The purchase of a home involves many steps, which we’ll detail below. They include:
- Define your goals.
- Contact the appropriate real estate professionals, which include: a real estate agent to help you find the home, a mortgage broker to pre-approve you for a loan (if the property will be financed), and a real estate attorney to handle the closing and look out for your interests along the way.
- Find and select the ideal home or property to purchase.
- Make an offer and negotiate with the seller. Be sure the contract is reviewed by an experienced attorney before you sign it.
- Take all necessary steps once you’ve signed the contract to move towards closing.
- Close the deal!
FINDING THE PERFECT HOME FOR YOU
Before making this important purchase, take the time to determine what you can afford, the ideal neighborhood you’d like to live in, and what features you need or want in a home. You should drive–and walk–around prospective neighborhoods to get a feel for whether you want to spend many years of your life there. (Or, if this is an investment property, whether prospective tenants will want to.)
A qualified mortgage broker or bank representative can help you determine how much home you can afford to buy. You’ll also need to have the cash necessary for a down payment available, so if you find a property quickly you’ll be able to act.
A real estate agent who has experience in the geographic areas you’re considering is a crucial aspect to getting the right house at the right price.
Once you’ve found the ideal home, the real estate agent can help you negotiate the price and any other conditions of the sale.
At this point, it’s imperative that you have an experienced real estate attorney look at the contract before you sign it, to explain confusing clauses in the contract and point and things you might want to change. There is no such thing as a “standard contract.” Each deal is individual. Remember that once a contract is signed by both parties, no changes can be made. At the time you sign the contract, you’ll give your Realtor your deposit check, which is then held in “escrow” until the closing.
STEPS TO BUY AND CLOSE ON A HOUSE IN FLORIDA
The following steps are typically what you’ll go through from the time you have a signed contract to your closing. The same real estate attorney who reviewed your contract will oversee this process, explaining what you need to do and ensuring that everything goes as smoothly as possible.
LOAN APPLICATION
If you’ll be financing the property, you’ll need to complete your loan application. Be sure to find a reputable lender or mortgage broker who can best meet your needs. During this process, buyers must provide the lender all pertinent information regarding their assets, income, debts, and credit history. If all goes well, especially if the buyer has been pre-approved, the loan should be approved without issue.
HOME INSPECTION AND REPAIRS
You’ll want to immediately have a thorough inspection (including all aspects of the home and also checking for termites) performed by a licensed inspector. It is required if you’ll be getting a mortgage, but even if you will not, this is important to do. Most contracts state how many days, such as 10 or 7, you have to complete the inspection. This is done during the Due Diligence Period which is part of the Purchase & Sale Agreement.
DUE DILIGENCE
After the inspection report is concluded in a timely fashion, most contracts grant buyers the right to back out of the deal if the promptly-done inspection reveals hidden flaws you can’t live with. These are called “As Is” contracts and are now the most commonly used contract type in Florida. Some contracts require the seller to instead fix the problems uncovered, up to a set amount. It is critical that the inspection be completed during the stated time period and that a buyer who wishes to cancel the deal and get their deposit back do so during that same time frame. Missing this timetable is the biggest problem I see buyers have; don’t let this happen to you.
APPRAISAL
As a part of the loan approval process, if a lender is involved they will require that the property be appraised to ensure that the value of the property is adequate to justify the loan. Although the buyer and seller have already agreed on a price, the appraiser’s evaluation must support that price. If it does not, the sales price may have to be lowered.
REAL ESTATE TITLE
The closing agent (a real estate attorney or a title company) is selected by either the buyer or seller, depending on the terms of the contract. The closing attorney will check the records to be sure the title is “clear.” If it is not, they will work to remove any liens or other problems so the sale can be completed. The attorney also prepares necessary paperwork, and handles the receipt and distribution of all monies in the transaction. If there are any disputes between the buyer and the seller before the actual closing, the buyer’s attorney (who may or may not be the closing agent) will advocate for the buyer.
HOMEOWNER’S INSURANCE
If the home will be subject to a mortgage, the buyer must arrange for a homeowner’s insurance policy covering the property. These arrangements must be made prior to closing and the policy must be presented at the closing.
RE-INSPECTION OF REPAIRS
If the seller has made repairs, the buyer will want to see records of completion and payments. Buyers will “walk-through” the property before the closing, to ensure satisfactory completion. This walk-through should happen even if no repairs were needed, to be sure the property is in the same condition it was in when the buyer first saw it.
CLOSING
Everyone comes to the office of the closing agent or Realtor to sign all of the paperwork. Your attorney will have carefully reviewed the closing disclosure form (called a CD) before the closing to be sure all the figures are correct. When both buyer and seller have signed all the papers, the funds are transferred to the seller, and you get your keys.
Congratulations, now you’re a Florida homeowner!
Careful planning and having a team of experts are essential to ensuring a smooth, successful home-buying process. The Law Office of Gary M. Landau has been helping buyers in South Florida close on their homes for more than 20 years.