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Guide to buying a property in USA

The great land of opportunity across the Pond still beckons for British property buyers. Now prices have fallen, stabilised and are now recovering in our beloved Sunshine State, a lifestyle of winter sun, golf and beaches is tantalisingly affordable.

It’s just about still the greatest buyers’ market in recent US history, with property prices frequently 50 per cent less than in 2006, yet rising consistently now in areas such as Orlando and Miami. And the last time we looked, Disney World Florida still attracts more Brits that Disneyland Hong Kong (where property prices have not nosedived, either).

People buy property in America for many reasons, but you can divide them into two camps: those seeking the ease factor and those the excitement factor.

It’s easy to buy in America because there are no restrictions on foreign ownership, we speak the same language, they have a well-regulated, easy to understand property market plus a sophisticated internet infrastructure (MLS) that lists every property for sale and every bit of data you could ever want to know about an area. There are plentiful flights throughout the year, wonderful roads and welcoming people. It’s just all very easy – especially if you can pay cash (mortgages are hard to get for non-Americans).

Culturally, for many British people America is far and away the most exciting place on the planet, with much of our entertainment industry coming from there and with every corner from New England to New Mexico, Oregon to Orlando having some sort of cultural resonance. It’s also a place where many British people would love to emigrate to “live the American dream” and make a lot of money.

Despite the barriers, many do. Every year around 3,000 new British emigrants register as permanent residents of California alone. 

 

USA property hotspots

Florida, with its year-round sun and plentiful flights, is the number one state for overseas property buyers and attracts the highest number of British buyers. Orlando is the most popular destination for British property buyers, combining pleasure with business – a holiday home they can enjoy themselves and rent out to other holiday makers. It's the number one holiday rentals hotspot for HomeAway.co.uk.

 



Most construction in the Greater Orlando area came about as a result of Disney’s development, and the bulk of stock was built before 2007, when construction pretty much ground to a halt.  So brand new homes are in a minority and are in demand, although resale typical stucco villas with garaging and their own covered pool start at around £100,000 these days, with prices still largely dependent on proximity to theme parks. This market still has a supply of distressed properties, both short sales and foreclosures, but competition for the best deals can be fierce and buyers should make detailed inspections to uncover defect, debt or repair issues with these homes.

Florida’s Gulf Coast including Sarasota, Bradenton, St Petersburg and Clearwater is the second most popular destination for British investors. The coastline is hugged by a number of barrier islands that have become resort destinations, the most well known being Siesta Key, Anna Maria Island and Longboat Key.

Known as Florida’s cultural hub, with much arts, music and theatre, the area has some of the world's finest beaches too, lapped by the warm waters of the Gulf of Mexico. Homes directly on the beach or waterfront command premium prices, starting around $400,000, but the homes themselves may be older. Newer construction can be found just a short distance from the coast, with brand new villas starting around $170,000. Resale condominiums may be purchased from $50,000 and villas from the low $100,000s.

Further down the coast, Fort Myers properties are priced around 20 per cent less than similar homes in the Sarasota and St Petersburg area. Further south in affluent Naples, prices can rise considerably, and you’ll find many deed-restricted neighbourhoods and country club developments. Villas start from $300,000 and condominiums from the low $100,000s. Miami is booming again, with high-end branded condo developments in much demand from international buyers.

Elsewhere in the USA, British second-home buyers are a much rarer breed, perhaps surprisingly given the low prices and the country’s perennial appeal.

California and New York are the most popular areas for Brits to live and work, and both have exceptionally high property prices in the safe, cosmopolitan areas where most want to live, and - more importantly - can find legal work.

In New York’s Manhattan or Brooklyn, or LA’s Santa Monica, you’re looking at London prices - $400,000 for a two-bedroom apartment.

Go beyond these areas and the price decreases rapidly. The coast road from New York to Boston, with beautiful countryside and easy access to either metropolis, has three-bedroom houses in friendly seaside towns and harbours from under $200,000. Properties with a view of San Francisco Bay may sell for “a million a window”, but there are attractive inland villages and towns with houses that are palatial by European standards selling for $150,000 or less.

New England has historically been popular with British buyers too – especially those relocating full-time to operate a traditional style B&B, or to work around Boston.

Don’t forget the interior too. The states west of the Great Plains have been attracting buyers, with their wide open spaces in the north, such as Wyoming and Montana, the ski resorts of Colorado for top-end ski properties; and Las Vegas and Lake Tahoe for glamour - and plenty of bargains currently.

Buying process

The situation in America is slightly complicated by the variety of state laws, though the lack of a language barrier makes it seem easier, and the industry is well regulated and very transparent (all properties are listed on a nationwide database, Multiple Listings System or MLS, of which all agents have access).

Once the property is chosen, the agent working for the buyer prepares an offer to purchase a property. Once signed by the seller, this becomes a binding contract, and the buyer usually pays a deposit into an “escrow” account of 10 per cent for residents, as much as 20 to 30 per cent for non-residents.

The buyer will usually instruct a licensed home inspector to perform a detailed inspection of the property to identify any issues, or repairs which may be needed. An appraiser will visit the property to give a detailed report of the home’s market value. A title search is performed to ensure the property is free and clear of any charges and all building permits have been closed.

So long as the protections were written into the contract, should there be issues resulting from the searches and survey the buyer can still pull out. Otherwise, a real estate transaction can then be “closed” by an attorney or title insurance company.

Buying costs

Documentary stamps to record the deed with the local authorities cost 0.7 per cent of the purchase price and can be paid by the buyer or seller. The title insurance policy is a one-off payment of approximately 0.75 per cent of the purchase price. Attorney or title company costs to close the transaction are usually around $700, split equally between buyer and seller. The buyer may be required to pay home owner association fees and building insurance in advance and this may be paid at closing.

You'll also need to find the most cost-effective, safe and easy way to move your money to the USA to complete your purchase.  Bank charges and fluctuating exchange rates can both have an impact on your overall cost - but you can save up to 4% of the cost by working with a specialist currency firm.  They can help you achieve currency exchange rates better than the banks, and reduce the risk of your international payments increasing.

On a £100,000 exchange, a currency specialist can save you up to £4,000 by providing better rates compared to your high street bank.  Click here to read more, or here to download your free guide to saving money on your purchase.   

Buyer beware:

When buying a short sale, buyers should ask who is negotiating with the lender on behalf of the seller. Ideally it will be a specialist attorney. Sellers or realtors who negotiate these sales tend to be less successful and take more time to negotiate than an attorney who knows this specialist sector.

When buying a condominium, buyers need to thoroughly investigate the financial health of the condo association. Ideally the association will have reserves in place for major items such as roof replacement or road resurfacing. Ask how many home owners are in arrears with their monthly fees – a high percentage should ring alarm bells as it indicates an increase in the monthly fees may be inevitable to cover the shortfall.

Beware of past condo or homeowner (HOA) fees that may be demanded after you buy a house or condo. Buyers should always have an attorney review contracts and title search documents on their behalf, particularly if they are buying a foreclosed property.

 

Need more information?

If you would like more detail about some aspects of buying a property in Florida, then download our FREE guide, sponsored by My Florida Property Store, which covers the popular regions, with a run-down of the local property market including the types of property and things to watch. We give tips on legal, currency and tax as well as the steps involved in the buying process.

 


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