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The process of buying real estate in California is simple: 1) Select a property 2) Make an offer 3) Negotiate and sign a contract 4) Contract for an inspection and read and agree to all disclosures 5) Finally, pay for or finance the property. These five steps are essentially the same whether it is for new homes, lender owned homes, or commercial property. There will be many legal documents, mostly disclosures and inspection reports, for your review and concurrence. If you are financing the property with a loan there will be a significant number of mortgage papers to sign.

People from outside the United States can purchase property in California with little difficulty.  There is no difference between being a US citizen or not when purchasing property in California. However, non U.S. citizens need a valid US Visa and proof of residence for country of origin to get a loan and visit the U.S. legally. Banks will typically require 20% or more down and will charge about 1% more on the interest rate.

There are many types of Visas, from work Visas to student Visas. A permanent Visa can take years to obtain, however, a foreign nationals looking to invest $500,000 to $1,000,000 may be eligible for the fast track to obtaining a permanent US Visa. Contact us for more details:

1) Finding and Selecting a Property
Though self-explanatory for the best results select a reputable real estate agent and provide them with your personal parameters such as price range and square footage. Since, most people like to be independent (and eliminate wasteful viewing) ask your agent for access to properties meeting your parameters listed on the Realtor’s website and in the multiple listings. Agents will have access to all the contact information necessary to set up appointments for your viewing and inspection of selected properties.  As your agent we feel we are best qualified to meet your needs.

2) Make an offer
To make an offer certain legal forms must be completed and submitted to the seller. Though, one can do this themselves, or hire a lawyer, but in most cases the use and assistance of a real estate agent has been shown to produce the best and most timely results. In most cases the seller will counter the offer and negotiations could go back and forth between the buyer and seller several times before an agreement is reached.

3) Sign a contract
Like in most countries, real estate agents are certified to process real estate purchase contracts. Both the seller and the buyer are committed to the sale when the purchase contract and all counteroffers are signed. The contract will be subject to certain conditions, such as the buyer obtaining a mortgage (if money is borrowed), and the seller ensuring that the title to the property is “clean” and all inspection issues resolved. The buyer should be aware that the commitment to certain dates is binding. It is important to adhere to dates and conditions set out in the agreement, otherwise the seller might take the opportunity to pull out of the sale, particularly if a better offer has been received.

Typically there are fees incurred at the time of purchase. These fees will vary according to factors dictated by the purchase agreement and the method of payment the buyer selects. A good rule is the fees will range between 3% and 5% of the purchase price of the property. Most of the fees are associated with the origination of the loan (application fee, credit report, mortgage insurance, appraisal, etc.), so if you are offering all cash then your fees will be notably less. Other closing fees are physical inspection fee, title insurance, and escrow fee.

4) Inspections and Disclosures
Upon acceptance of the purchase offer the buyer typically has 10 to 17 days (the number of days depends on what is in the contract) to complete all inspections and review all disclosures. If the buyer accepts the property after reviewing the inspection report and disclosures, all that is left is paying for the property. If on the other hand, some damages or defects are discovered the buyer can request the seller to repair them or reduce the price. The buyer can also back out of the deal even if the seller is willing to do the required repairs or reduce the price.

5) Paying for the Property
When the buyer is using a loan, foreign or US, to assist in buying the property the lender/bank wires the money to escrow. If the buyer is using all cash then they would do the same; wire the money to escrow. Once escrow has all the money, the title insurance, and Grant Deed and everything checks then the purchase is completed by the final signing of forms at which time the buyer gets the Grant Deed and keys.

For foreign nationals purchasing with all cash the process is simple, but if financing is needed, there will be additional work. Also, banks will typically require 20% or more for the down payment and will charge about 1% more on the interest rate.  You should compare loan opportunities in your country versus the U.S.

Cost of Homeownership
As an owner of a house or condo you will have responsibilities and the main one is paying property tax. Property tax in California is approximately 1% to 1.25% of the purchase price and increases no more than 2% of the original amount per year. Property tax is paid twice a year, February 1st and November 1st.

If you purchase a condo or a house in a gated community there will be HOA fees (Home Owner Association). The amount of the HOA fees varies from a few hundred dollars to over a thousand dollars per month.

Another fee that is common in newly developed areas is the Mello Roos. The Mello Roos for all intent and purpose is a property tax. Basically the Mello Roos happens when a developer builds many homes in an area the city will require that a new school and/or fire station be built or other improvements made. Instead of adding this cost onto the homes the developer will sell bonds (typically 20 year bonds) and have the new homeowners pay the bonds off. To avoid the interest the homeowner can pay their share of the bonds off early.

What is Title Insurance?
Title insurance protects the buyer of real estate in the case where a situation arises in which the title to a property is clouded. This happens when a person or entity has an interest in the property that was not found or disclosed at the time of sale. (This is very common in countries like Mexico) For example, a lender may have a lien on a property that was not discovered for some reason. The title insurance protects the new owner from any expenses or loss that may occur as a result of this defect in the title.

When Viewing a Prospective Property
Try to be practical instead of emotional when looking at homes, particularly older homes. It helps to write down your needs and wants for a place and here are some ideas.

  1. Is there a view?
  2. Is there privacy?
  3. How many bedrooms and bathrooms?
  4. Is there gas versus electricity for the stove?
  5. How large is the garage?
  6. How large is the lot?
  7. Is there a separate laundry room?
  8. Is there a fireplace?
  9. Is there a pool and/or a Jacuzzi?
  10. Is there plenty of storage?
  11. Is the purchase an investment strategy?

Also keep in mind when looking at places you will probably never find the perfect place unless you build it yourself. If you will be seeing several places in a single day ask yourself at the second places “if you prefer the first place or the second place”. Then when you go to the third place ask yourself the same question but compare the place you picked out of the first two with the third place. Do this each time you look at a place, as it will help you in deciding the place you want.

Additional Services
Even though good Realtors have knowledge in all aspects of real estate we are far from being experts in all the aspects. To provide the level of professionalism we feel our clients deserve we have a network of pre-screened vendors to assist our clients with their specific needs.

  1. Loan Officers
  2. Building/home Inspectors
  3. Chimney Inspectors
  4. Pool Inspectors
  5. Appraisers
  6. Interior Decorators
  7. Construction Contractors
  8. Landscapers
  9. Real Estate Attorneys
  10. Immigration Attorneys
  11. Private money Lenders

For more information contact us anytime to set up a free, no obligation consultation so you can meet us and learn more on how we assist homebuyers.