Buying a house in Florida: frequently asked questions and answers

Be honest: haven’t you ever thought about buying a property in Florida and fulfilling your dream of owning your own vacation home? Such thoughts raise many questions, many more of which you don’t even ask yourself and end up with nasty surprises. Below, Monika Wilson from Century21 has put together a question-and-answer catalog on buying a house in Florida based on her experience with my “foreign” clients.

When buying a property in the USA, there are only minor costs for the buyer. As a rule, the seller pays the closing fees. He pays the registration fees, the title company (notary’s office) and the title insurance. The buyer then only pays a small closing fee, usually less than USD 500. The property tax is paid by the seller until the closing date, then by the new owner. If the buyer takes out a mortgage, the closing fees for the mortgage are payable by the buyer.

The Title Search searches for old debts and encumbrances. As a rule, these must be paid or cleared by the seller before the contract is concluded. The title company will not conclude a real estate sale with old debts or encumbrances. In addition, the seller takes out title insurance for the buyer, which – should the title search have overlooked something – pays for the damage.

In principle, the above-mentioned costs are incurred when selling the property. The seller pays Title Insurance, Title Search, Doc Stamp and the commission for both the seller’s and the buyer’s estate agent. In addition, there is a ten percent levy for foreign sellers, but this is usually refunded to the foreign seller after a few months.

The more information the buyer gives the estate agent, the easier it is to find a suitable property. The following considerations are helpful for the estate agent in advance: What kind of property should it be? House or apartment, with or without a pool, on the water or not, near a golf course, in a gated community or not, the desired age of the property, the infrastructure and – of course – the purchase price.

As everywhere else in the world, the most important rule for the ideal property is: location, location, location. The estate agent then searches for current real estate offers according to your criteria that come closest to your ideal expectations. The most difficult thing for us estate agents is when a prospective buyer comes with the idea: “I want to buy a property, but I’m not sure whether it’s a house or an apartment, I don’t have an asking price, send me something.”

We have about 5000 properties on the market here in Southwest Florida and can’t just send out offers without a more specific idea.

This is difficult to answer and also depends on your ideas. Apartments and gated communities have the advantage that you don’t have to worry about almost anything and when you leave, you close the door and the issue is taken care of.

However, closed residential complexes and apartments incur monthly housing allowances. If there are many bank foreclosures or short sales in this complex, the affected owners naturally do not pay this housing allowance. This increases the burden on the remaining owners and thus the housing benefit for them. The communal areas still have to be looked after and maintained. Gated communities or apartments also have certain rules:

For example, some do not allow short-term rentals, BBQs, pets and so on. For a “normal” house (not a gated community), you usually need a garden service and/or pool service and, if you rent out, a caretaker to look after the property while you are away.

There are some good search engines that import their information directly from our MLS (central database of estate agents). Some of them make a comparison with the MLS several times a day and are therefore always up to date. One of the best search engines from my point of view is “Listingbook”. There you can enter criteria and save favorites.

Listingbook sends a daily email with new listings that match your criteria as well as price changes and sales. Unfortunately, Listingbook is not yet available everywhere. Realtor.com is also pretty good, but they don’t do the results matching as often, so some properties are already out of date. (sold or out of date) Zillow and Trulia are even worse, some of their listings are years old.

The best way to find a good estate agent is through recommendations from people who have already worked with them. Another way is to look at the brokers’ websites – how much information is given – the more the better.

Here, every estate agent has access to all properties on the market. Every estate agent throws their offers into a big pot, the database. Every estate agent working in the relevant area can then take properties from this database and sell them. This gives us the opportunity to serve our customers optimally and the buyer only needs to work with one estate agent. The commission for both agents (buyer and seller) is paid by the seller.

After selecting the property, a written offer is submitted by the buyer broker to the seller broker. Attention! This offer becomes a legally binding purchase contract if the seller accepts it without any changes. However, if the seller submits a counter-offer, it is only a counter-offer and not a contract. If the seller accepts the offer, a down payment is due, the amount of which is specified in the contract. This deposit is paid into an escrow account and remains there either until the purchase is completed or until the contract is terminated.

As a rule, the buyer’s agent will always make an offer contingent on a home inspection. During this inspection, the home is “inspected” for roof structure, air conditioning, electrical, plumbing, Chinese/defective drywall, construction, termites, mold, … as well as the functionality of all appliances.

Normally, the buyer has 10 days after the offer has been accepted by both parties to have such an inspection carried out. If the home inspector finds a defect – no matter how big or small – the buyer can withdraw from the contract without any problems and free of charge. In this case, the deposit paid will be returned to the buyer in full. The home inspection, however, is paid for by the buyer.

If necessary, the contract is made dependent on financing . If the buyer does not receive this financing, the contract can also be terminated and the down payment is returned to the buyer in full.

If the home inspection is satisfactory to the buyer, the contract goes to the title company, which, like a notary’s office in Germany, carries out the purchase in trust. The title company then conducts the aforementioned title search. It prepares the closing documents, which are signed by the buyer and seller on the closing date. The agency then arranges the necessary entries in the land registry.

Property tax is paid retroactively. The sales of similar properties in the same area serve as the basis for assessing property tax. Unless the property has homestead exemption (here in Florida, homestead exemption is given if the property is the primary residence) the property tax is equalized to these prior year sales.

If the value of the property rises or falls, the property tax goes up or down accordingly. With Homestead Exemption and Save our homes, the property tax (or the value of the house) is frozen and the tax can only increase by 3% – regardless of whether the value of the house increases.

Yes, there is no difference whether you have a visa or not. A foreigner can buy a house in the USA even without a visa or green card and is officially entered in the land register as the owner. However, the purchase of a house has no influence on possible immigration or the receipt of a visa. The “normal” entry requirementsfor the USA still apply.

Yes, but the conditions are somewhat more difficult. Banks require an equity capital of 25 to 35 % for financing real estate for foreigners, usually with higher interest rates.

Short and long-term rentals are possible. However, in the case of apartments or houses in closed residential complexes, you should ask the association whether they allow rentals. For all other properties, short and/or long-term rentals are possible without further ado.

There are good and bad managers and here is my best tip: Talk to other clients of the manager or real estate agents. As estate agents, we usually know which property managers keep their managed properties in good condition and which ones do not.

A good estate agent will be happy to provide the buyer with sales figures for similar houses in the same area. A comparison will show whether the price offered is justified. Also, it is always better to buy the ugliest house in a good neighborhood than the other way around. Of course, you should not buy real estate in a high-price market but rather in a low-price market.

You should also always bear in mind when investing that a house you buy for USD 200,000, for example, will rise in value to USD 400,000 more quickly than a house you buy for USD 400,000 will rise to USD 800,000. The same applies, of course, to a house you buy for USD 1,000,000: It will rise to USD 2,000,000 faster than a house will rise from USD 2,000,000 to USD 4,000,000.

My advice here is once again: location, location, location. You can always change a house itself, but not its location. Buy in a buyer’s market rather than a seller’s market and in a falling market rather than a rising market.

That varies. Sometimes you can negotiate a lot, sometimes not at all. Unfortunately, there is no rule of thumb here. Some sellers have offered their houses at or even below market price, while some sellers are completely above market value. It also depends on how motivated the seller is. However, an experienced estate agent has experience in this area and can advise you.

The purchase of a bank foreclosure is similar to the purchase of a “nominal” house. The only difference is that the owner of the property is not a private individual but the bank. It cannot generally be said that bank foreclosures are in poor condition. However, some are. Many banks have the houses cleaned and, if necessary, painted and renovated.

There are bank foreclosures that you can’t tell are bank foreclosures. But there are also some where you first have to send the cleaning crew through and all the doors, washbasins and so on are missing. However, such houses are rather rare.

They are actually “milking mice”. In a short sale, the owner is still the owner, but owes more than the house is worth. The bank may settle for less money and book the rest as a loss. It reads well, but in practice this is a very cumbersome and lengthy procedure.

The banks naturally want to delay reporting the loss for as long as possible. Just a few months ago, short sales of this kind dragged on indefinitely – 6 months was not uncommon. And during all this time, the buyer does not know whether the seller’s bank will accept the offer or not. During this waiting period, the buyer may lose out on other offers that would also have met their expectations.

For a few months now, however, these processes have been improving, the banks are staying in contact with both brokers and they are trying to speed up the process of a short sale – with more or less success. Once the seller’s bank has approved the offer, a short sale proceeds like a “normal” purchase.

The running costs of a house are

Yes, but the banks require a lot of forms to be signed and a copy of your passport. There are banks that do not charge account maintenance fees. Internet banking is offered by almost all banks and this also works from abroad.

As estate agents, we are not allowed to provide information about a “good or bad” residential area. This is considered discrimination or steering. I recommend: Drive to the neighborhood you are interested in at different times of the day. Talk to the potential neighbors. Look at how well-kept or unkempt the houses in the neighborhood are. You can find out about crime on the local sheriff’s department website. Crime statistics are published here.

All of this information pertains to Florida. In some other states, the rules are a little different than here – but by and large, this information should provide a guide with which to “drill” your chosen broker.

This article does not constitute legal advice, but is for general information purposes only.