HOME & CONDO BUYER GUIDE IN SOUTH FLORIDA

             An overview of what to expect during the buying process

 

Buyer brokerage fees are typically paid by the seller as agreed in the listing agreement. My services are free to you. I don’t get paid until I get you to the closing table!

 

CONDO-Every condominium has rules regarding pets and rental restrictions which you should be aware of before entering into a contract if these are a consideration. Also, we will want to be aware of any current or proposed assessments which would be added to the current monthly/quarterly HOA fee for a period of time to fix or repair common elements of the condominium.

 

HOME [fee simple ownership which includes single family and town homes]-Some home owners associations (HOAs) are more restrictive than others, especially regarding types of vehicles permitted and fencing. A review of the Rules and Regulations will be important if the community is governed by an HOA.

 

After you find the perfect home for your needs, we discuss the terms of the offer to the seller.

 

PART 1 – THE CONTRACT

The terms will include the following, and are the conditions that the buyer proposes to the seller.

 

Sales price being offered to the seller ***

 

Escrow deposit amount Typically a minimum of 1% of the sales price offer indicating you are serious about buying the home. The higher the deposit, the more serious the seller feels that the buyer is about the offer. This amount is held in an escrow account by an escrow agent [attorney or title company] until closing and then applied to the buyer’s side as a credit towards the closing costs/sales price. These funds are to be presented at contract signing.

 

Name of escrow agent In Palm Beach county the escrow agent is chosen by the seller, and in Broward county the escrow agent is chosen by the buyer.

 

Financing terms (cash, conventional, FHA, VA). If a loan is to be secured, the buyer must get pre-qualified through a mortgage lender and obtain a pre-qualification letter to be submitted with the contract to the seller. The buyer can shop lenders for best rates and terms, but a

lender decision should be made by contract signing. It is important to realize that a pre-qualification needs to factor in the HOA fees, property tax, and home owner’s insurance, not just a principal and interest payment. Property taxes are subject to reassessment after change of ownership. Florida law provides a cap on annual assessments of local Homestead properties [primary residence] to 3% or the annual increase in the Consumer Price Index, whichever is less. Local Property Accessors Office can provide more information.

 

It is important to have your lender secured by ‘contract signing’. Loan application must be completed within 5 days or the contract is considered cash.  Buyers must comply with their lender requests for information and documentation in a very timely manner. In Florida, the financing period includes the home appraisal. During a sellers’ market, home values are typically not an issue for appraisals coming in at sales price. However, in a buyers’ market, appraisals can be an issue and often require the contract to be renegotiated or terminated if the seller will not reduce the sales price to the appraised value.

 

If the home purchase is CASH, the buyer must obtain a letter of Proof of Funds from their banking or other financial institution to be submitted with the contract to the seller as evidence of their ability to close. The letter or document must include the banking institution letterhead, name on account, amount of funds to cover the purchase including closing costs, and dated within 30 days of closing.

 

Property inspection/right to cancel days- in a sellers’ market the days are usually 5-7 but in a buyers’ market they can be 10-15. The inspection must be completed, inspection report received, reviewed, and either accepted or concerns addressed and negotiated with the seller within this period of time. For a 5-7 day window, this means the inspection must be competed on day 1 or 2 after the contract is signed. *In a sellers’ market, sellers are generally not inclined to offer any concession for repairs. The sale is typically ‘as-is’.

 

Closing date  typically 30 days for cash and 40 for financing, though a quicker closing is possible with cash. The closing date can change if both parties agree in writing.

 

Addenda to the contract.

Condominium Rider- Condominium Declaration, Articles of Incorporation of the Association, Bylaws and Rules of the Association, most recent year-end financial information, Frequently Asked Questions and Answers, copy of the minutes for the last 4 meetings, copy of H06 insurance policy, and a copy of most recent budget.

Comprehensive Rider Homeowners Association/Community Disclosure. This document outlines the amount due and when, whether an approval is required by the HOA and the deadline prior to closing, payment of fees, assessments, and association charges, management company and contact information.

 

We will request a Seller’s Property Disclosure (if available) which is where the seller would indicate any repairs/replacements/improvements/damage during the sellers’ ownership. Otherwise, we rely on the inspection report.

 

Once the contract terms have been agreed upon by both parties, we are UNDER CONTRACT, and numerous time-lines as outlined in the contract begin counting down. This is more significant for a financing purchase, however, the inspection period is a big hurdle for all parties.

 

PART 2 – NEXT STEPS FOR THE BUYER

 

Schedule the Inspection I will provide names of a few inspection companies for you to contact (if needed), to complete a home inspection. This is an out-of-pocket expense that is anywhere from $350 up depending on size of property. This needs to be scheduled for day 1 or 2 after the contract is fully executed. Some inspectors provide a very intensive inspection service, but you may call a specialty inspector for pool, roof, mold, lead based paint, foundation, etc. as needed. We will request the ‘40 year’ building inspection from the condo association for mid and high rise condos.

 

Application for Approval - Every condo, and many HOAs have an Application for Approval process. The documents will need to be completed by the buyer for board approval within a specific period of time before closing, per the contract.

 

Docs Review of all of the requested documents in the Addenda. 3 day deadline to review upon receipt of documents.

 

Loans – reach out to the lender upon being UNDER CONTRACT. I will forward a fully executed contract to your lender. They will disclose all lender closing costs to you. At this time, carefully following their instructions and requests is imperative to stay in the financing time-line for closing.

 

Contact the Title Company to discuss owner’s title insurance. It is not required in the state of Florida, but the owner's policy helps protect the new property owner from a previous owner's debts, such as being required to pay a lien placed against the property due to the actions or inactions of a prior owner. If financing, lenders require a lender’s policy to protect their interest in the home and that will be part of the lender package.

Wire transfers for down payment or cash sale. All wiring instructions are to come from the escrow agent only. This is very serious due to the rise in fraud around wiring instructions. Every precaution should be taken to ensure security. This can’t be emphasized enough.

They will only give wiring instructions to you, the buyer. Wire fraud is a serious issue and all communication regarding wiring funds is handled securely with the escrow agent only. (see Wire Fraud Prevention).

 

Typical title closing costs [not lender related] – (See attached). All legal matters must be discussed with a licensed attorney only.

 

Contact an insurance company to secure a condominium insurance policy – H06 or a homeowners insurance policy. [I can refer options] If financing, a lender will assist with this service.

 

Buyer walk through this takes place 24-48 hours prior to closing. I will arrange a walk-through of the home to make sure that it is in the same condition it was when you signed the contract to purchase. (see attached)

 

Closing  As a result of pandemic conditions, closings are taking place more and more either by mail away signings with a notary, or with a closing agent meeting the buyer or seller remotely. We can discuss what works best for your situation.

 

Brokerage Relationship   Broker will act as a transaction broker. Broker will deal honestly and fairly; will account for all funds; will use skill, care, and diligence in the transaction; will disclose all known facts that materially affect the value of the residential property which are not readily observable to buyer; will represent all offers and counteroffers in a timely manner unless directed otherwise in writing; and will have limited confidentiality with buyer unless waived in writing.

 

 

***Due to current market conditions providing very limited inventory of homes to purchase, sellers are typically getting their homes under contract quickly, at list price, and with few if any seller concessions. It is a sellers’ market, but values are expected to continue to increase for the next hand full of years, which will allow home buyers to realize an increase in equity on their new home purchase. Interest rates are still very low, so it is an ideal time for buyers to purchase as well. For more information on Florida real estate in 2022 Click Here

 

I’m here to walk you through each step until we get to closing. I am always available by phone for any questions or concerns. View videos, blogs, resources, and homes searches on my website below.

 

Cheryl Hazel

754-207-4504 | cheryl@cherylhazel.com                          Updated 2022

 

(all referenced 'see attached' documents available with client representation)