The Buying Process
A Step by Step Overview of the Entire Home Buying Process
It's a lot more involved than you might think
 

Click on the menu choices below to go step by step through the process involved in purchasing your new home. Below is a description of the subject matter covered under each menu choice.

Agent/Agency - Choosing the right agent & info about agency & types of  representation. The Search - Insights and the steps involved in searching and finding your dream home. The Offer - What's involved in putting together an offer/purchase contract. Home Inspection - Information on Home Inspections and required repairs, etc. Appraisal - Info on the home appraisal (valuation of your new home for mortgage purposes). Taxes & Insurance - Info you need to know about property taxes and homeowners insurance. Title Insurance - Title Insurance: What it is & why you need it and more. Final Walk Thru - The final walk-thru inspection, repairs and  things to consider. Closing - The closing process, closing costs and things to do after the closing.

Agents/Agency Topics Covered Below Related Topics and Important Information Selecting an Agent Agency Disclosure Forms Understanding Real Estate Agency The Buyers (Selling) Agent The Listing (Sellers) Agent The Transaction Broker (Buyer and Seller) Understanding How Agents Get Paid - Cost of Homeownership Agency: - Single Agent - Transaction Broker - No Brokerage Relationship   Buying a home can be a difficult process. The level of anxiety and stress associated with buying or selling a home can be enormous. Let us help you find your dream home and save you $$$ in the process. You can search the MLS right from this site, but if you'd like contact us and we'll set you up on Our E-mail MLS Listing Service and we will e-mail you listings that meet your criteria as they become available. You'll be the first to know of new listings which is important in today's market. Selecting A Real Estate Agent Making the wrong choice can cost you thousands. First be sure you hire your own buyer agent to represent your interests. You will not get a better deal calling the listing or advertising agent, in fact you may end up paying more. Many buyers choose a real estate agent by accident, choosing the first agent they meet. Usually their main concern is finding a home. Many is the time I've tried to explain how the real estate business works and the advantages we offer through our rebate programs. I'm sure you can guess, but the answer I get from most is "I just want to find a home" which I find shocking. This is one of the largest transactions in your life, taking a bit of time to learn more about the details could save you thousands. The fact is all agents have access to ALL home listings through the MLS (Multiple Listing Service). Finding the right home is the least of your worries. Our e-mail listing service will insure you get all the listings in a timely manner. What you really need to worry about is who'll give me the straight facts as well as honest advice and counsel about the home I choose. And, once you've found the right home who will provide the best representation. In other words who has the experience and expertise to determine the right purchase price, negotiate the best possible price, terms and conditions and help you to coordinate and complete the transaction from inspections to mortgages, avoiding any problems or pitfalls along the way. Not only can Florida Rebate Realty help you find the right home and provide professional representation services WE CAN SAVE YOU MONEY THROUGH OUR REBATE PROGRAM. Your comfort level is important since you will probably spend a significant amount of time with your agent. You'll want an agent that understands your needs and desires and promptly returns phone calls or e-mails day or night. Buying a home is one of the most significant transactions of your life so don't leave it to chance. More often than not, the keyword in the real estate industry is "sell" rather than "represent". Far too many brokers and agents appear to have an undeclared mission statement that reflects "salesmanship" rather than "representation" of their clients. First and foremost, ethically and legally, a real estate agent should be continuously aware of his or her responsibility to the client. Top of Page Top of Section Agency Disclosure Forms These disclosure forms should be discussed and signed at the first substantive meeting with your agent. The forms specify the different types of agency and what your agent's duties to you are. There is the Single Agent Disclosure and the Transaction Broker Notice. Have your agent discuss these forms with you so you're clear what type of agency and representation is best for your situation. You may also choose a third option No Brokerage Relationship Top of Page Top of Section Understanding Real Estate Agency On the surface all real estate agents seem alike. Most buyers don't understand the difference between a listing/seller's agent and a buyer's agent. Further, they have no idea in what capacity these agents are acting; a single agent,  a transaction broker or who represents whom in a transaction. A Single Agent represents either the buyer or seller but not both parties. A Transaction Broker represents both parties but in a limited fashion. Top of Page Top of Section The Buyer's (Selling) Agent The buyer's agent represents the buyer exclusively. He or she has a responsibility to represent the buyer and look out for their interests. Most people hate being fooled or given inadequate information. They want to be presented all the available information at the outset so they can make an informed decision. Under these circumstances most people are willing to accept responsibility for the events that follow. What they don't like is not being informed about something that would have made a difference in how they saw things and how they approached the decision-making process. A buyer's agent can secure all the information available about a property and share it with you so that you can make informed intelligent decisions about the most important investment in your life. Top of Page Top of Section The Listing (Seller's) Agent The listing agent is the seller's agent exclusively. He or she has a responsibility to represent the seller and look out for the seller's interests. The listing agent almost always has a written agreement called a listing contract that specifies among other things, the price, commission amount, and the authorization to put the property in the MLS, split the commission with the selling/buyer's agent, and put a yard sign in front of the property. The listing agent will share any and all available information about any buyers with the sellers. Information such as the buyers motivation, how much they are willing pay, etc. so you're better off using your own buyer agent to represent you. Top of Page Top of Section The Transaction Broker (Buyer and Seller) There are times when a real estate agent will represent both the buyer and seller in a transaction. This happens when a buyer who is not represented by a buyer's agent calls on a sign, ad, or Internet listing. The listing agent will show their property listing to the buyer. If the buyer decides to write an offer for the home without employing their own agent they will ask the listing agent write the offer. Before writing the offer, the listing agent has the buyer and seller sign the Transaction Broker Notice which discloses that the agent will not work to represent one party to the detriment of the other party when acting as a transaction broker to both parties. This is perfectly legal but not always in the best interest of the buyer. When you make an offer to buy a house, you are entering a negotiation. The seller wants as high a price as possible and the buyer wants the lowest price possible. If a Realtor represents both sides, there is a conflict of interest, though an ethical Realtor can equally represent both sides. Most Realtors are very ethical and take their responsibilities seriously. However, if the listing Realtor knows how much you are willing to pay for a home or the loan amount you have been qualified for, and that information somehow gets passed on to the seller even though they are also representing you as the homebuyer, you are at a disadvantage. You won't be in this position, wondering if you're getting a good deal, if you hire your own buyer agent to protect your interests. Top of Page Top of Section Understanding How Agents Get Paid Many buyers don't understand how real estate agents are paid. Here's how it works: When a seller lists a property for sale, the listing agreement includes a commission clause that stipulates how much commission the seller will pay. It's usually a percentage of the final selling price, let's say six percent. Typically that 6% commission will be split between the buyers agent and the listing agent at the close. The listing broker lists the home in the MLS notifying all the other brokers that the commission split is 3% to the selling buyer's agent. If you go directly to the listing agent they keep the entire commission. Due to self interest and company policy they are not going to give you, the buyer, a break. If they'd give anyone a break it would be their client the seller. Most home buyers think the seller pays the entire commission. The bottom line is that indirectly it's you the buyer who is paying the commission which is built into the sales price. At Florida Rebate Realty we can save you $-thousands or even $-tens-of-thousands with our commission rebate programs. Top of Page Top of Section   Searching For A Home Topics Covered Below   Searching For A Home: Introduction The Right Frame of Mind Making a Time Commitment to Your Home Search Viewing Homes For Sale Considerations When Viewing a Home Timing: Selling Your Present Home Other Sources of Property for Sale What if You Discover a Home You Like on Your Own Open House Etiquette Can't Find the Perfect Home   Introduction If the first thing an agent wants to do is to drive you around, go find another agent. Experienced agents don't drive people around before interviewing them first. Also, a good agent will have you begin the loan process immediately. We're not talking about getting pre-qualified, we're talking about getting approved for a loan. This will put you in the strongest possible negotiating position. Buying a home can be an emotionally draining experience. Finding the right home can be a time consuming endeavor. You must be willing to make a commitment of your time and effort to work with your agent. The best properties sell quickly, prices are up, and it can be tough to find a home with just right mix of size, location, amenities, and emotional appeal. Before starting your search make out two lists of what you are looking for in a house: those things that you must have, and those things that you would like to have. When talking to your realtor, go over not only what you want, but why you want those things - a good realtor may be able to suggest homes that don't meet your stated requirements, but do meet your needs. Shop with a pad of paper - make notes. Share your feelings with your realtor - not just yes or no, but what things you liked and did not like about each house. This will help your agent help you to find the right house. Top of Page Top of Section The Right Frame of Mind With the right mindset, buying a home will be easier and less stressful. Below are some tips to help you. 1. Help Yourself Learn as much as you can about the entire process through books, friends and the Internet. Investigate neighborhoods by driving around and learn price ranges, check commute times to your place of work. Most importantly be sure you feel comfortable about the neighborhood. You'll need to drive around to open houses and see property. If you wait around for your agent to drive you around on Saturday or Sunday for a couple of hours you aren't helping your agent or yourself. The more you know about the area and the price of homes in the area the easier it will be for you to determine the value of homes you view and eventually put in an offer on. 2. Be emotionally detached If you can keep a check on your emotions you'll think more rationally and be able to make better decisions. When you find a house that seems to fit acknowledge that the house may fit your needs and price range and leave it at that. Remember, there are many behind-the-scenes things that may be taking place--other buyers competing for the home, unforeseen issues with the physical condition of the property or other issues that may make it a poor choice. Bottom-line, acknowledge the house may be a fit, but don't get carried away with emotion. Remember there are many hurdles you need to overcome. Let your agent deal with the seller's agent to find out about all of the behind-the-scenes issues and then move quickly to submit a good clean offer. Once you are safely under contract and past the physical inspection, you can relax a bit and start thinking about the future. 3. Patience and understanding Sellers may make unreasonable demands or get upset over certain issues. This is part of the process. The sellers may not want to sell their home but they may be in a situation where they must. They may be selling due to a job transfer, a divorce, money problems, old age, or illness. Selling under these conditions might get anyone upset. Have patience, be calm and try to see the sellers point of view. Your agent should be able to work any problem with the seller's agent. If the purchase contract was written properly you should be protected from the majority of issues that may come up. 4. Problems prior to closing It's not uncommon for there to be problems before the closing. The problem could come up from the lender, title agent, or someone else involved with the transaction. Don't panic, almost all problems can be resolved. If your agent is experienced he or she has probably handled similar problems in the past. Remember, stay calm, call your agent and let them take care of the problem or steer you in the right direction. Top of Page Top of Section Making a Time Commitment to Your Home Search Be ready to make a big time commitment. You are making one of the biggest decisions of your life, both emotionally and financially. You will spend endless hours driving around neighborhoods, looking at homes, view open houses and weighing the pros and cons of each neighborhood and each home. Add in the time getting approved for a loan and you get the idea. Finding the right home probably won't happen by just setting aside a few hours on a Saturday afternoon. This is serious business, the decisions you make will have long lasting implications, so be prepared to devote the proper time. Top of Page Top of Section Viewing Homes For Sale First I will print out the home listings from the MLS that meet your price range and requirements. I will drop off, fax or e-mail these listings for you to review. Look over the listings and call me back with the houses that appeal to you. I will contact the listing agents and eliminate any homes that are sold or under contract (pending). The market can move quickly and the best homes that are priced right will sell quickly. Also, many agents do not update their listings on the MLS in a timely manner. I will call you back with the homes that are still available and you may take a drive around to look at the homes and neighborhoods from the outside. Call me with the homes you liked from the outside and I will make appointments to view these homes. Top of Page Top of Section Considerations When Viewing a Home If you walk into a home and immediately don't like it, let's not waste time. Let me know that it's not quite right for you and lets move on to the next house. If the listing agent talks to much, just say to them, Do you mind if I take a look around on my own and then I'll ask you if I have any questions. If you like a home try not to show it. We don't want the listing agent or seller to know. Don't feel you must explore every inch of a home. It can be very difficult to set up appointments the same day, unless the home is vacant. It is best to schedule 24 hours in advance. It may be difficult to arrange a showing early in the morning or late at night, on holidays, or on Saturday or Sunday mornings. Some people are slobs and the house will be a war zone. Look beyond the clutter and imagine the place cleaned and painted. Many good deals have been passed over by buyers who didn't use their imagination. Your agent can usually point out the repairs or modifications that could be done to make the house fit your needs. Top of Page Top of Section Timing: Selling Your Present Home If you have a home to sell, you'll want to put it on the market, as soon as possible if not sooner. The ideal situation is to have the closings as close together as possible or in some case a week or two apart, giving you enough time to move and clean-up your old home and paint and/or clean up the new one. This may be possible if your home goes on the market priced correctly. Once the closing date for your existing house is set, you can then go about selecting your new home without worrying about timing. You don't have to sell your home first, but there are many downsides. Prospective sellers may not consider any offer you make if the contract is contingent upon your selling your home first. Some sellers my accept your offer but keep their home on the market seeking a better offer and giving you the first right of refusal. Now you have to hope and pray your home sells before another buyer comes along to buy your dream home. Just the stress of worrying if someone else will buy your dream home is enough but imagine that someone else does buy it. You are better off first selling your house. If the buyers of your house want to move in quickly and the sellers of your new home can't move fast enough then the solution is a short-term rental of an apartment. Getting the home of your dreams may be worth a short-term inconvenience. Top of Page Top of Section Other Sources of Property for Sale In addition to the homes I send you from the MLS, I always recommend that my clients scan other sources of homes for sale. The reason is that many times my clients will see something that catches their eye that is in a completely different area than they were considering. This scenario also helps illustrate an important lesson I learned about finding your home. It can sometimes be very difficult to articulate what you are looking for. However, when you find it, you'll know. What I believe is that most buyers are looking for a particular feeling they get from a house. Some want a feeling of security they get from a home with tall fences and gates. Some want a feeling of nature from a home with lush green landscaping. Some want that family warmth and coziness from a home with a large kitchen that overlooks the family room so they can cook while still talking to friends and family. Remember: All real estate agents have access to the MLS and can show you any home you see advertised by another real estate agent. Calling the listing agent may not be the best of ideas because they represent the seller not you. Top of Page Top of Section - The Internet The Internet is an excellent way to view listings and get a feel for the market. You can search for available listings anywhere in the country 24 hours a day through my website. However, be aware some of the listings may be out of date or inaccurate. Consult your agent to get up to date information and more detailed information about a property or neighborhood. - Harmon Homes, Homes & Land and The Home Review Magazine These are free weekly periodicals that can be picked up at newsstands and convenience stores. These convenient magazines have many photo ads of properties listed by agents. This is another great tool to use in your property search. - The Local Newspaper Real Estate and Open House Section I always recommend that my buyers grab the local newspapers to check the open house section. This way you can see what will be open on the weekend and go see the homes that interest you. - Open Houses Open houses are a great way to learn the market and see what's for sale. Your agent will also be able to tell you what's open that weekend. If you are interested in a particular area, drive that area on Sunday and you'll be sure to find some open houses. - Tuesday Broker's Caravan Usually every Tuesday between 11am and 2pm agents/brokers will hold an open house to get a property exposed to other agents. This enables other agents to preview the new listing inventory for their buyers. However, anyone is welcome to stop by. I frequently send or accompany my clients to Tuesday caravan so they can get a jump on the competition. Usually, food and/or refreshments are offered to entice agents to stop by. - For Sale By Owners (FSBO) The FSBO can be another great source of properties for sale. Sometimes sellers want to try to save real estate commissions by selling their home themselves so they run newspaper ads in the real estate classifieds and put up lawn signs. If the seller is truly motivated this can be an excellent way to find a property. If you do find a FSBO that looks interesting, have your agent call the seller and make an appointment to view the home. Most sellers will cooperate with an agent if that agent has a bona fide buyer. In fact, many times they're grateful there is an agent involved because they quickly realize that it's not easy to coordinate all of the paperwork and forms needed in a real estate transaction. The seller usually ends up paying a 2.5 or 3% commission so everyone's happy. It is a good idea to have someone represent your interests and help negotiate the best possible deal. Top of Page Top of Section What to Do if You Discover a Home You Like on Your Own If you see a sign when driving around, walk in to an open house, read a newspaper ad, or see a property on the Web that interests you, call me right away. I will pull all the info about the property & fax or e-mail it to you immediately! I will immediately call the listing agent and find out the details about any property and get you the inside scoop! Agents don't have exclusives. All agents have access to all MLS listings. Top of Page Top of Section Open House Etiquette The main goal of an agent at an open house is to meet potential clients and induce them to work together. They can be a little pushy at times and start asking you all types of personal questions. If you walk in to an open house, please let the agent know immediately that you are already represented and hand them your agent's card. This will cause most agents to back off and go back to whatever they were doing. Top of Page Top of Section Can't Find the Perfect Home If you know exactly what you want and it isn't on the market we can help. Whether it be a specific home or group of homes or a particular neighborhood we will find you a home. We will contact the owners and let them know we have a client that is interested in purchasing their home. After viewing the home or homes, if you are interested, we can start negotiations and put in an offer on your behalf. Be advised there is not much room for negotiation when you approach someone to buy their home. Top of Page Top of Section The Offer Topics Covered Below   Before Putting In An Offer: Introduction Check the Sale Comps Check out the Neighborhood Check out the Seller Check the Commute Making An Offer: Introduction Contract Contingencies Minimizing Closing Costs Making the Offer The Counter Offer Process Disclosures Condos & Townhouses: Points to Consider Tenants in the Property   Introduction - Before Putting in an Offer Once you find the right home that fits your budget and requirements the next step is to make an offer on the property. Before you make an offer you need to get as much information as possible so that you can make an intelligent offer. A good agent will provide you with all the information at his disposal so that you can make an informed decision. Top of Page Top of Section Check the Sale Comps The first and most important thing your agent should do is to provide you with a report showing what comparable properties in the neighborhood have sold for in recent past. In general, the more recent the sale the more relevant it is. Lacking any recent sales in the particular neighborhood then your agent should provide you with sales comps on similar homes in similar neighborhoods within the area in question. Your agent should be able to interpret the reports and give you an opinion on the true value of the home within a range. Top of Page Top of Section Check out the Neighborhood If you haven't checked out the neighborhood yet then do it now before putting in an offer. Drive around the neighborhood at different times to get a feel for the neighborhood. If possible, walk around and talk to other property owners to get their opinions of the neighborhood. Ask your agent for their opinion and what they know about the neighborhood. Top of Page Top of Section Check out the Seller Why are they selling, divorce, debt, job relocation or retirement? Your agent should be able to find out this information from the listing agent and possibly a clue as to how motivated the sellers are to sell. Information is the key to putting in a good offer. Top of Page Top of Section Check the Commute If you commute, drive from your job to the house. Or better yet take the morning drive from the house to your job. You want to be sure the commute time is acceptable. Top of Page Top of Section Introduction - Making An Offer Before you even get to the point of making an offer ask for and read a purchase contract to get familiar with the various clauses and paragraphs. Below are the points to be aware and the steps in the offer process. Top of Page Top of Section Contract Contingencies A purchase contract contains many contingencies that protect a buyer. A contingency is an event that must transpire in order for the purchase contract to stay in full force. In other words, if A, B and C do not take place then the buyer may walk away from the contract and get a refund of all deposits made to that point. For example, most contracts have a loan contingency that says the buyer must get the loan approved within the terms agreed to in the contract. As an example other contingencies may include approval of the Home Inspection Report, sale of your present home, approval of the Condo Documents (condo purchase only) or anything else that both parties agree too. These contingencies help protect buyers. In the past, there were fewer contingencies and disclosures. It was a "buyer beware" atmosphere. This is no longer the case, but that doesn't mean you should not be diligent in protecting your interests. Top of Page Top of Section Minimizing Closing Costs A technique to reduce the cash out of pocket to purchase your new home is to ask the seller to pay some or all of your Closing Costs . Basically what you're doing is financing your closing costs. What happens is that once you've agreed upon a price for the home you then add your closing costs on top of the sales price and the seller agrees to pay for your closing costs. This is written into your purchase contract. The increase in your monthly payment is minimal and you save thousands in out of pocket expenses. Be aware that the home must appraise for the sales price including the closing costs. Keep in mind a few simple rules. On conventional loans you can only ask the seller to pay non-recurring costs, not pre-paids or items to be paid in advance. If you are putting ten percent down or more, the most the seller can contribute is six percent of the purchase price. If you are putting less down, the most the seller can contribute is three percent. On VA loans, you can ask the seller to pay everything. VA loans do not require the buyer to make a down payment or to pay any closing costs. On FHA loans, it is backwards. You can ask the seller to pay your pre-paids and impounds, but it doesn't normally make sense to ask the seller to pay your non-recurring costs. The exception is that there are some fees a seller has to pay on a FHA loan, so you won't be paying those anyway. Also, if the seller wants to pay discount points (not your loan origination fee) or pay for a buy down, that is allowed. The reason it does not make sense for the seller to pay your normal buyer's costs on an FHA loan has to do with how the FHA loan amount is calculated. Instead of just using a percentage of the purchase price like everyone else, FHA calculates your loan amount based on the purchase price plus your closing costs (most people think the down payment on an FHA loan is 3%, which is not true). If the seller pays your closing costs, your loan amount is calculated from a smaller number, resulting in a smaller loan amount and a larger down payment. So the seller pays your closing costs, but your down payment is larger. The end result is that your out-of-pocket expenses to close are about the same. Top of Page Top of Section Making the Offer You've looked over the sales comps and other information provided by your agent and considered the sellers motivation. After talking it over with your agent you have your agent write up a purchase offer at what you think is a fair price. The key word is fair price. Everyone has a different perception of what is a fair price. Some buyers like to make a low ball offer to get things started and then bargain up to the price they are actually willing to pay. Low ball offers can back fire and they often do. Many sellers take such an offer as an insult and will not even make a counter offer and even worse they may become more inflexible in negotiations. Along with the offer the buyer must put up a small initial good faith deposit which is held in escrow by the buyers agent or in some cases by the title company. After acceptance of the offer it is customary to make a more sizable additional escrow deposit. In my opinion it is very important to include a pre-qualification or better yet pre-approval letter from your lender with the offer. Your offer will carry more weight if the seller knows you are a legitimate well-qualified buyer. I want to present my buyers and their offer in the best possible light. I want the agent and the seller to completely understand the offer and what we are trying to accomplish. I want to make it easy for the other party to say, "Yes. We will accept your offer". Top of Page Top of Section The Counter Offer Process After I submit your offer the listing agent and the seller will discuss the your offer. If the offer is not acceptable at face value, generally the agent and seller will make a counter offer and submit it to the buyer's agent. We will then discuss the terms of the seller's counter offer. At this point the buyer can accept the counter offer, counter the counter, or of course simply walk away. Counter offers can go back and forth several times. Listen your agent's advice during this process. Agents talk, and the selling agent will usually tip off your agent as to what it's going to take to get the deal done. Remember common sense and a little flexibility go a long way in getting the deal done. Top of Page Top of Section Disclosures In addition to the purchase contract and any counter offer forms, there maybe numerous other disclosure forms that must be filled out by the agents, sellers, and buyers. Some of the more important forms are the Seller's Disclosure, The Homeowner's or Condo Association Disclosures and the Lead-Based Paint Disclosure. These forms are used to disclose material facts about the property so that the buyer is aware of known defects, expenses or issues impacting the property. There are various time periods in which a buyer is to receive these disclosures. - The Seller's Disclosure This is a disclosure form that is filled out by the seller and the listing agent and is signed by the buyer and the seller. This form discloses all known material defects in the property. In general your agent should request a copy of this form from the listing agent before making an offer. Top of Page Top of Section - Lead-Based Paint Disclosure (Property built prior to 1978) This form discloses to the buyer if the seller has any knowledge of lead-based paint in the property. The seller is also obligated to provide the buyer (usually via one of the agents) with a booklet that explains the hazards of lead-based paint. Top of Page Top of Section - Homeowner's or Condo Association Disclosures These disclosures inform you about the cost of your association dues and any special assessments that you may be liable to pay for. In an older condo especially it is important that your agent inquire about any existing or planned assessments that may impact your pocket book. In the case of a condo resale you are entitled to receive a copy of the condo documents to review and approve. You have the right to cancel a purchase contract if you do not agree to the terms and conditions within these documents. Read on below for more information on purchasing a condo and/or townhouse. Top of Page Top of Section Condos & Townhouses: Points to Consider Owning a condo or townhouse is different than owning a single-family residence (SFR). There's less maintenance, less privacy, and less responsibility. Owners pay monthly homeowners fees to maintain the property. There may be restrictions such as the number of pets you can have or what you can put on your balcony. Many condominium projects are managed by professional Condo Associations. Buying a condo is also different. There are a number of condo documents that must be read and approved. Approval of these docs is a contingency of the sale so you have to approve them in order to complete the sale of the unit. Below is a partial list of some of the documents that a buyer receives when purchasing a condo or townhouse. Top of Page Top of Section - Conditions, Covenants, and Restrictions (CC&R's) The condominiums CC&R's details how maintenance and repairs are handled, what physical changes you can and can't make to your unit, whether or not you can rent the unit, or any restrictions on pets to name a few. Be sure to read the entire CC&R's carefully. There may be what you'd consider strange restrictions on what you can or can't do in your unit. Top of Page Top of Section - Articles of Incorporation These are the legal documents that were recorded when the project was incorporated. - Operating Budget This is simply the budget for running the building. Of course there is maintenance, roof repairs, pest control, and other costs. You want to make sure the budget is sound and that the building has enough money to cover these expenses. Top of Page Top of Section - Reserves This is simply the cash available in the account to cover emergencies. A building with little or no reserves usually has to assess the owners if there is ever a major emergency such as a roof or plumbing leak. An older building with deferred maintenance and poor cash reserves can be a money pit for a new owner. Be careful in this situation and be sure to consult your agent for advice. Top of Page Top of Section - Pending or Contemplated Assessments This isn't part of the condo documents but make sure to inquire if there are any pending or contemplated assessments. For example, let's say that the HOA wants to replace the roof but there are not sufficient funds in reserves to pay for it. What usually happens is that the HOA will notify the owners that they will be assessed a certain amount for the roof repairs. As a buyer you want to know about any contemplated or pending assessments because you could end up owing money within a short time of purchasing your new condo. Top of Page Top of Section Tenants in the Property If you are purchasing a property that is tenant occupied, be sure your agent includes a clause that says the tenants are to be out by the closing date. You don't want to be stuck having to evict the tenants. Top of Page Top of Section Home Inspection & Termite Report Topics Covered Below   Introduction Seller Responsibility Choosing an inspector Who pays for the inspection and how much does it cost? Inspection Day The Home Inspection Report. Problems with the property: Where you stand Required Repairs: Points to consider Is a Termite Inspection required? Who picks the Termite Inspector? Termite Inspection on condominiums or townhouses   Introduction Any home, new or used, will have minor problems. For instance, an electrical outlet may not work, there may be a leaking faucet or maybe roof, one of the appliances may not work. The purpose of a home inspection is to insure you are aware of all problems and potential problems with a home before you buy. A seller is required in most cases to make the necessary repairs to insure everything is in working order. You or your realtor should schedule a home inspection immediately after acceptance of an offer to purchase. The Florida Association of Realtors contract provides that this must be done within ten business days of the effective date. Basically the inspector will check the home from the roof to the foundation and everything in between. He will run the dishwasher, check the heating and cooling systems, check the plumbing, electrical, check for leaks, etc. He will give you and/or your agent a written report on the spot or fax or mail the report within 2 or 3 days. At you or your agent's request the seller or seller's agent will be given a copy of the report as well. You may want or need to also have a separate roof inspection. If you are purchasing a home on the water, you will want to have a seawall inspection done as well. (Damage to seawalls, docks and swimming pools are not covered by flood insurance.) If you want to have inspections for radon, lead-based paint, environmental hazards, etc. You will need to have these completed within the same period. Pest control inspections are generally not done until 30 days before closing, due to lender requirements. In many cases the home inspection company may be a licensed pest control company as well. It would not be prudent for a homebuyer to forego a home inspection before purchasing a home. Under Florida law the seller must disclose (seller's disclosure) to the buyer all known facts that materially and adversely affect the value of the property being sold and that are not readily observable. The key word is known. Your agent should ask for this disclosure before you put in an offer. There are often things wrong with the home that the seller may not know about. The home inspector checks the interior and exterior of the home, goes up into the attic space, and goes in the crawl space, if there is one. The price of a home inspection will vary with the size of home and with the amenities of the home (crawlspace, pool, etc.). Expect to pay anywhere from $250 to $500. Top of Page Top of Section Seller Responsibility The inspection is done to determine whether any warranted items are in need of repair. Generally the seller warrants that the structure (including roofs and pool) are structurally sound and are watertight, and that the appliances, heating, cooling, mechanical, electrical, security, sprinkler, plumbing systems, seawall, dock and pool equipment, if any, are in working condition and will be maintained in working condition until closing. The seller does not warrant and is not required to repair cosmetic conditions (unless the cosmetic condition resulted from a defect in a warranted item). Cosmetic conditions means aesthetic imperfections that do not affect the working condition of the item, such as tears, worn spots and discoloration of items such as floor coverings, wallpapers, window treatments; nail holes, scratches, dents, scrapes, chips and caulking in bathroom ceilings, walls, flooring, tile, fixtures, mirrors; tears or holes in screens; and minor cracks in windows, driveways, sidewalks, pool decks, garage and patio floors. The seller is not obligated to bring any items into compliance with existing building code regulations (unless necessary to repair a warranted item). Codes are constantly changing, and vary from one municipality to another. If the item was installed properly under the code existing at the time of installation no more can be required. The inspector will point out items that he recommends bringing to current code, such as GFI (ground fault interrupt) outlets, but this is a buyer option, not a seller requirement. Note that most contracts provide that a licensed contractor or repair person must do any repairs. Items commonly noted in an inspection: Electrical panel: a fuse that is double lugged. Pool equipment and/or screen enclosure that needs to be grounded. Faucet that will not turn completely off. Outlet that does not have power. Top of Page Top of Section Choosing an inspector Be sure the inspector you hire is licensed and certified. Does he belong to a professional association such as ASHI? What are the qualifications and background of the person actually doing the inspection? How long has he been doing inspections? What type of report does he prepare? Does he distinguish between comments that are general and those that are specific to your property? Does he welcome you to be there during the inspection? Is he willing to answer questions as he goes along, and to explain how things work? Will he differentiate observations from problems? To what extent does he stand behind his work? Ask your agent for a list of home inspectors as well as checking the yellow pages. Also ask friends, family and co-workers for a referral. Do not just rely on your agent to arrange for the inspection especially if you have any doubts. Recently, in the news there were stories about home inspectors working with real agents to the detriment of their clients. The agents instructed the inspectors to not disclose all of the problems in a home because they wanted to make sure the deal closed so they would get paid. In return the agents would send more business to the inspector. Make sure you are comfortable with the inspector. Feel free to ask for a list of recent clients and call them to see if they were happy with the inspector. One last thing, make sure that your home inspector has E&O insurance. You want to be able to recover damages from his insurance company if there is negligence or fraud. Protect yourself. Top of Page Top of Section Who pays for the inspection and how much does it cost? The buyer pays for the home inspection. You pick him and you pay him. You want an independent opinion as to the true condition of the property. Most inspectors charge about $200 to $300 for a condo and about $250-$500 for a house. Of course larger properties with 2 or more stories, larger square footage, or older homes that are in very poor condition can be higher. Always describe the property accurately to the inspector in order to get an accurate price quote. Top of Page Top of Section Inspection Day When the day of the inspection comes, make sure to be present as your inspector inspects the property. This way you can ask him any pertinent questions about the home. It's not necessary to shadow him as he does his inspection, but when he is finished have him show you all the defects he finds with the property. Most inspections take about 1.5 - 2 hours for an average house. Top of Page Top of Section The Home Inspection Report Go through the report carefully when you receive it. Make sure your agent has a copy as well. Then decide which defects you can live with and which you can not. Work with your agent to determine which repairs you would like the seller to correct. When you have decided, have your agent send a letter to the seller's agent asking for repairs. Here's what I typically tell my clients: you are buying a used home with all of its accumulated defects and problems. It's not perfect. Don't ask a seller to fix or paint minor problems. However, if the air conditioner has problems or one of the appliances doesn't work, I would want those items to be fixed. Keep in mind the market conditions, and the seller's situation. If you are in a hot market with rising property values and there were multiple offers on the property then the seller will probably not want to spend time or money on repairs. You've got to decide at that point how much you want the house, especially if there is someone else waiting in the wings if your deal falls apart. In a slower market, a buyer has more leverage to ask for repairs. A seller who is highly motivated will fall over himself to get the property repaired and keep the deal on track. The bottom line is to work closely with your agent and rely on his professional opinion. Top of Page Top of Section Problems with the property: Where you stand If there are significant problems such as a damaged foundation, a severely damaged roof, or plumbing that is shot, I always recommend that the buyer get a specialist out to examine the damage and get an estimate to repair the problem. Your home inspector is only an inspector. He generally should not be doing repairs or giving cost estimates. That is a conflict of interest. In Florida the sales contract usually specifies the $ amount of any required repairs the seller will undertake. If required repairs exceed the amount specified, the seller may agree to pay for these repairs, the buyer may accept the home without the repairs that exceed the amount specified or the buyer may back out of the contract. Refer above to Seller Responsibility, to understand what would fall under required repairs. Many buyers think cosmetic problems, such as cracked floor tiles or roof tiles must be repaired, which is not the case. Talk to your agent to fully understand what are warranted items. You cannot back out of a contract because you think an item should be repaired but the seller does not agree. If you are unsure about the condition or quality of a home talk to your agent. There are ways to further address or protect your interests by adding the right language or addendum to the sales contract. Top of Page Top of Section Required Repairs: Points to consider If possible I would recommend taking a cash credit for repairs instead of having the seller do the repairs. Sellers will always try to do the repairs as cheaply as possible and chances are that you won't be happy with the quality of the work. Simply take the estimate you got from the contractor who gave the estimate and have your agent send a letter to the seller's agent requesting a cash credit at closing. Usually there is a bit of negotiating at this point. Sellers like to split the cost of repairs with the buyers. If you ask for a thousand, they'll offer five hundred. Ask for your agent's opinion and do what makes sense to you. Common sense goes a long way. Top of Page Top of Section Is a Termite Inspection required? A termite inspection is not always required. However, most of the time it is performed. One of the main reasons is that most lenders making the loan require a pest inspection and repairs if there is damage. As a buyer, I would certainly require an inspection and repairs to be done. Top of Page Top of Section Who picks the Termite Inspector? Generally the buyer (or the buyer's agent) picks the termite inspector since they will be paying for it. In many cases the company doing the inspection of the home may also be licensed to do the termite inspection. Top of Page Top of Section Termite Inspection on condominiums or townhouses The type of structure determines if an inspection is required. Typically the HOA (Homeowners Association) is responsible for termite issues in the common areas and exterior of your condo. It is fairly uncommon for a termite company to recommend tenting a condo building when a sale occurs. Usually the HOA will contract with a termite company for periodic inspections and maintenance. In most cases a termite inspection is not required for a condo. However, some lenders still may require a complete termite report and clearance for condos. Check with the condo homeowner's association to see what their termite policy is. Top of Page Top of Section The Home Appraisal Topics Covered Below   Introduction What's the cost and who pays? Do you get a copy? What if the appraisal comes in below the contract price?   Introduction Banks require an estimate of value prior to making a loan because they don't want to make a loan on a property worth less than the contract price. An appraiser is sent out to the property to determine the value of the property and make sure the value is in line with the sales price. Appraisers inspect and measure the property and check the sales comps in the immediate area. Appraisers are not home inspectors they are just inspecting the general condition of the home. Top of Page Top of Section What's the cost and who pays? The buyer usually pays for the appraisal unless the buyer has cut a special deal with the lender. Depending on the lender the appraisal may be paid in advance or incorporated into an application fee, some are COD, which means the buyer must write a check at the time of the appraisal and finally some lenders will bill the buyer at closing. An average appraisal is roughly $275-$600 depending on the size of the home. Top of Page Top of Section Do you get a copy? The buyer doesn't usually receive a copy unless specifically requested by the buyer. However, you paid for it so you certainly are entitled to it if you wish. Some lenders have "policies" that don't release the appraisal. Check with your lender. Top of Page Top of Section What if the appraisal comes in below the contract price? If the appraisal comes in too low, it can be a problem. The appraiser is saying the property is not worth what you agreed to pay for it. When this happens, usually both of the real estate agents will mobilize and scour the MLS for recent sales comps that the appraiser may have overlooked. Sometimes these comps can help change the appraiser's opinion of value and he will raise the appraisal price of the home. The agents will also look for properties in the MLS that are currently in a pending status to see if they can determine the contract sales price. If they can get this information it can usually be used to help the appraiser raise his estimate of value. Usually, most appraisals can be readjusted higher with a little bit of legwork. If the final appraisal is below the contract sales price you have the option of canceling the contract or paying the difference out of pocket. If the appraisal comes in higher than the contract price, then great, you got a great deal on the home. This doesn't happen very often. Top of Page Top of Section Property Taxes & Homeowners Insurance Topics Covered Below Information of Interest: Understanding Property Taxes Homeowner's Insurance Windstorm Insurance Flood Insurance Condo Insurance Do I need Insurance? When should I purchase Insurance? - Homestead Exemption Understanding Property Taxes Property taxes are used for municipal improvements and upkeep. Schools, streets, paying bonds, etc. Property taxes are due once a year in November unless you have an impound/escrow account. Property taxes in Broward and Palm Beach County in general are approximately 1.75% to 2.00% of the assessed value of the property. The tax assessor may reassess your property after you close and issue you a tax bill based on the new assessment when the new tax bills are sent out. Depending on how long the previous owner has lived in the property your tax bill could increase substantially from the previous owners tax bill. In 1992 Amendment 10 to the Florida constitution put a cap on the increase in a homeowner's property tax assessment at 3% or the annual increase in the CPI (Consumer Price Index). This amendment also provides that the homestead property's assessed value return to its' true fair market value upon transfer of deed. Your current years tax bill would be based on the previous owners bill, however in the next full year of your ownership the assessed value of your property and your property taxes could increase substantially. In order to avoid this shock please consult with your agent but the best way is to call the property appraisers office and ask. I have the locations and phone numbers of the appraisers office for Broward and Palm Beach County at the bottom half of my Homestead Exemption page. A lender generally considers your property taxes as part of your monthly obligation even though you may pay your taxes once annually. Let's say you buy a $300,000 home and the tax assessor assesses your house at $200,000. Your taxes are approximately $200,000 x 2.00% = $4,000 per year. Divide that by 12 months and you get a monthly tax payment of $333.33. For pre-qualification purposes, the lender considers that $333.33 part of your monthly payment. The good news is that property taxes are a tax deduction. Please check with your tax advisor for further information. In Florida there is a property tax exemption called the Homestead Exemption on your main residence which will decrease your tax bill. Top of Page Top of Section Homeowner's Insurance Homeowner's insurance (sometimes called hazard or fire insurance) pays for financial losses caused by a broad range of disasters that could damage your home or your property if they occur during the period of the contract and subject to the terms and conditions of your policy. The insurance company also promises to pay damages resulting from injuries or damage to other people, such as slip and fall or a dog bite, for which you are held legally responsible. Top of Page Top of Section Windstorm Insurance A basic homeowner's policy does not cover Windstorm (hurricane) damage. Generally insurance companies write their policies through the JUA (Joint Underwriting Association), which is a state agency set up to help provide windstorm insurance to homeowners through various insurance carriers. Coverage is fairly expensive. Ask your insurance agent for specific pricing. When purchasing a condominium or townhouse, be sure to inquire if the HOA currently has insurance. Top of Page Top of Section Flood Insurance Lenders check flood maps prior to making a loan. If the subject property is in a flood zone then you will be required to purchase flood insurance. However, an individual can opt to purchase flood insurance if so desired. Top of Page Top of Section Condo Insurance The exterior and common areas of condominiums and townhouses are generally covered by the HOA's master insurance policy. However, you still should purchase a condominium package policy to cover the interior contents of your condo. Condo insurance usually includes liability insurance, which covers you against liability claims such as slip-and-fall or dog bite claims. Top of Page Top of Section Do I need Insurance? Homeowners insurance coverage is required by all mortgage lenders to protect their investment. Depending on the location of your property you may be required to purchase flood insurance as well. If you were buying your property in a cash deal (no mortgage financing) you would not be required to purchase insurance, however this would not be advisable. Homeowners insurance covers not only the structure but the items in your home. Flood insurance may not be required by a lender however it is still a good idea to purchase this extra protection. Any damage caused by flood waters is not covered under a homeowners insurance policy. Top of Page Top of Section When should I purchase Insurance? Immediately after acceptance of an offer to purchase, you should start shopping for homeowners and flood (if required) insurance. Remember that the JUA (the Joint Underwriting Association of the State of Florida) will not issue new policies when a named storm is within a certain distance of Florida, i.e., West of 72 degrees west longitude, east of 95 degrees west longitude, north of 15 degrees north latitude and south of 35 degrees north latitude, nor within 48 hours of when the storm leaves this area. Note that this includes Puerto Rico, Texas, Mexico, and parts of South America and up into North Carolina. If a hurricane is within this area, JUA will not issue policies unless they have already been paid for in full. Ask your agent if you will need a flood elevation certificate. If so, this should be ordered at the same time as your survey, as it is less expensive when done at the same time. The lender - conservative in your interest - may not order the survey until after your loan is approved. You will need to provide and original binder of insurance from your insurance agent to your title agent at or before closing. Top of Page Top of Section Title Insurance Q & A's Topics Covered Below   Introduction What is a Title? What is an Abstract? What can make a Title defective? What is Title Insurance? Owner's Policies and Lender's Policies Why buy Title Insurance? What does Title Insurance Cost? Preliminary Title Report (Prelim) Who Pays for Title Insurance? Who Picks the Title Insurance Company? Deciding How to Hold Title   Introduction With few exceptions, a home represents the largest single investment most people will make in their lifetime. Thus, it is only natural that an owner will want to make that investment secure by protecting the basic proof of ownership. Title insurance is the most effective and least expensive way of doing just that. Title insurance is issued by a title company or title attorney. Title agents not only issue the policy they also conduct the closing process. Lender's require title insurance. Most people don't really know what is involved in the closing process. The closing process is where all funds are disbursed, closing paperwork is prepared, title deeds are prepared and notarized. The closing is usually handled by a title company or a title attorney. Among their many responsibilities are: Cashing the buyer's deposit check and holding the money in the escrow trust account. Coordinating paperwork between the parties, agents, lender, title, insurance. Preparing and notarizing deeds and documents. Coordinating the funding of the loan. Paying off the seller's loan. Preparing the HUD-1 closing cost settlement statement for all the parties. Disbursing the sellers check and the agent's commissions. Prorating the annual property taxes and any other obligations This is just a brief overview of the many responsibilities that the closing agent performs. Top of Page Top of Section What is a Title? A title is the evidence or right that a person has to the ownership and possession of land. A defect in that title can be any legal right held by someone other than the owner to claim property or to make demands on the owner of that property. Top of Page Top of Section is an Abstract? An abstract is a history of the title to a particular tract of land. It is not a title! It consists of a summary of the material parts of recorded instruments affecting the title of the real estate. The abstract may be correct but the title imperfect. The abstract is not a guarantee. It is only a record of what has been recorded. It does not judge the correctness of any item it lists. It merely reports them for an examiner to interpret. Abstracts are not used in real estate transactions in many parts of the country. Top of Page Top of Section What can make a Title defective? There are many possible causes of title defects that no examination can disclose. That is because they have never been recorded and thus do not appear in the abstract. A title insurance policy protects the owner against all of the hidden risks listed below, and many more: Fraud- False claims of ownership, forged deeds, wills, signatures, conveyances, instruments, false representations, false records of all sorts, illegal acts of trustees, guardians, administrators, and attorneys. Human error- Errors in copying, indexing, recording; errors by administrators, executors, trustees, guardians and attorneys; destruction of records. Improper deeds and wills- Deeds by persons of unsound mind, minors; deeds delivered after death or without the grantor's consent; invalid, suppressed, erroneous wills, missing heirs, unsettled estates. Liens and other rights- Liens for unpaid estate, inheritance, income, property and gift taxes; homestead rights, community property rights; irregular court proceedings, court opinion reversals, lack of court jurisdiction; defective foreclosures. Top of Page Top of Section What is Title Insurance? Title insurance is a contract to protect an owner against losses arising through defects in the title to real estate owned. If the title is insurable, the company guarantees the owner against loss due to any defect in title or expenses in legal defense of the title pursuant to the terms of the policy. Top of Page Top of Section Owner's Policies and Lender's Policies. A lender will often require a title policy for their protection alone. Such a policy does not protect the owner. To protect themselves against possible title defects, an owner should purchase an owner's title insurance policy on the property. Top of Page Top of Section Why buy Title Insurance? When a person buys a car or consumer goods, they seldom need to know whether the former owner is married, single, or divorced; whether they have paid their taxes or are involved in a lawsuit. But when a person buys a home, it is necessary to have all of that information and much more. For while he or she may own the property, others may also have rights in that same real estate. A competent investigation can uncover such items as unpaid taxes, easements, restrictions and more. However, all items affecting the title are not contained in a single book, in a single office, or even in the same city. Then, add to this the possibility of human error at a multiplicity of points. Yet what is not in the public records often causes title problems. For all these reasons and many more, a property owner needs the protection afforded by title insurance. Top of Page Top of Section What does Title Insurance Cost? The cost is directly related to the value of the property. The higher its value, the more coverage is needed. The premium is small compared to the total purchase price. The premium is paid only once and remains in force for as long as the property is owned by the insured and continues to protect the insured on warranties after it is sold. Generally, in Florida the cost of an owners title insurance policy is $575 on the first $100,000 and $500 per $100,000 thereafter. This is the minimum cost according to Florida law. For example on a property valued at $150,000 the title insurance would cost $575 + $250 for a total of $825. Please be advised these are estimates and that the actual cost may be somewhat higher depending on the title agent. The cost for an lender's title insurance policy which is to insure the lender is usually a nominal fee. Top of Page Top of Section Preliminary Title Report (Prelim) Once the earnest money contract is signed by both buyer and seller, a commitment for an owner's title insurance policy should be ordered. This commitment will be based upon a search of the public records. A preliminary title report issued by the Title Insurance Company that tells a buyer several things about the property. It tells you what liens are on the property such as the seller's current loan(s), state or IRS tax liens, or back property taxes. The prelim also notifies a buyer about any easements on the property. An easement is basically a right for someone else to use a portion of your land. For example, utility easements give the right to the Telephone Company to have telephone poles in your yard or cable companies to run cable under your property. The prelim will disclose those liens, defects or encumbrances that will be exceptions to coverage on the policy unless removed. Such a search will allow the purchaser to understand the manner in which the title company is willing to insure the condition of title and to insist upon the seller providing clear title to the property before exchanging the sales' proceeds for the transfer deed. Once this exchange is made and the transfer documents are recorded, the owner's policy will be issued, insuring the buyer against loss due to any undisclosed claim covered by his or her policy. If you have any questions, always make sure to ask the title officer assigned to the file to interpret the findings and make recommendations. Top of Page Top of Section Who Pays for Title Insurance? There are two title policies that must be purchased in a real estate transaction (except cash transactions). One is the owner's (buyer's) policy and one is the lenders policy. Generally, in Palm Beach County the seller pays for the policy that insures the buyer whereas in Broward County the buyer pays. The buyer pays for the policy that insures the lender in both counties. Top of Page Top of Section Who Picks the Title Insurance Company? In Palm Beach County, the seller usually through their agent will pick the title insurance company whereas in Broward County the buyer, usually through their agent will decide. Most title companies provide adequate service, however charges can vary significantly. Consult your agent or call a title rep for more information. Top of Page Top of Section Deciding How to Hold Title Your title agent and/or loan officer will ask you how you want to hold legal title to your new property. Here are 5 common ways to hold title to your new home. 1. Sole ownership. Most single or divorced buyers hold title in sole ownership. For example, John Doe, a single man as his sole and separate property. A married person can also takes title to real property in sole ownership. However, their spouse usually must sign a quitclaim deed giving up any ownership interest in the property. There are no tax or other advantages of holding title in sole ownership. When the sole owner dies, any real property held this way is subject to probate court upon the owner's death 2. Tenants-in-Common. When two or more owners take title to real estate, especially if they are not married, they often become tenants-in-common. For example, investors might select this method. Each tenant in common owns a specified interest in the property. For example, one owner might own a 60 percent interest and another could own a 40 percent interest. The percentage ownership is specified on the deed. A major advantage is that each tenant in common can sell or pass their interest by their will to whomever they wish. For this reason, tenancy in common is especially popular in second marriages, so each spouse can will their share to their children from their first marriage. However, tenancy in common property is subject to probate court costs and delays. 3. Joint tenancy with right of survivorship. When title is held in joint tenancy with right of survivorship, all co-owners must take title at the same time, own equal shares, and the surviving co-owner winds up owning the entire property. After a joint tenant dies, the surviving joint tenant(s) receive the deceased s share. The deceased s will has no effect on joint tenancy property. A major advantage is that probate costs and delays are avoided when a joint tenant dies. The surviving joint tenant(s) usually need only record an affidavit of survivorship and a certified copy of the death certificate to clear the title. 4. Tenants by the Entireties- A tenancy created by husband and wife jointly owning real property with instant and complete right of survivorship. 5. Living trust. A good way to hold title to real property is in a revocable living trust. There are many advantages, such as avoidance of probate costs and delays. Until the death or disability of the trust creator, the home and other real estate in the living trust are treated normally. Since the living trust is revocable, real estate can be bought, sold and financed normally. If the trustor becomes incompetent, the named alternate trustor (such as a spouse or adult child) takes over management of the trust assets. When the trustor dies, the assets are distributed according to the trust terms. Privacy is a major advantage. Unlike a will, which becomes part of the public probate file, the living trust terms remain private. Another advantage is that court challenges of living trusts are virtually impossible, whereas challenging a will by disappointed relatives occur frequently. Many people feel that the best method for most homeowners is the living trust, because of all its advantages and virtually no disadvantages. However, there is a fee for your attorney to set up a trust. Consult him or her for prices. 6. Corporate Name- Usually this is for properties purchased by corporations, however many foreign nationals choose to hold title in a corporate name for reasons ranging from tax ramifications to secrecy. Top of Page Top of Section Please consult your real estate attorney for advice on holding title. The Final Walk-Thru Inspection Topics Covered Below   Introduction When is the walk through done? Something is missing The repairs are not completed or done correctly The Tenants are still in the property What if the seller's are not cooperative in resolving problems   Introduction The buyer's walk through prior to the closing is to verify the repairs (if any) have been done in a professional manner. Be sure the tenants, if any are out of the property. Check that the seller has not removed any fixtures that are included in the sale like draperies or light fixtures. The walk-through is also a good time to check out any repairs that were performed. Finally, you want to be sure the sellers have moved or are in the process of moving. Top of Page Top of Section When is the walk through done? The final walk through is done prior closing, usually the day of the closing. If there is concern about the condition of the home or quality of repairs, if any, then a walk through can be scheduled much earlier. The reason for this is that I feel my buyer has leverage at this point to make sure the repairs and everything else have been done to the buyer's satisfaction. Top of Page Top of Section Something is missing Many times a seller will remove something like a light fixture or fan. Not only do they remove it, they either leave a hole where the fixture was or replace it with something of less value. If something is missing, the first thing to do is to have your agent send a letter to the seller's agent asking that the sellers return the missing item(s) or give you, the buyer a cash credit to replace the missing item(s). If the sellers are stubborn, use your common sense and weigh the value of the missing items against your desire for the house. Although the principle may be important, losing your dream home over an argument about a $100 fixture may not be wise. To avoid this situation, any items or fixtures that are unique or of special interest should be noted prior to making an offer. These items should be detailed in the sales contract. Top of Page Top of Section The repairs are not completed or done correctly Arguments over the quality of repairs can be a difficult point to negotiate. The repairs may appear to be done by a novice to you but the seller will argue that the repair has been completed as agreed even if you don't like the final product. The quality of repairs may be open to interpretation. I usually recommend that a buyer ask for a cash credit instead of having the seller make repairs. The only thing you can do is ask your agent to send a letter to the seller's agent asking the sellers to redo the job to your satisfaction or give you a cash credit to properly finish the repairs yourself. Once again use your common sense. If you got a great deal on the house and everything else is ok, it might be better to let it slide. As always, confer with your agent and follow his or her advice. Top of Page Top of Section The Tenants are still in the property One thing you don't want to do is inherit someone else's tenants. When you do your walk through check to see if the tenants have started packing, inquire if they have found a place, and find out when they anticipate moving. Make sure your agent follows up with the listing agent. I advise you not close if the tenants and their belongings are not out of the house. Every situation is different, please consult your agent for his or her advice on the best way to deal with the problem. If the seller is motivated to close, the agents should put some pressure on the seller to get the tenants out. Sometimes a small cash inducement from the seller to the tenants to leave promptly works wonders. Top of Page Top of Section What if the seller's are not cooperative in resolving problems If any of the problems above can't be resolved amicably and you don't want to just forget it, read on to see what you can do. At this point you are ready to close or you are at the closing table. All you need to do is sign the loan docs and bring in the balance of your down payment. At this point you have leverage. The agents want the deal to close so they can get paid. Your lender wants the deal to close so he or she can get paid. All the vendors, termite, title, etc. want the deal to close so they can get paid. And of course, the seller wants the deal to close so they can get their check. It's all up to you. Important note: The buyer does not have a cancellation right. The walk through is solely to confirm that the repairs if any have been completed as agreed and that the seller has complied with seller's other obligations. Nevertheless, you do have leverage. I would advise my buyer to do nothing. Do not sign any of the closing documents or the loan documents. I would inform the seller's agent that you're not budging until the issues are resolved. What usually happens is the agents will start to feel the heat. They just want to close. They are so close to a paycheck that they will put heat on the seller to perform. Or in many cases the agents will chip in to make good on the repairs or missing items. However, always verify with your mortgage lender that you are not jeopardizing your loan or interest rate lock. Also ask when your loan documents expire. NEVER DO ANYTHING THAT WILL JEOPARDIZE YOUR LOAN. You'll need to work closely with your lender and agent to make sure of the time constraints. Remember interest rate locks expire as do loan documents. If the interest rate expires you will have to re-lock your interest rate and you might get a higher rate. If your loan docs expire, you will be charged about $300 to redraw the loan docs. Use your common sense. You will have to make a decision on how far to go. Top of Page Top of Section The Closing Topics Covered Below   The Closing Process Homeowners and Flood Insurance The Estimated Closing Cost Settlement Statement (HUD-1) Final Loan Approval Signing Your Loan Documents Funds to Close Funding the Loan Recording the Deeds Change the Utilities to Your Name After The Closing HUD-1 Settlement Statement Paperwork to Keep Change the Locks Internet Change-of-Address Service Apply for Homestead Exemption   Homeowners and Flood Insurance You will need to give your insurance information to the title company as soon as possible before the closing. They can't close without it and lenders will not draw closing loan documents without it. Give your loan officer your insurance agent's name and phone number and they will be able to help coordinate things. You must obtain a signed original insurance binder from your agent, which you must bring to the closing. Remember to inquire if your home is in a flood zone and to obtain flood insurance as well. For more detailed information about insurance click here. Top of Page Top of Section The Estimated Closing Cost Settlement Statement (HUD-1) Prior to closing you should get (or ask for) the estimated closing cost settlement statement from the title company. Look at the buyer charges and make sure they look correct. If you have any questions, ask your agent, the title agent or your loan officer to explain them. Many times the HUD-1 is not ready until shortly before the closing for various reasons. There is no need to worry. You can't close without this statement and all parties will review the statement at the closing. If there are any mistakes they can be easily corrected on the spot. Top of Page Top of Section Final Loan Approval Your loan is approved. However, sometimes there are conditions that need to be cleared up before the lender funds the loan. They may want another explanation letter for something or they may want a correction on a document. Whatever the case, the title agent, the mortgage broker, or your agent will work to solve these conditions. They are usually just minor items that need attention, but talk to your agent or mortgage broker if you have any questions or concerns. Top of Page Top of Section Signing Your Loan Documents Your lender will send the closing documents to the title company for you to sign. Loan docs spell out all of the terms and conditions of the loan such as the interest rate, term of the loan, loan points, and your actual payment. Once the docs are signed they are sent back to the lender. Top of Page Top of Section Funds to Close Before the closing you will usually have received a copy of your HUD-1 closing statement that will show the balance you owe to close. The title agent will instruct you to bring in the balance of your down payment and closing costs. You will be asked to bring in a cashier's check or to wire the money directly to their account. Top of Page Top of Section Funding the Loan At this point the lender has already wired the funds into the title company's bank account. Once everything has been signed and sealed the title company will disburse checks to all the interested parties to the transaction (seller, loan officer and your real estate agent). Top of Page Top of Section Recording the Deeds The title company will take the deeds to the county recorder to record all of the documents. You will receive copies of all the documents you signed at the closing. However, the recorded Warranty Deed along with your title insurance policy will be mailed to you several weeks after the closing. If you do not receive these documents be sure to call and ask what happened. Top of Page Top of Section Change the Utilities to Your Name Don't forget to change the utilities in to your name. Usually the seller needs to cancel the utilities before the utility companies will allow you to put them in your name. Have your agent remind the seller's agent to remind the seller. I usually recommend making the changes 2 or 3 days before the actual close. Your agent should have all of the utility company phone numbers. Click Here for utility company phone numbers and other useful phone numbers. Also check out Useful Links & Info for more information. Top of Page Top of Section After the Closing HUD-1 Settlement Statement As discussed elsewhere, at the end of the closing, the title agent will issue a settlement statement referred to as the HUD-1. If somehow you have not reviewed this statement up to this point then do so now to be sure all charges and credits are correct. This itemized statement shows all of the charges and closing costs that you paid as well as any credits you received. Your agent will also receive a copy of the HUD-1. If you have any questions ask your agent or the title agent to go over the statement with you. Top of Page Top of Section Paperwork to Keep Make sure you keep a complete file of all of the closing documents, real estate contracts and loan documents. Your accountant will need your HUD-1 statement when preparing your taxes. Some of the closing costs and pre-paid interest are tax deductible. Top of Page Top of Section Change the Locks I always recommend that my buyers change all locks immediately upon gaining possession of the property. You don't how many keys are floating around and who has them. This is also a good time to consider checking window and sliding glass door locks. You'll have greater peace of mind knowing that all your locks are changed and that all points of entry to the house or condo are secured. Top of Page Top of Section Internet Change-of-Address Service Don't forget to notify everyone of your new address. A great web-based change-of-address service is AddressCorrection.com. This is a great service I found on the internet. This site will take care of notifying companies and individuals of your new address when you move. They have an extensive database of companies, organizations, and government offices that you can pick from. You can reach their web site at: http://www.addresscorrection.com/default.asp Good luck! Top of Page Top of Section Apply for Homestead Exemption All legal Florida residents are eligible for a Homestead Exemption on their homes, condominiums, co-op apartments, and certain mobile home lots if they qualify. The Florida Constitution provides this tax-saving exemption on the first $25,000 of the assessed value of an owner/occupied residence. You are entitled to a Homestead Exemption if, as of January 1st you have made the property your permanent home or the permanent home of a person who is legally or naturally dependent on you. January 1st is the date on which permanent residence is determined. For more detailed information on the Homestead Exemption Click Here. 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