Step 1 – Decide where you want to buy the house in the USA
There are no restrictions in the United States on purchasing a property as a foreign national. This applies to resident foreign nationals who might want to buy property for primary residence based on where they currently live in the USA or Non-resident foreign investors looking to purchase property for vacation or investment use.
While determining where to buy a house, resident foreign nationals should consider;
- community type
- schools (if you have kids)
- amenities nearby
- and many more
Step 2 – Find an REA experienced in foreign real estate transactions
Finding a realtor with experience in handling international transactions is imperative because buyers can make many hurdles and potential mistakes if chosen wrongly.
Ideally, the right real estate agent should have an expert qualification such as a CIPS (Certified International Property Specialist) designation.
A CIPS designee has undergone specialized training to complete international transactions seamlessly with reduced risk. They have the expertise to work with international clients – both foreign-born individuals residing in the U.S. and non-resident buyers of U.S. real estate. Additionally, these specialized real-estate agents are usually fluent in multiple languages. They can help you find your way around any local state-specific rules and regulations while being knowledgeable about your cultural or language-specific needs.
The CIPS designation is the only international designation recognized by the National Association of REALTORS® in the USA.
Step 3 – Understand your real estate tax situation
The United States is often considered the land of opportunity. The government wants to ensure that this sentiment remains true by providing no additional taxes for non-resident investors in U.S. real estate, unlike other countries that might subject you to additional surcharges for buying property as a non-resident foreign buyer.
Resident foreign national buyers who intend to use the house as a primary residence don't have any additional tax liability other than the property tax.
Suppose you are a non-resident buyer interested in purchasing an investment property in the USA to produce income. In that case, you will owe taxes on net income earned from the property but not on any appreciation in value.
Step 4 – Start your home search process with the REA
The first step will be letting your real estate agent know what type of property you are looking for. If you have already found a home and want to buy it, your agent will help with this purchase's closing details.
If not, your real estate agent will show you various options online and arrange to visit those homes during open houses if you are a resident foreign national buyer.
Suppose you are an overseas buyer looking to buy property in the U.S. In that case, your real estate agent will show you options by showing pictures and videos of housing that meets your criteria online and can arrange virtual tours if you are not ready to come down to the U.S. yet.
Step 5 – Make an offer on the property you like and finalize your USA.
Once you have selected a property you would like to purchase, your realtor can give you information on similar properties recently sold in the area. Your real estate agent will advise what price offers you should make to the seller with this information. Since most property list prices are negotiable, you should rely on your specialized agent's expertise in negotiating.
Once you make the offer, the seller has three options. They can accept your offer, reject it or counteroffer with a different price. If they choose to accept your offer, congratulations, you're now one step closer to becoming an American homeowner!
Step 6 – Conduct a Home Inspection
This is the most critical and final step before buying your new property. You can buy a house without doing an inspection, but it's highly recommended that you hire a home inspector to make sure all of your bases are covered. The inspector will check for any defects in construction or damages and make sure the house is structurally sound and all systems are working.
Your expert, real estate agent can provide you with a list of home inspectors or arrange one on your behalf and navigate you through the process.
Step 7 – Sign a purchase contract with the seller.
After the home inspection, you will enter into a contract of sale with the seller. The arrangement of sale is the document that binds you to the transaction. The contract of sale will include the price and any other terms that your realtor negotiated for you. At the time of contract, you will need to provide your Earnest Money deposit between 5-10% of the sales price. This money sits in an escrow (trust) account until you close on the property.
The contract of sale will also include a clause that says you can back out of the buy if your immigration status changes or an issue with financing surfaces.
Step 8 – Complete a Title Report
Once you are in the contract, the next step will be to complete a title report. Your real estate agent will guide you with this. In the United States, a Title Report will show previous owners of the property and any current liens against the property. The Title Report is critical because it protects the purchaser. Any liens against the property would need to be satisfied by the seller before the purchaser takes ownership. You will take ownership without any liens.
Step 9 - Obtain Home financing through a U.S. Mortgage for foreign nationals.
Contrary to what you might think, you can obtain U.S. mortgage financing without a U.S. credit history as a foreign national. Some U.S. lenders offer mortgages for new immigrants and non-resident buyers with no U.S. credit history at a competitive rate. These lenders also specialize in foreign, federal mortgages for non-immigrant visa holders such as H1-B, L-1, etc.
With home financing options available to foreign nationals at competitive rates, new immigrants don't have to wait for 2-3 years to build credit in the U.S. before buying a house. Similarly, Non-resident buyers don't have to pay all cash to purchase a home and put that cash for better use and higher returning assets.
You can access our definitive guide on How to Obtain a U.S. Mortgage for Foreign Nationals with No or the thin U.S. Credit History for details on the U.S. mortgage process.
You have nothing more to do until the Title Report is completed if you are paying cash.
Step 10 – Take ownership of your new house in the USA.
There will be many documents to sign on the day you will be taking ownership. First, the seller will sign a deed to transfer ownership to you. The Deed is a crucial document because it proves ownership. The seller places your name on the Deed, and the seller's signature proves that they have transferred the property to you. Next, a Title Closer will notarize the document and record it in the local government office. This is for your protection.
On the day you take ownership or the day of the closing, the seller will hand you the keys so that you may move in at any time.