How is the property purchase process in the US?

There are minor restrictions on foreign ownership of real estate in America but they are insignificant for buy-to-let investment purposes. At the federal level there are only a few restrictions on non-resident aliens (NRAs) owning or investing in real property (the Agricultural Foreign Investment Disclosure Act of 1978 (FIDA); The International Investment Survey Act of 1976 (IISA); The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA)). For practical purposes these restrictions are unimportant. In Oklahoma, foreigners are not allowed to buy land but they can buy condominiums.

Specific procedures vary from state to state, as well as between counties and cities. The procedure below is followed in New York City, i will add soon the florida and california steps:

1. Make an offer orally through your agent, who will convey it either to the seller´s agent or to the seller directly. The seller may counter your offer, beginning a negotiation process that, hopefully, will lead to an agreement on price, terms, and closing date.
2. The seller´s attorney begins preparation of the contract of sale. He or she obtains and reviews the following documents: the deed, survey, title insurance policy, promissory notes or mortgages on the property, certificates of occupancy, tax bills, fuel and utility bills, leases, permits for elevator, pools, etc.
3. Meanwhile your attorney (a real estate attorney is required in all property transactions in New York City) examines the financial condition of the condominium where you want to buy.
4. The buyer´s attorney reviews and negotiates the contract deed, title search and title insurance policy, as well as the documents referred to in the title policy, such as survey, certificate of occupancy, real property tax bill, heating, cooling and electric bills.
5. After your attorney concludes that the condominium´s financial condition is satisfactory, that the by-laws of the building are acceptable to you, and that the contract of sale is also acceptable, he will allow you to sign the contract. You will then usually be required to present a deposit of 10% of the purchase price. The contract plus the deposit will then be forwarded to the seller for signature. This money will be held in the seller´s attorney´s escrow account until closing. It is important to note that until all parties have signed the contract, and it has been delivered, the seller can still entertain and accept other offers.
6. You will then receive from your real estate agent the board requirements and application materials. For condominiums, the sale is conditional upon the Board of Managers´ Waiver of the Right of First Refusal approving the purchaser, unless you are purchasing directly from the developer. Your purchase contract will stipulate that you must promptly submit your application for board approval after the issuance of a financing commitment, if any. You must cooperate with the condominium board requests, and provide any documentation it requires to issue the waiver. The required materials typically include: an application, a financial statement signed by a Certified Public Accountant, all requisite support for your financial statement, three years of tax returns, bank statements, letters of personal and financial reference, letters of professional reference, the contract of sale, bank documents (if necessary) indicating that your loan is in place, etc.
7. Your application will be reviewed, and if all required materials are included and in order, an approval is typically granted. After which you can proceed with the closing ceremonies.
8. Closing practices are dictated by custom, and vary from region to region. Generally, all necessary parties are present, their identity is verified, the documents are finalized, financial calculations and adjustments are reviewed and documents, money and information are exchanged. The closing usually takes place at the office of the seller´s attorney, but occasionally at the office of the lenders´ counsel. Various costs are payable at closing, which vary according to jurisdiction. The purchaser typically pays fees to record the deed and the mortgage, utility bills, escrow fees, bank attorney´s fee, taxes, special assessments, financing charges, inspection fees, origination fees, adjustments and other fees that may be imposed by the state and local government.
9. In order to protect a purchaser or lender from third party rights over the real estate, it is advisable to instruct your lawyer to record the relevant documents by filing in a public recording office, usually a country office.

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Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property – lawyers´ fees, notaries´ fees, registration fees, taxes, agents´ fees, etc.

Title Search and Insurance:
Title insurance fees vary depending on the location of the property. It is common practice to obtain title insurance from one of the competing title insurance companies. The title insurance can only be acquired at closing, after the transaction has been completed between buyer and seller and the price has been paid.

A title report, although not mandatory, is an essential prerequisite to secure title insurance. Title companies do not provide title insurance without a title report tracing the deed history and clearly articulating the liens, covenants and other limitations on title.

The total cost of title insurance and search differs widely based on the size and value of the property, the location and the coverage and complexity of the search and insurance. It os beneficial to shop around to look for the best value, as a general guide it should be around 0.5% of the property value.

Recording Fees:
Recording fees are charged by the government for entering an official record of the change of ownership of the property. It can be paid by either party but is usually paid by the buyer. Recording fees are usually fixed amounts and are minimal.

Legal Fee:
Attorney´s fees may vary depending on location and the complexity of the transaction.Most lawyers charge a percentage of the selling price, about 0.5% to 1%, while some lawyers charge a fixed fee or on an hourly basis. Each party pays for their own lawyer.

Real Property Transfer Tax (RPTT)
Transfer tax varies depending on the location of the property. Five states do not impose transfer taxes (Mississippi, Missouri, New Mexico, North Dakota and Wyoming). The National Association of Realtors has a list of the amount of real estate transfer tax imposed by different states.

In New York City, the real property transfer tax is levied on sales or transfers of property and the tax rate varies, depending on the property value and property classification.

NCY REAL PROPERTY TRANSFER TAX – RESIDENTIAL PROPERTY
TAXABLE INCOME, US$	TAX RATE
Up to US$500,000	1%
Over US$500,000	1.425%

NCY REAL PROPERTY TRANSFER TAX – RESIDENTIAL PROPERTY
TAXABLE INCOME, US$	TAX RATE
Up to US$500,000	1%
Over US$500,000	1.425%

Real Estate Agent´s Fee:
Real estate agent or broker´s fee is typically negotiable. Although the standard rate is 6% some agents are willing to reduce their rate just to close a deal. Some agents impose a higher fee but include other functions such as title search. It is usually paid by the seller.