in certain countries have tremendous buying power.
Real estate brokers in the South Florida area pool their property listings into the Multiple Listing Services (MLS). The MLS system can then be accessed by all real estate brokers and their agents. The brokers will then split the commission earned from the seller based on pre-arranged agreements. Through this system, sellers get the greatest amount of visibility for their property, to a very large number of buyers.
In many countries, anyone can act as a real estate broker because there is no government regulation of the professional real estate service. In the U.S., individuals must be licensed by a state before they can act as a real estate broker or sales associate and complaints about a licensee can be brought before the state regulatory body. Real estate agents cannot act alone, but must conduct their real estate client representation through a real estate broker. Acting for another in a real estate transaction without a proper license is a crime. A real estate broker cannot pay a person who does not have a license, and anyone acting as a licensee without a license is probably not entitled to be paid nor allowed to bring an action in court for compensation.
Another consideration for foreign buyers is FIRPTA (Foreign Investment in Real Property Tax Act). Under FIRPTA, a buyer must withhold 10% of purchase price if the seller is a foreign person. No withholding is required if the seller is a U.S. citizen; green cardholder (lawful resident); or resident alien (meets either the physical presence test-present in the U.S. for at least 183 days in the current calendar year; or the substantial presence test-present in the U.S. for a weighted average of 183 days over three years).
In the U.S., sellers typically compensate a real estate professional to market their property. This agreement to pay is usually required in writing. A buyer’s agent typically receives payment from the property seller or from the listing agent. Increasingly, it is common for buyer’s agents to have buyers sign agreements as well. These agreements can provide for the buyer to pay the broker, and may or may not credit the buyer for all or part of the compensation the buyer’s agent receives from the seller or seller’s agent. As practices vary widely throughout the world, it is important to ask your clients what their expectations are, and then be prepared to explain why your compensation model is legally required or beneficial for them, when compensation is expected, and the effect, if any, on agency relationships. Sometimes, buyers can expect that someone they know will be compensated by you because of a referral, involvement in the transaction, or simply because that person has a real estate license. Determining this early allows you to explain your policy, and explore allowable and legally permissible compensation arrangements.