How To: Buy real estate in the US

By popular request of our customers, our How To section will today be dealing with the acquisition of real estate in the US:
From some basic information to specific advice on what you have to keep in mind.

Basics One big difference between buying real estate in the US and buying real estate in Germany are the different legal systems in the two countries. For real estate law this means, for example, that any warranty claims, which are regulated by law in Germany, have to be specifically stated in the contract in the US (otherwise, it will be very difficult to claim anything). The basic principle in the US is "caveat emptor" in the sense of "customer, be cautious."
For the customer, this means:

According to US law, all regulations will be agreed upon by both parties to the contract (including the entire risk), which means that such contracts are a lot more detailed and extensive than similar ones in Germany. With regard to legal terminology in English, it is advisable to always hire a specialist lawyer to take care of all the legal details.

The process of buying real estate Frequently, the business transactions are being handled by a real estate agent. They have to be certified for the respective state.
A real estate agent can also work for the buyer, in any case, the client has to be disclosed in a written statement. This is important for the broker's fee that the client, so usually the seller, has to pay upon closing or settlement of the sale. There are no rules for the level of fees, it usually depends on location, type of real estate and the purchase price etc (it is almost always worth to try and negotiate the price!)

As soon as all the details of the sale have been negotiated, the parties will close a "contract for sale and purchase." This will have to be in written form and, in some states, notarized or confirmed by two witnesses. This contracts will mostly be standard forms drawn up by bar associations or real estate associations.
For your own protection, carefully check all details of this contract; if you discover any faults later on, these might be revised, but you will usually not be released completely from the contract again.

Frequent misunderstandings Please check carefully what exactly happens with any "furnishings," similar to Germany, only things permanently attached to the property are considered part of the real estate, everything else will not be sold with the real estate.
Please carefully check the condition of the real estate, standard contracts often include the formulation "as is," so, if necessary, hire a specialist to have a closer look at the piece of real estate. The same applies to technical equipment such as heaters, pipes etc, that will often be described as being in "normal working order" in the contract, which does not mean they have to be new. Please also ask about any additional utilities and other fees.

Financing Usually, real estate contracts are closed on the condition of a loan commitment. So you should try to get one as soon as possible, usually within five days of signing the contract at the latest.

With the signing of the contract you will usually have to pay the so-called "earnest money deposit," this is usually between 1 and 3% of the purchase price and will only be refunded if the purchase fails by fault of the seller.

Closing-date One basic difference between the German and American real estate law is the subdivision into the part based on the law of obligation and the transfer of ownership on the closing date, usually two months after that.
The German real estate law only knows one date, the transfer based on the law of obligation, which is the day on which the contract is being notarized.
In US law, the period between the signing of the contract and the closing date is called the due diligence and the curing period. In the sense of "customer, be cautious," the buyer may again check the piece of real estate for any kinds of defects and complain.
The due diligence phase is usually 45 days, the curing period 30. For residential buildings, these periods may be shorter.
Only after this period, when the buyer has accepted the piece of real estate as is or with a list of defects, his deposit becomes non-refundable and he has to pay the entire purchase price.

During the phase between signing the contract and the closing date, you should also take care of the details of financing. Possibilities are local banks, national credit institutions or mortgage brokers.

Closing With the so-called "closing" the real estate property will be procured by payment of the purchase price and handing over of the deed. At the closing, all parties will have to sign the appropriate documents, which means all of them will have to be present. The following documents will be signed: loan confirmation, mortgage, acknowledgement of reports, warranty deed.

It may be advisable to have a lawyer handle the closing, he should also be able to give you further advice on form of property, will etc.