Real estate buyers from outside the U.S. may find the following quick overview a useful introduction to ownership issues and laws when purchasing a home in the United States of America.
MLS
Potentially one of the biggest difference between buying a property in your home country and buying a house here in the U.S. is MLS. MLS stands for Multiple Listing Service. Every home for sale listed by a real estate agent, unless it is specifically exempted from MLS, will be listed in the MLS database. (For example, the various property information modules that you find on my website are feeds from the MLS database.)
MLS is a sharing of comprehensive home information among real estate professionals. Listings brokers enter the data about a home for sale and offer to share the commission with a broker who brings a buyer. It's an online software that contains all the specifics about a home, from the address, age, square footage, number of bedrooms, baths, upgrades and schools districts to types of financing the seller will consider, and more. There is generally at least one to a dozen photographs of the home, plus a link to a virtual tour, if one exists.
All this is to say that it isn't necessary to contact every listing sales agent representing a property you'd like to see in order to preview properties for sale. All real estate sales agents work collaboratively so that a single agent can show you any property listed for sale, regardless of whether or not he, or she, is the listing agent. One call does it call. Contact us and we can arrange to show you any property you find listed in MLS that you'd like to see!
Licensing and Professional Affiliations
In many countries, anyone can act as a real estate broker because there is no license required to do so. In the U.S., individuals must be licensed by a state before they can act as a real estate broker or sales associate and complaints about a licensee can be brought before the state regulatory body. Real estate agents cannot act alone, but must conduct their real estate client representation through a real estate broker. Acting for another in a real estate transaction without a proper license is a crime.
Property Taxes
Property tax payments are required as an additional cost of real property ownership. These payments can be added to a loan or paid directly to the taxing agency. Failure to pay property taxes can lead to financial penalties and even loss of the property.
Agency
The practice of selling real estate varies from country to country. In most U.S. states, a real estate agent has the authority to receive and present offers but not the authority to sign for the principal without a power of attorney. In other words, the agent can negotiate on behalf of, but not bind contractually, the principal.
Contracts and Conducting Negotiations
The Statute of Frauds requires that a contract to sell real estate must be in writing and signed by the party to be charged if it is to be enforceable. Verbal agreements to sell are not binding nor are agreements that are signed by the principal’s real estate agent instead of the principal (unless the agent has a written power of attorney from the principal).
Escrow and The Closing Process
In the U.S., the escrow process is formalized with different parties serving different roles. The escrow holder serves as a neutral depository for documents and money with equal duties to buyers and sellers plus responsibilities to existing and future lenders. The escrow holder performs these services for a fee. If the transaction does not go forward and the escrow holder holds the buyer’s deposit money, generally the funds will not be released without mutual signed instructions from both buyer and seller.
Compensation
In the U.S., sellers typically pay a real estate licensee to market their property. This agreement to pay is usually required in writing. A buyer’s agent typically receives payment from the seller or from the listing agent. Increasingly, it is common for buyer’s agents to have buyers sign agreements as well. These agreements can provide for the buyer to pay the broker, and may or may not credit the buyer for all or part of the compensation the buyer’s agent receives from the seller or seller’s agent.
Co-ops
A Co-op Apartment, is a form of ownership not that common in Boston and Cambridge real estate. Only about 10% of all apartments available for purchase are in co-operative buildings. Co-ops are owned by an apartment corporation. When you purchase within a co-op building, you're purchasing shares of the corporation that entitle you, as a shareholder, to a "proprietary lease." The bigger your apartment, the more shares of the corporation you own. Like condominium ownership where association fees are paid on a regular basis, co-ops have similar fees that are referred to as maintenance charges.
Condominiums
Unlike Co-ops, with condominium ownership you are buying real property. You hold title to your apartment unit plus a percentage of the entire project in common with all other owners. There is still a monthly common charge similar to the maintenance charge in a co-operative. These charges don't include your real estate taxes and are not tax deductible. They also tend to be lower than in co-ops because there is no underlying mortgage for a condominium building.
Only real estate professionals who are members of NATIONAL ASSOCIATION OF REALTORS® may call themselves REALTORS®. All REALTORS® must subscribe to NAR’s strict code of ethics, which is based on honesty, professionalism and the protection of the public.