Buying property in the USA – the pitfalls and just how easy they are to avoid

The 7.30 report on the ABC recently ran a segment on the pitfalls of purchasing property in the USA. You can view the segment here

What is interesting is that they pointed out all of the pitfalls, but didn’t really tell you how to avoid them. There are of course a couple of very simple ways to avoid paying too much for a property in the USA or even purchasing in a bad suburb or city.

If you go to www.zillow.com you are able to search on the vast majority of properties in the USA, and in most cases get a price estimate and hopefully a price comparison with the market. This immediately gives you some rough idea of market value, and from what Zillow’s own research says, a figure that is pretty accurate. If you go here you can see how the Zestimate is calculated and how accurate it is for each city.

As a rough guide however Zillow say the following on estimate accuracy:

  • within 20% of the actual sales price 74.5 percent of the time
  • within 10% of the actual sales price 52.1 percent of the time
  • within 5% of the actual sales price 30.0 percent of the time
  • for an overall median error rate of 9.4 percent

Here is an example of what Zillow can give you on a specific property for sale – http://www.abc.net.au/7.30/content/2012/s3488301.htm

As you can see you get a very good overview on the property, its expected financial returns and comparative listings. A great start to ensuring you are paying at or close to market value.

Of course there is nothing like a local visit, so I would strongly recommend flying to the relevant City and doing a personal inspection and some general market research.

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