What types of Properties are available?
TYPES OF HOMES AVAILABLE TODAY
Today, the majority of homes available fall under 3 distinct types of sellers and each type of property they are selling has its own set of special circumstances. Understanding them will help you in the process of trying to decide what is best for you and your particular needs.
Bank Owned Foreclosures
Price: These are often the best prices of any of the houses on the market
Condition: Extensive cosmetic and structural work is sometimes needed as well as repairs to appliances, thereby accounting for the "special price". Because REO properties are sold "as is", it is important for you to have the home inspected and be prepared to have utilities turned on for the inspection.
Offer: You’re offering price, while it is significant to the bank, in not the important factor. Cash offers and small mortgages willing to buy "as is" and "where is" carry more weight. You must provide a pre-approval letter stating qualification or proof of funds if paying cash. The bank will often take time and seek other offers while considering yours.
Closing: While these properties have been known to proceed quickly it is not something you can count on 100%. If you are not under any particular time frame this won't be an issue.
Pre-Foreclosure Short Sales
Price: Short sales are usually priced better than other properties but the bank will have to agree to the price which is usually less than the original mortgage.
Condition: This will vary depending on how long the seller has been in financial trouble and your home inspection will help to determine this.
Offer: Since it is contingent on Bank approval, price is key and you should be prepared to supply a letter of approval with your offer and they too will continue to look for other offers while considering yours.
Closing: It could take 45-90 days for closing.
Seller Owned Properties
Price: Although not typically the least expensive of properties available for sale, they are usually fairly priced.
Condition: The majority are in excellent condition as they are compared to other homes priced under market value.
Offer: They will usually not engage in long negotiations and extremely low offers are often unacceptable. All offers will require a pre-approval letter.
Closing: Very quick comparatively speaking and can often be determined by the purchaser.
How do I go about finding a property?
Initial Consultation: Determine your priorities and needs
Discuss Financing options
Obtaining Financing
Consult with Loan officer
Consult with a Mortgage Consultant
Complete Application
Obtain Pre-approval
Provide Documentation
Finding the Right Home
Agent to show you properties based on your criteria
Evaluate each property with Agent to determine best home to purchase
Preparing an Offer
Review Comparable properties to determine offer
Review progress of loan pre-approval
Decide on terms (Inspection, Closing Date etc.)
Prepare deposit for purchase
Reaching an agreement with a Seller
Agent presents your offer to the vendor
Negotiation of terms & counteroffers
Complete the process
Deposit for purchase
Review of Disclosures
Review Title Report
Roof, Termite, etc. Inspections
Remove any contingencies
Arrange for Insurance
Arrange for Warranty
Arrange movers
Final walk through
Sign Documents
Transfer of funds
Recording of title
Receive Keys
MOVE IN
Does working with you cost me anything?
NO, Just like here in Canada, the commission is paid by the Vendor as it has been accounted for in the listing of their property.
Do I need a lawyer?
No. Real estate transactions in Florida are typically covered by title insurance. The title insurance is paid by the vendor i.e. they are insuring title for you. The purchase transaction is usually handled by a title agency and they are usually engaged by the vendors on the recommendation of the real estate agency representing the vendor.
Although their fee is paid by the vendor, title agents have a fiduciary duty to represent both buyer and seller in a professional manner. The title agent will check for liens, chattels and other encumbrances on the property and ensure that the buyer is purchasing the property free and clear.
If there is a mortgage involved for the buyer, the title agent will charge a fee to the buyer to make all the arrangements, pay the registration (tax stamps) fees, etc. and place the security as instructed by the lender.
Prior to closing, the title agent will prepare a HUD statement outlining all fees, utility adjustments, interest adjustments, tax stamps, property tax adjustments, mortgage payouts, etc. Both buyer and seller are given the opportunity to review the HUD statement and request changes where appropriate.
Is there sales tax due when buying a property in Florida?
No. There are some nominal state “documentary stamps” –or filing fees –due at closing. The amount of fees paid is different if paying cash or financing the property.
Property Taxes:
There are many falsehoods and misunderstandings regarding property tax on Florida property.
All homeowners are required to pay property tax based on the assessed value of the home. The mil rates vary by community and county. Municipal taxes are very broad and often include policing, school taxes, water and sewer fees, community assessments and other varied charges. The taxes are applied equally to all home owners and similar to the arrangement here in Canada, the assessed value of the home is reviewed on a regular cycle to ensure that assessed values are in keeping with market conditions.
In most cases, the tax assessment will be adjusted up or down after closing based on the actual purchase price. If there is a CDD (community development debenture) or HOA (home owners association) fee associated with the community, these fees are often collected by the municipal authority.
Native Floridians/US citizens have the option to apply for ‘homestead’ status on their property which places a cap on the annual increases permitted by municipal authorities. Canadians do not qualify for homestead exemption and are subject to market increases in value and assessments.
How Do I pay my Bills in Florida?
We encourage all our clients to set up US dollar accounts both at home and in Florida. With the local account you can convert money at any time when rates are favorable and then transfer to your Florida account prior to vacations or to cover upcoming expenses. Wherever possible, we encourage our clients to receive their statements/invoices and pay all bills via the internet. Internet banking is secure and convenient. You may return to your Florida home (after a 2 month absence) and find your power and water cut off!! Your bills were probably being sent to your Florida address and you weren't getting them. If you are uneasy about internet bill payments, then we strongly encourage you to have all your invoices sent to your home address in Canada. If you will be away in Florida for extended periods, have a friend or family member forward the US mail to you.
Can I get Home Insurance?
If you live in a condominium project, the condo fee usually includes the cost of property and fire insurance. Most condo corporations require owners to maintain condo owners insurance to cover the contents of the unit. These policies generally run about $200 per year. If you have a single family/detached tome or a town home, you will have to obtain a fire insurance policy. As is the case in Canada, the cost of the policy will depend upon the amount and extent of coverage. Budget on $700-1000 per year for home owners insurance. When looking at property, especially close to water/coastal areas, enquire about flood coverage. The area where you are contemplating ownership may be in a flood/surge zone.
What expenses should I expect relating to a home in Florida?
Owning a home in Florida is no different than owning a home here in Canada. You will have the same expenses with perhaps a few new ones thrown in. Almost all fees and home ownership costs can be put on an automatic debit plan through your US bank. We recommend that you have all bills sent via email or to Canada. The common expenses would be:
Power - usually with Florida Power & Light. Billed monthly to cover normal power consumption related to appliances, lighting and the Air Conditioning system. For most snow birds, the AC is reasonable in cost and only kicks in after mid March and through the summer and early fall period. Power costs are generally reasonable and they will vary based on personal comfort preferences;
Cable, telephone & internet - there are many service providers who will 'bundle' a package for you. Normally, the competitive rate for all 3 items runs about $100 per month. These services can be put on vacation mode (with a small monthly standby fee) if the property will be vacant for extended periods. The monthly fee can escalate quickly if you add movie or sports packages. Most phone plans come with unlimited North American calling which is a great feature for NL'ers!
Natural gas - some homes are equipped with gas for cooking, clothes dryers, AC system heat backup and pool heating. Gas is billed monthly based on consumption and is generally very reasonable.
HOA fees - (Home Owners Association) many communities have lawn care maintenance provided in the monthly fee. As well, some communities have very attractive and extensive landscaping provided on the main boulevards and the entrances to each sub-community within the development. In addition, it is not uncommon to have a community swimming pool and a recreation center in large developments. The costs to maintain all these common facilities are charged monthly to home owners in the form of a HOA fee.
Can I get a mortgage from my Canadian Bank for a home in Florida?
The short answer is no! Canadian banks cannot hold security or enforce an action on property outside their Canadian jurisdiction. Since the banking fiasco of the '07-'8, American banks have tightened up the lending and underwriting criteria. Most US banks will lend to Canadians with a minimum 20% to 25% down payment and provided you meet their credit standards. Most of our Canadian banks have a US affiliate/partner i.e. Royal Bank has RBC Bank, BMO has Harris Bank, CIBC has Mellon Bank, etc. Check with your local account manager for their US counterpart and have your Canadian bank provide you with a letter of introduction. Many buyers also take advantage of the equity in the Canadian home by taking out a home equity line loan to finance the US property.
Who takes care of my Florida home while I am away?
There are several factors to consider when looking at how to manage your Florida property while you are away. Some of these may be utilizing neighbors for short term time frames or utilizing one of the following options which will help to answer the WHO is going to care for your property as well as the COSTS that will be associated with it.
HOME WATCH
The idea of a professional HOME Watch company is a great investment for those using their Florida home a vacation property. For fees averaging around $60 -$100/month you will have peace of mind knowing that someone is looking after it. Keep in mind as well that you may need pool or lawn care that will average around $90 /month each.
TYPICAL HOME WATCH SERVICES:
• Check ALL doors and windows for safety concerns
• Check security system
• Look for signs of any water issues and check plumbing
• Monitor internal climate control
• Check operation of smoke detectors
• Check Electrical Panel for issues
• Check automatic sprinklers
• Inspect for any insect or animal issues
• Immediate reporting of any abnormalities found
• Start and run vehicle(s) and boat(s)
A Leasing Firm
Are you looking to RENT out your property while you are away? For some this is a great way to maximize the investment potential as well as knowing that there is someone in the area who can arrange everything for you. Along with the services of a home watch company, the leasing firm markets your property, handles tenant applications and payments, checks tenants in/out, arranges end-cleaning, pays expenses out of your account, provides monthly reports, and supervises repairs. The usual cost for this is about 10-20% of gross rent for a full-service firm depending on the services required.
Please complete your due diligence when purchasing property in the U.S. The questions above are meant as a starting point of discusions and negoititions and may or may not be accurate. Before you purchase please verify that all information is true.
