Guide to Buying Property in America
Prices have fallen hard since 2008 but in the United States they’ve begun to stabilize, and the country is once again the land of opportunity for property buyers. From the thrills and energy of New York and Los Angeles to more sedate lifestyles in Florida or Kentucky, Washington or Colorado, American property is more affordable than ever!
The market just now is one of the best for buyers in the history of America. Property prices are often around half of what they were back in 2006, but they’re rising consistently in places like Orlando and Miami. Florida has always been a big tourist and holidaymaker draw, but prices in rural Montana are on the rise from a low start too.
People buy property in America usually for one of two reasons: either they’re attracted by the ease of buying American property and of moving to America, or the appeal is the excitement that America has to offer.
The USA is an easy place to buy property compared with some other foreign markets because there are no restrictions on foreign ownership. Americans speak the same language we do, there’s a well-regulated real estate market that’s easy to navigate and detailed information on properties is easily available. It’s easy to get to America, easy to travel around and easy to get along with the friendly, welcoming people. The only thing that isn’t easy is getting a mortgage if you’re a foreigner, so it’s best to arrange your finances back in Blighty!
On the other hand, America is one of the most exciting places on the planet. No-one could deny the vibrancy of a city like San Francisco or New York, but for Brits there’s the added attraction of having grown up on American TV, film and music. The appeal of living out the American dream, or simply your own dream of America, is hard to resist.
for Sale in America
Property Hotspots in the USA
Florida, with its mellow Caribbean climate and long coastline, its permanent sunshine and easy access by air, is the top state for overseas property buyers. It attracts the greatest number of British buyers too, though it also pulls in a great many Americans, especially retirees.
Orlando is the most popular destination for British people looking for a holiday home they can rent out to others when they’re not using it. The majority of construction in the Greater Orlando area was the result of Disney’s development of the nearby Disneyworld Orlando, and most housing stock therefore dates to pre-2007, after which construction in the area slowed down almost to a standstill. Consequently, brand new homes are sought-after rarities commanding relatively high prices. A typical resale stucco villa with garage and covered pool often still retails for around $100k though, and the biggest influence on the price of a property isn’t size or age but proximity to Florida’s many theme parks.
The Orlando market still has great prices in the form of short sales and foreclosures, there is strong competition for the best deals and it’s always a good idea to thoroughly inspect the property and its records for signs of defects, disrepair or debt before getting into anything binding.
Florida’s Gulf Coat, including Sarasota, Breadenton, St Petersburg and Clearwater, is the second most common destination for British investors. The coastline has several small barrier islands and these have themselves become famous resort destinations whose names are familiar to millions: Siesta Key, Anna Maria Island, Longboat Key.
These areas are the cultural hub of Florida, featuring thriving arts, music and theatre scenes amongst much else. For those who aren’t attracted by the culture, though, the area also boasts some of the world;s finest beaches, gazing out across the Gulf of Mexico.
Homes directly on the beach or waterfront command premium prices, beginning around $400k, but the homes themselves may be older builds. Newer constructions found just a short distance from the coast an sometimes feature brand new villas for $170 and up. Resale condominiums typically go for around $50k and villas for just over $100k.
Further south along the coast, Fort Myers properties are typically priced around 20% lower than homes in the Sarasota and St. Petersburg areas. Travel south again, to affluent Naples, and prices once more rise considerably: Villas start at $300k and condominiums in the low $100ks. Meanwhile, Miami is booming again, with high-end, brand-name condominium developments attracting strong demand from international buyers.
for Sale in Florida
Outside Florida, British second-home buyers a re considerably rarer, outnumbered by expatriates and American second-homers as well as permanent residents in most places. Prices, however, remain low – surprisingly so to British eyes.
The most popular destinations for Brits moving to America full time to live and work are California’s big metro areas and New York. Both areas have extremely high property prices in the areas where Brits tend to want to live. In New York’s Manhattan or Brooklyn, or LA’s Santa Monica area, prices are on a level with London and Paris, at $400k for a typical two-bed apartment.
Once you get beyond these areas, though, prices fall quickly. Three bedroom houses along the New York-Boston coast road routinely sell for under $200k despite their beautiful surroundings and easy access to both Boston and New York.
New England is one of the hotspots for British buyers outside of the Florida sunbelt, especially as a retirement spot, for those who plan to operate hotels and B&Bs, or for work in and around the Boston metro area.
Properties with a view over San Francisco Bay are notoriously expensive but only a few miles inland, positively palatial homes are on sale for around $150k.
While some inhabitants of America’s coastal metropolises think of the interior as ‘flyover states,’ there’s no need to share their attitude. The states of the Great Plains are losing their traditional farming economies, but tourism, wildlife and fishing, hunting and outdoor sports are replacing them. As they do, property prices rise and homes sell, in Wyoming, Montana and North and South Dakota. Colorado has always been a popular destination because of its skiing, and high-end properties abound, in the Aspen region especially.
Arizona and Nevada offer some great bargains too, and you can be close to Las Vegas’ buzz for less than you might think. It’s also worth investigating Texan property, where Austin offers cosmopolitan living within easy reach of rugged wilderness and small town properties are often inexpensive.
The Buying Process in the United States
Buying property in America is easier than in many other foreign countries because the country has clearly defined property rights, well-regulated real estate agents and it’s easy to travel around. Information is readily accessible too: All properties for sale are listed on the nationwide Multiple Listings System (MLS) database, to which all realtors have access. However, the United States leaves many of its laws to individual states, and tax and legal environments can differ a great deal from state to state.
Once you’ve selected the property you’re interested in, the buyer’ agent will prepare an offer to purchase it. Once the seller signs this, it becomes a binding contract, and the buyer will usually pay a deposit into escrow, to be released when the purchase is completed. The amount will usually be around 10% of the purchase price if you’re a resident, but could be as high as 30% if you’re not.
The buyer will usually have the property examined by a licensed home inspector to identify any issues, and to flag up any repair work that needs doing. An appraiser will visit the property and give a detailed report of the home’s market value, and a title search will be performed, to make sure the property is free and clear of any outstanding debts or charges and that all building permits have been closed.
If the protections are written into the contract, in the even the searches or the survey reveal any deal-breaking issues the buyer can still pull out. Otherwise, a real estate transaction will be closed by an attorney or insurance company.
Property Buying Costs
Documentary stamps to record the deed with the local authority will cost you 0.7% of the purchase price. Either the buyer or the seller can pay this. The title insurance policy is a one-off payment of around 0.75% of the purchase price, and attorney or title company costs will typically come to around $700 split evenly between buyer and seller. The buyer is sometimes obliged to pay home owner association fees and building insurance in advance, and these payments can be made at the closing of the sale.
When buying a short sale, the buyer should ask who is negotiating with the lender on the seller’s behalf. It should be a specialist attorney. If it isn’t, the seller might be trying to do the job, or it might be in the hands of a realtor. That means it will be done more slowly and less expertly than if it were given to an attorney who knows his way around the specialist short sale sector.
If you’re buying a condominium, make sure you thoroughly investigate the financial health of the condo association. The condo association should have reserves in place for eventualities like roof replacement or resurfacing the road. Ask how many homeowners are in arrears with their monthly fees. If it’s a high percentage, that’s a bad sign. An increase in the monthly fees might be needed to cover the shortfall and it implies that the condo association is failing.
Watch out too for pas condominium or homeowner fees that might be demanded after you buy a property. You should have an attorney review contracts and title search documents on your behalf, before you sign, especially if you’re buying a foreclosed property.
Property in Florida - Florida Properties
Perhaps the most famous destination for British property buyers has to be the state of Florida with its glorious climate, access to theme parks and stunning affordable villas. You can find a wide selection of homes for sale in Florida ranging from small condos to lavish Hollywood style villas all of which continue to grow in demand despite the recent credit crunch and weakness of the US dollar against major European currencies.
Popular areas of Florida in demand include the Orlando area centering around Disney like Kissimmee, Davenport and other nearby towns all within easy reach of the major attractions that Florida has to offer.
Buying Property in Florida
Investment Properties in America
As a direct result of the financial difficulties currently rippling throught the housing market in the USA there exists an amazing opportunity for acquiring investment real estate in America. As well as the distressed and repossessed properties mentioned above America now has an abundance of investment opportunities for the astute property investor looking at mid to long term returns.