So you’ve decided on your perfect place to buy your dream home – perhaps sunny Florida for a holiday home to escape the UK winter. But how do you go about actually finding your ideal home itself? How do you create you brief, choose your realtor and what’s the process of buying a house in the USA? Find out in part four of your buying guide series.
Step 1: Creating a brief for buying your perfect American home
Once you have spent time working out exactly what kind of property you are looking for in the USA and how you can afford it, you will be able to put a brief together that will help you (and your realtor) find the property you want, in the location you want it, and at the price you want it for.
This brief will keep you focused. It can be very easy to get pushed off course throughout this process of buying a house in the USA! You don’t want to end up getting something in an area that doesn’t meet your needs, for a price much more than you expected!
Find out everything you need to know about moving long-haul in your Emigration Guide.
Create your brief by taking another look at the questions in the earlier Part One section and updating your answers with the information that you now know. Make sure that you set a budget, indicate how you’re going to pay for the property (cash, mortgage, or a combination of cash and mortgage), and when you’d like to buy. Be as detailed as possible.
Foreclosure or ‘short sale’ properties
Sometimes, when house-hunting in the USA, you may still come across opportunities to purchase a ‘short sale’ property or ‘foreclosure’.
These two types of purchase are the direct results of owners no longer being able to afford mortgage payments and can present great opportunities to snap up bargain properties, typically in Florida. Careful research on these properties is still important.
A ‘short sale’ property occurs when the owner demonstrates to their mortgage lender (i.e. the bank) that they are unable to repay the mortgage. The lender will assess the current market value of the property and determine a price which minimises their losses, while still ensuring the property is sold at a price that reflects a fair market value. Once the bank has approved this, the property is marketed as a ‘short sale’ by the owner at the price approved by the bank. A ‘foreclosure’ is the repossession of a property by the lender.
Step 2: Finding the right realtor
Finding a good realtor is key to successfully navigating the process of buying a house in the USA. You need to find one who sells the type of property that you are after, who is registered and reliable, and most importantly, listens to you and understands your needs. If you are planning a viewing trip, it’s advisable to select your agent beforehand and send them your detailed brief, so that you can begin the house search the moment you land.
If you are planning a viewing trip, it’s advisable to select your agent beforehand and send them your detailed brief, so that you can begin the house search the moment you land.
Finding a good realtor
A good realtor will meet the following criteria:
- Operates legally. The majority of states in the USA require realtors to hold a Real Estate License. Make sure your realtor is a member of the National Association of Realtors (NAR). This organisation regulates the standards that realtors are legally obliged to meet.
- Is proactive. You want someone who will get back to you if you have questions or queries, and who will be able to solve any issues. A good litmus test can be to send a brief or email when you first contact the realtor and seeing how quickly and well they respond.
- Has experience with overseas buyers. You’ll have an extra layer of complexity compared to a domestic buyer. Our Resource Centre on +44(0)20 7898 0549 or email@example.com can help with introductions.
- Understands your local area. Realtors tend to focus on a particular patch. Additionally, there is a system called the Multiple Listing Service (MLS), whereby they can see details of all properties on the market at any time. This ensures the whole process of buying a house in the USA is transparent.
Step 3: The viewing trip
If you do not yet own, or are not yet living in the USA, and you have the time and funds available to you, we recommend a viewing trip to your area of choice. This will allow you to investigate different areas and suburbs, speak to locals, visit the shops and check out nearby attractions in order to establish the right spot for you.
If you plan on spending a reasonable amount of time in the USA, it’s worth renting a property in one of the communities you’re considering rather than shelling out for a hotel. Trying this out for a little while, even if it’s just a couple of weeks, will allow you to get more of a feel for the area. It’s a very helpful way of knowing whether it’s right for you.
Make sure you understand how to control the risk of suddenly changing exchange rates by reading the Property Buyers’ Guide to Currency.
We have put together a viewing trip property analysis worksheet which you can use to make notes and rate every aspect of the property and location, from its general appearance to the access to local amenities, allowing you to have a full comparison of each property to refer to. Make sure you take photos to correspond with these notes.
Step 4: Making your purchase
If you’ve got this far, congratulations! It’s time to buy your dream home. So what are the key steps in the process of buying a house in the USA?
Make an offer
Once you have found the property that you wish to make an offer on, your realtor will put in an oral offer on your behalf. This will usually spark a negotiation of price, terms and closing date, until you reach an offer that both buyer and seller are pleased with.
Contract of sale
Once the offer has been accepted, the seller’s attorney will begin drafting a contract of sale. This document will contain a review of all of the documentation applying to the property, including:
- the deed;
- title insurance policy;
- notes on the mortgage;
- certificates of occupancy;
- all tax and utility bills; and
- any leases and permits relating to the property.
While this is happening, the buyer’s attorney will be examining all of the financial records for the property.
Once you receive the contract of sale back from the seller, your attorney will review and negotiate on the terms.
Sign the contract
Once your attorney is satisfied that both the financials of the property and the contract of sale are satisfactory, you will sign the contract.
Remember that, until all parties concerned have signed the contract, the seller is well within their rights to entertain offers from other buyers.
Once the first contract is signed, a closing date will be decided. On this date all obligations of the contract MUST be finalised. This will generally be 30 days from the signing of the first contract.
Pay the deposit
Once the contract is signed by both parties, it becomes legally binding and it is time for the buyer to pay the deposit. This is usually paid into the escrow account of the attorney of the seller and will only be released once everything is finalised.
Get a property survey
It’s important that you have it written into the contract that the sale is subject to the results of your property surveys. At this stage, a licensed home inspector will visit the property to identify any issues or repairs that are needed. Additionally, an appraiser will visit the property to provide a detailed report of the property’s market value. A title search will also be conducted to ensure that the property is free from any charges.
Find out how to access healthcare overseas in your free Guide to Healthcare Abroad.
Remember, when you put an offer in on a property you are doing so based on the condition it is in at the time. As you will not be able to bring up any defects after this point, you need to ensure you’re completely aware of and happy with the condition of the property before you make an offer. Always have a survey or ‘Inspection Report’ carried out on the property before you make an offer. This will identify any defects with the property that could help you to negotiate a lower price.
Between the signing of the first contract and the closing of the sale, insurance should be obtained to protect you, should any issues surrounding the title of the property arise, for example, if another person has an interest in the property that may not have been disclosed, such as a previous lender with a partial claim on the title. Title insurance protects you, the buyer, from any expenses or loss you may experience as a result of such a defect (sometimes known as a ‘cloud’).
Close the sale
Again, the State that you are buying the property in will dictate the exact closing procedures that you will be subjected to. In general, all parties are present, all documents are finalised and then money, information and documentation are exchanged and the property becomes yours.