Differences Between Brazil and America Real Estate Markets

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Differences Between Brazil and America Real Estate Markets. With the significant increase in investors interested in the real estate market in Florida, some questions are now common and we take this opportunity to answer to our readers.

What are the differences between the way real estate agents operate in Brazil and the US?

In Brazil, real estate offices generally have exclusive property listings. If a client is interested in a particular property, he must consult the listing agent for that property.

In the US, all agents have access to all listings on the market, because there is a common data base.

Who pays the sale commission?

The payment, exception made for specific negotiations, is always made by the seller, be it a re-sale or new sale through a builder.

How is the commission divided?

In the United States there are two agents involved in the transaction, one representing the seller and another representing the buyer. The commission is divided equally between the two real estate offices and the office owner will determine the percentage that the office will retain and what will go to the agent.

Is there any advantage for the buyer to negotiate directly with the seller or the builder?

In reality, there is a disadvantage because the buyer will not have a professional to represent him/her and protect his/her interests, but if this would be the case, the commission will be, in the majority of the cases, 6% and paid integrally to the listing agent.

Who pays for homeowners’ dues and property taxes when the property is leased/rented?

In the US, the owner is responsible for these expenses as well as for the maintenance of appliances such as refrigerators, stoves, microwaves, dish washers, and clothes washers/ dryers and air conditioning units.

In case the owner does not live in the United States, who can manage the property?

Some Real Estate offices offer property management services, and rates vary. For properties used as vacation rentals, the starting rate is $ 150/ month. In the case of a rental/lease, the administration fee is generally 10% of the monthly rate. The range of services is wide and may include all the way from payment of bills (homeowner’s dues, power, property taxes, mortgage, etc.) up to management of other services like landscaping, cleaning, repairs, improvements, etc.

How much do real estate offices charge for renting/ leasing the property?

One month of rent/lease. The agent registers the property in the property management system and will prepare all pertinent rental/lease documentation.

Are there rules for maximum rent/lease terms?

It depends on the location of the property and the terms of the license applied for. In general, sub-divisions located in Kissimmee, Davenport, Haynes City (Cities located close to Disney) are built with a view to vacation rental/lease to tourists and therefore can be rented/leased as a hotel room. However, in areas such as Orlando, Windermere, Winter Garden, Dr. Phillips, the sub-divisions are strictly residential and only long term rentals/leases are allowed, for a minimum of 7 months. Normally buyers in these areas are buying for personal use.

Do taxes apply to rental/ lease income?

Yes and the investor must declare this income annually. If your property is only for your own vacation use, there is no need to declare income tax. We advise our clients to seek counsel of a real estate attorney before purchasing the property. There are several professionals apt to guide client’s case to case.

Are there lines of credit for foreigners?

Presently, there are financing options of up to 70% of the property value for foreigners. The purchaser must fill out specific financial forms and present proof of income and other documentation for approval.

Are property prices below market value due to the  real estate crisis?

The market is starting to rebound, but there are still many good investment opportunities. There has been an increase in demand and new construction is still not up to speed, which causes a lack of offering in the market. However, in areas of greater demand, there has been an increase in prices, but these are still well below the values in Brazil.

Is there negotiation leverage when purchasing a new home from a builder?

The margin of negotiation is very small or inexistent when purchasing directly from a builder. In case of purchase of pre-owned homes, negotiations are commonplace.

Besides the purchase price, are there any additional costs associated to the purchase?

Yes, in case of cash purchases, the additional costs represent from 1.5 to 3% of the sales price. When financing is involved, they may vary from 5 to 7%, depending on the type of financing.

Are there any taxes on profits obtained from sales of property when the seller is foreign?

Yes, that is why we advise our clients to seek counsel of a real estate attorney before purchasing the property.

How is succession handled in the event of the death of a foreign owner?

There is a transmission tax due to the heirs in case of a private owner. that is the reason we advise our clients to consult a real estate attorney before purchasing property. In many cases it would be interesting that the purchase be made in the name of a company registered in the United States. Thus, the heirs would be company shareholders and succession automatic, with no additional fees.

Differences Between Brazil and America Real Estate Markets

Rosana Almeida

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