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.
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.
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.
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.