To help you through the process of purchasing your overseas investment property we have produced this guide to buying a property in the US.
Set out below is the typical buying process and timings from reservation through to completion.
|Reservation||Once you have chosen the property you would like to buy, you will need to sign a reservation document, which will be sent to you electronically and can be signed for using your PC, Laptop, Tablet or Phone.|
|Deposit||At the time of reservation you will need to make a deposit payment of $2,000 to the Title Company handling the sale of the property in the US. This is paid directly to them and your funds are held securely in a client Escrow account.|
|Our Fee||We charge a professional arrangement fee on all USA buy to let property sales. Our fee is £2,495 and is payable directly to us in the UK in Pounds Sterling upon reservation.|
|Purchase Agreement||Once the reservation process is complete you, along with the seller, will need to sign a formal Purchase Agreement known more commonly in the US as “the Contract”. Again this will be sent and signed for in the same way as the reservation documents.|
|Inspection Report||Once both parties have signed the contract, a full independent property inspection (survey) will be carried out and a copy sent to you for your approval prior to you committing to purchase. It takes between 7 – 10 days from day of order to receiving the report. Should you decline the property based on the inspection, then your reservation and arrangement fee will be transferred to an alternative property of your choice.|
|Title Search||Whilst the inspection is being carried out the appointed title company will search the property history to ensure that there are no debts or encumbrances attached to the property and that you can close on the property with full and clear title.|
|Closing||You will be sent all the necessary closing documents which will include, the seller’s documents, transfer affidavit and a full financial breakdown (known as a HUD-1 Settlement Statement) for you to review and agree prior to transferring the balance due and signing to complete the purchase.|
|Handover||Goldsquare Investments will hand you over to the chosen management company who will look after your property and tenants on a day to day basis.|
At all times the team at Goldsquare Investments will be on hand to guide you through the process and make sure that everything goes smoothly.
Frequently Asked Questions
Q. How do I sign on my laptop or another device?
A. An E-Signature is commonplace now for both business and personal use. A statement declaring your understanding and willingness to be bound by the contents of such a document is identified by checking a tick box in place of a wet ink signature.
Q. What is an Escrow account and how is it safe?
A. An Escrow account allows the purchaser to transfer funds to the title company safe in the knowledge they can only be used for the purchase of the property once everything is in place for the transaction to complete. If for any reason it cannot complete the funds can only be returned to the you.
Q. Why do I have to pay an arrangement fee to Goldsquare?
A. The professional arrangement fee only applies to our US investment properties. We do not add profit or commissions to the sale price so the fee is there to cover all of our costs associated with the sale, on both sides of the Atlantic and of course, in part, it is how we get paid!
Q. What is a Purchase Agreement?
A. A Purchase Agreement or Contract as it is more commonly known is simply a document between the buyer and the seller that details the property itself and the figures upon which both parties are happy to proceed. Simply put it is both parties agreeing the amount which is to be paid for the property.
Q. What is the inspection report?
A. An inspection report is an examination of the condition of a home. Home inspections are conducted by a home inspector, who has relevant qualifications to do so. The inspector prepares and delivers to the client a written report of their findings. It will detail, the condition of the exterior and interior of the property, both structurally and cosmetically, any signs of damp or infestations, the condition of the basement (if applicable) and the roof. Electrics, water supply, plumbing including the furnace (boiler) and heating systems will be checked and reported on. Only once you are happy with this report will we proceed with the purchase.
Q. What happens if there is a problem highlighted in the report?
A. If it is something minor like a cracked tile or faulty light switch, then we would normally go back to the seller and ask if they would fix it, which they are usually happy to do. If it is something more serious like the property requires a new furnace and heating system, then we would advise you to cancel the contract and transfer to another property of your choice.
Q. Do I have to pay a deposit and arrangement fee again if I decide to transfer to another property?
A. No, both the deposit and arrangement fee are full transferrable to another property.
Q. What is the HUD statement?
A. The HUD-1 Settlement Statement is the formal breakdown of all the costs and expenses associated with the sale and transfer of the property. It will detail what money goes where and who it is coming from, the buyer or the seller.
Q. Who do I send the balance to?
A. All payments for the property go directly to the title company. They will hold all funds in Escrow until such time that they and you are satisfied everything is in place for the purchase to complete.
Q. How do I get my rent?
A. The appointed management company collect the rent on your behalf and transfer it to you where and when you wish. Some clients like it transferred every month, some every quarter and some yearly. The management company will work to your requirements.
Q. What is Section 8?
A. A section 8 property means someone that qualifies for Housing Benefit currently occupies it. This is often seen as a major benefit by investors as the rent is guaranteed to be paid by the state, directly to the landlord by-passing the tenant, every month without fail.