Les Echos – Edition(#1) July 19, 2019
There are many steps before becoming a homeowner in the United States. But in the Dollar’s land, business goes fast. The deadlines are 45 days on average when a cash sale can even close in a week. And across the Atlantic, a character is essential: the Real Estate Agent.
At Uncle Sam’s, business is going strong. If it is possible to close a sale in less than a week, do not skip the steps and take the risk to jeopardize your investment.
No matter where you buy, there is a key character to get started in the purchase of a property in the United States: the “Realtor”, the real estate agent. At its service there is the Multi Listing Service (MLS) database, which is a centralized file of all properties for sale reserved exclusively for Realtors.
As a result: more than 95% of the sales are made through them. The sale between individuals via sites like “Particuliers a Particulier PAP” or “Le Bon Coin” does not exist. “All real estate agents use the MLS, so there is no need to register with several agencies to find a property” says a French real estate agent at Sotheby’s Realty based in Miami. The service is always free for buyers with all the real estate commission costs paid by the seller.
Set up your budget
But the first step before presenting your project to a real estate agent is to balance your budget. In order to avoid dealing with “real estate tourists”, Realtors generally ask for a “Bank pre-approval”: a document provided by the bank confirming that it can lend you this money.
But American banks are cautious about lending to foreigners. To limit the risks, they require a contribution between 35% and 50% of the amount of the property in addition to the mortgage, and for much higher interest rates than in France. Around 4.5%, they are high compared to the French rates but remain cheap for the American people.
“It is better to borrow from a French bank, with the propitious exchange rate: borrowing 100,000 €uros is equivalent of having $113,000, so take advantage of it!” advises this agent. But not all French banks are enthusiastic about the idea of financing a project abroad and a significant contribution will always be required.
Get inspected the property
Once an offer is made, we sign with the owner a “contract”, which is the equivalent of “a promise to sell in France” where we agree on the price. You must then pay a “Earnest Money Deposit”, a security deposit with an “escrow agent”, a trusted third party. “Between 5% and 20% of property purchase price depending on the real estate agent negotiation” says this same agent. A first payment is required within 3 days before settling the rest of the deposit.
In the meantime, the buyer must hire an home inspector to check the condition of the property and all of the facilities. “This is a crucial step which can lead to a renegotiation of the price or even the cancellation of the sale” adds François Gagnon, president of the ERA real estate group for France and Europe.
A purchase in 45 days
Past this step, there is no more stepbacks. Administrative formalities then begin going through to the Title Company. This is the American equivalent of the “notaire in France” who checks the validity of the Deed title that will be transferred. Once paperworks is signed, it is time for the “closing”. The moment when you officially become the owner after having paid the rest of the funds.
In the land of the dollar, business goes fast. While the sale’s procedure in France lengths over 3 months on average, they do not exceed 45 days in the U.S. “And if you pay cash, the deal can be completed in a week,” says François Gagnon.
Source : lesechos.fr