- Why buy in the USA?
- Things to watch out when you buy property in the USA
- How to buy property in the USA
- Cost of purchase
- About Loan
- About Tax
Why buy in the USA?
The US real estate property market is in growth mode. The 2008 financial crisis resulted in a market collapse and huge dips in property values throughout the country. Ever since, the market has been catching up, and properties are appreciating.
According to Zillow, a real estate website, the median sales price for a home in Los Angeles County in January 2012 was $344,000. Currently (as of November 2014) it sits $475,000, a whopping 38% higher!
Many major cities now have hot property markets where you can expect to see higher appreciation – especially Los Angeles, San Francisco, and New York City.
Unlike some other countries, the US has no regulatory restrictions against non-citizen/non-resident buyers. Condominium or house, new or used or off-plan – it’s all is available to purchase.
Agent’s commissions, for both seller’s and buyer’s representatives, are paid by the seller. A buyer is only responsible for a final selling price plus miscellaneous closing costs.
Things to watch out when you buy property in the USA
- Know which city suits your investment – America is the 3rd largest country in the world and has 10 cities with populations over 1 million people. Each city has its own unique characteristics, environment, and returns on investments. Be sure to do your homework and conduct research (including using this website) to find out answers to your questions and optimize your investment plans.
- Property taxes and home owner’s association fees vary by the city and area – learning what kind of tax burden you can expect is important as it will affect your yields.
- Adequate parking an absolute requirement for all residential properties (except in New York City). Check how many parking units are available for an apartment. Also, confirm the parking location and system, whether it’s a parking lot/garage, street parking, assigned spaces, etc., as this will affect rentability.
- Avoid short-sale properties and properties that have been foreclosed upon. These are bank-owned or pre-bank owned properties and the transaction periods tend to be longer and more complex than standard transactions.
How to buy property in the USA
| STEP 1 |
| If you are planning to get a mortgage, have it pre-approved before you start looking for properties. |
| You can go and talk to a local mortgage broker or a bank. Based on your income and credit record, calculate your budget. |
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| STEP 2 |
| Finding the right property |
| Use internet services to find a property that you are interested and/or contact a local real estate agent.Visit the properties, and make sure to view as many as possible to get an idea of the overall picture of the area. It is preferable to tour the neighboring area as well so you can also get an idea of what it would be like to live there. (This applies if you are buying for an investment as well, since the neighborhood and environment affect rentability.) |
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| STEP 3 |
| Making an offer |
| After comprehensive viewing, when you find a desirable property, make an offer of purchase to the seller’s agent. |
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| STEP 4 |
| Negotiation |
| 3 responses can be expected from the seller’s agent:1.The seller’s agent accepts your offer. The price is agreed upon by both parties and the escrow process to finalize the deal can begin. (See STEP 5)
2. The seller’s agent makes a counter-offer. A counter-offer can include alternative terms of contract, including price and duration of escrow process. If the counter-offer is acceptable, notify the agent of your intention and finalize the deal. (See STEP 5) 3. The seller’s agent rejects your offer. This means that an alternative buyer’s offer was accepted, or the seller decided withdraw from the transaction process. |
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| STEP 5 |
| Escrow Process |
| Once an offer is accepted by a seller’s agent, the escrow process begins. An escrow agent/company is a third party that acts as a neutral entity facilitate the completion of the deal. This is to protect the interests of both parties. The first step is to transfer a deposit (also referred to as ‘earnest money’) to an escrow agent. The standard amount is 10% of the selling price.Once the funds are transferred, the seller’s agent must provide a disclosure report of the property to the buyer via the escrow agent. If the content is reasonable and the buyer is willing to proceed with the transaction, a contingency is removed from the deal, meaning that beyond that point, even if the buyer decides withdraw from the deal, the earnest money will not be refunded.An inspection of the property is also conducted at this stage to examine if the property is in a good shape, both internally and externally.
The rest of the process includes finalizing the paper work for the purchase contract, and transferring the remainder of the funds to the escrow agent. Once the escrow agent reviews all the paperwork and fund transfers and finally confirms that everything is in order, then the funds and deed are transferred to their respective parties. |
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| STEP 6 |
| You are all set! |
| Congratulation! The home is all yours now! |
Cost of purchase
Escrow fee (1-2% of property price)
Property tax (for the purchased year)
Title charges
Recording charges
About Loan