Real Estate - The Purchasing Process
The M.L.S. (Multiple Listing Service) lists every home or building lot, for sale by ANY real estate agent in the area. Your search should start with a knowledgeable Realtor who can pre-search for, location, price range, pool, etc. No need to drive around the streets looking at FOR SALE boards, searching the newspapers and magazines, or contacting different real estate companies.
Members of the M.L.S. co-operate on sales. Remember; any Realtor will be pleased to show and sell any property that is listed and not just the homes with their company sale board outside. However if you are intending to rent out the property it is important to choose a Realtor who is knowledgeable about homeowner deed restrictions, property management & rental opportunities.
This very efficient viewing system makes a sensible option for clients with limited time in the area and we would suggest the following scenario.
- Select the most interesting possibilities and let your Realtor plan a route.
- If there are a number of homes or building lots to view then do a drive-by and short list the best prospects.
- Carry out an inspection on the homes you are really interested in. Most properties have an electronic lock-box fitted, which your Realtor can access. This gives availability for viewing without an appointment.
- Once you have selected a home or building plot your Realtor can prepare a written offer. (You should be aware that in Florida, offer to purchase contracts are legally binding and if your offer is accepted by the seller you are legally bound to proceed to purchase – this system ensures genuine intent and eliminates multiple offers).
- If your offer is accepted your Realtor will prepare the sales contract for signature and a deposit will be required. An Initial $2000 - $5000 is usually acceptable as “earnest money” with the balance up to 10% to follow at an agreed date.
- If a mortgage is required the contract is made contingent upon this being granted.
- It is unusual to have a chain sale in America and sellers tend to be ready to move out within a short period of time. The final closing or completion can take place as soon as the mortgage or other funds are in place.
- If you are not able to return to Florida for the closing then the title company (a solicitor is not required) will mail you out the closing papers for signature and your management company can take possession of the home on your behalf
Upon closing the sale of real property, there will be certain closing costs. The principal costs, which may be incurred, are:
Sellers Expenses:
- Attorney fees if applicable
(the State of Florida does not legally require the use of an Attorney in Real Estate transactions) - Owners title insurance policy
- Preparation of deed
- State documentary stamps on the deed ($.70 on each $1000)
- Realtor/Broker commission (approximately $300) + % to be agreed
- Pro-ration of outstanding property taxes
- Pro-ration of maintenance/Homeowners Association fees if applicable
- Current mortgage pay-off balance
- Structural/systems/home damage repairs prior to sale
Buyers Expenses:
- Attorney fees if applicable
(the State of Florida does not legally require the use of an Attorney in Real Estate transactions) - Recording of the deed in City/County records
- Broker commission (approximately $300)
- Property survey
- Homeowner property + contents Insurance policy
- Property flood Insurance policy
- Pro-ration of outstanding property taxes
- Pro-ration of maintenance/Homeowners Association fees if applicable
Additional Buyers Expenses if a Mortgage is obtained:
- Mortgage title Insurance Policy (an “assumption” fee only may be payable on a recent and existing mortgage).
- Service/Origination fee (paid to the Title Company and based on the loan amount)
- Credit report
- Property appraisal fee
- Intangible tax (.002 on new mortgages)
- Government documentary stamps on the mortgage note (.35 on each $100 or fraction thereof)
- Mortgage recording fee (based on number of pages)
- Escrow account credit balance – typically 6 months advance payments of property taxes and Insurances.
- New mortgage monthly payment (based on loan amount)
Fees shown are provided as an estimate of closing (completion) costs
All fees may not be applicable to a specific sale.
An estimate of fees will be provided prior to closing (completion)
EXACT fees will be provided on a “HUD-1 Settlement Statement” at closing.
Explanation of terminology………
OWNER'S TITLE INSURANCE POLICY
Insures free and clear title to the buyer and is typically paid by the seller. Calculated on the sale price.
MORTGAGE TITLE INSURANCE POLICY
Insures the lender from title defects and is typically paid by the buyer. Calculated on the mortgage amount.
STATE DOCUMENTARY STAMPS
State tax on the transfer and/or refinance of all property in Florida is calculated at .70 on each $100 and is paid by the seller
DOCUMENTARY STAMPS ON THE MORTGAGE NOTE
State tax on all NEW mortgages is calculated at .35 on each $100 and is paid by the borrower.
HOME OWNER'S INSURANCE
Required by the lender, covering the cost of re-build (excluding land) additional structures and contents – this must be in place prior to closing (completion) on all homes purchased with a mortgage and is paid by the borrower.
FLOOD INSURANCE
Required by the lender for property that is located in a low-lying area, which has close proximity to water. Cost is calculated by the elevation (height above sea level) of the property and is paid by the borrower.
ESCROW ACCOUNT (after purchase)
An escrow (savings) account for the purchaser will be established by the lender – property taxes and Insurance payments are calculated for the year – divided into 12 equal monthly amounts and collected by the lender along with monthly mortgage repayments.
ESCROW ACCOUNT (prior to purchase)
All deposit checks for the purchase of a property are deposited immediately upon receipt into an Escrow Bank Account – usually provided by the Title Company. The account is strictly controlled by government regulations. In the event a refund becomes necessary, the funds will be returned when the original check clears the bank.
