Buying and registering property in the USA

It takes 30–45 days to buy a property in the USA. The acquisition procedure is completed in several steps.

How it works in the United States:

1. Find an agent and show proof of funds. Choose your agent and show them you have the funds to cover the purchase price using documents proving your revenue, assets, etc. Otherwise, you won’t be considered a reliable buyer.

2. Find a property. A local real estate agency offers properties that match your preferences as a buyer. The city, area and your budget are the main things to take into account. Once you have found one or more options that interest you, the agency will arrange viewings. Don’t hesitate to ask your real estate agent any questions about the property, payment procedures or potential discounts.

3. Make an offer. Once you have chosen your property, make an offer to the seller verbally or in writing, executing it as a standard deed.

4. Pay your deposit. When your offer has been accepted, the seller's agent opens up an escrow account. You must then make a down payment which varies depending on the state where your property is located. For instance, in California, you will pay 3% of the purchase price within three days of the offer being accepted, while in New York, you will pay 10–20% of the asking price within 5–10 days and in Florida, you will be expected to remit 10% within a time set contractually. This deposit guarantees reciprocal liability of the parties to the transaction. The terms and conditions for you to withdraw from the transaction and return the deposit payment should be agreed upon in advance.

5. Get a mortgage (if applicable). The bank commissions an evaluation of the property by a specialised company. If your desired property is positively appraised, you will have to provide all the required documents for the bank to authorise your mortgage. If you wish to buy a flat, the bank will conduct due diligence with regards to the solvency, insurance coverage and any potential or pending litigations against the owners. The lender may ask to measure the surface area a few times for both private houses and apartment buildings.

6. Do the due diligence. You or your attorney’s must commission a title company to perform a title search. Should this search show any seizures, foreclosures or other restrictions on the property, then the seller has a limited time to rectify them. Otherwise, you can withdraw from the transaction and claim your deposit back. We advise you to purchase a single-premium insurance (title insurance) so as to be protected against potential issues.

Your future property must be inspected before the final signing in many counties of the State of New York, while in New Jersey, for example, it is done immediately after signing the final sales contract. Irrespective of when it is conducted, the inspection will help identify defects and reduce the price or provide compensatory credit to be used after closing the transaction. If no agreement is reached, in New York no contract will be made and in New Jersey, you have the right to withdraw from the transaction without being penalised. In California, any defects found during the inspection may entitle you to cancel the contract and get your deposit back, or ask the seller to solve the issues or offer a discount.

You have ten days to organise all the checks and inspections. If everything is in order, you can proceed towards closing the sale.

7. Get approval from the condominium or cooperative board (if necessary). When buying property in a New York City apartment building, you need board approval from the condominium or cooperative. However, in New Jersey, for example, it is only necessary for buildings managed by cooperatives. You will need to provide personal details and financial information as well as recommendation letters, etc. This step needs to be prepared well in advance, if not the formalities might delay completion of the transaction. Board approval is a strict procedure that includes a face-to-face interview and foreign buyers are not often granted membership if they are not residents of the USA. For this reason, we recommend prioritising property searches in condominiums if you do not have a residence permit.

8. Sign the final sales contract. It is advisable to inspect the property one day before or on the day of the transaction to make sure the property is in good condition and vacant. A real estate purchase contract is signed and the remaining funds must be remitted in full to the escrow account. If you have taken out a mortgage, the lender will remit the funds. Once all the documents are signed, your attorney will settle all outstanding fees pertaining to the property and execution of the transaction.

9. Transfer the ownership title. The keys are usually handed over when deed has been signed and as a general rule, the property is also completely vacant by the time the sale has been closed. After the title company has been paid or got the mortgage documents, you are issued the document proving your ownership: a title deed. However in many states, the transfer is only completed after the title deed has been registered with the district court.

10. Move in. The process is easy for private housing, but if an apartment is purchased, there are a few things to consider:

• You need to buy homeowner's insurance.
• You may be asked to pay a move-in fee in two parts: a security deposit (refundable if no damages occur during the move) and a non-refundable application fee to register you as the new homeowner.
• Apartment buildings often charge each new homeowner for membership. These funds are then usually channelled into the capital reserve or capital contribution funds. They can be fixed or accrued depending on the maintenance fee and are often paid when the transaction is closed.
• Read the move-in / move-out instructions of your new building. Many houses only allow you to move personal possessions and belongings during certain hours of certain days.
• Don’t forget to set up your utility service agreements.

Taxes and charges

You pay the property registration fee amounting to 0.2–0.5% of the purchase price.

The seller pays the real estate agent’s commission (5–6% of the transaction amount) and your agent does not charge for their services.

Each party pays the attorneys working for them, usually amounting to 0.5–1.0% of the purchase price. Hourly rates can also apply.

There is a fee for the escrow account which is just under 1.0% of the transaction amount or about $1,000. This charge is shared equally between you and the seller.

You pay for the property inspection and it will cost about $500–800 depending on the size of the inspected property. You can also engage several different inspectors to check electricity, the roof, etc.