General Information about Buying Real Estate in Florida

Purchasing a piece of property in Florida is no more complicated than in Europe, yet there are significant differences in the procedure, which may leave the European buyer with a few questions. Who pays the commission, for example? When and where is the closing being held? Do I have to file for a tax ID number? Below you'll find answers to the most important questions.

1. Who pays the commission?

The commission is usually paid by the Seller of the property, if it is officially listed with a Realtor. The Seller's agent splits the commission with the Buyer's agent. i.e. you, as the Buyer, normally do not have to pay any commission fees.

2. What exactly is the MLS system?

In Florida, every property listed for sale with a real estate office is entered into the so-called MLS system, the Realtor Association's central database for a specific area. There are two Associations in Southwest Florida, one for the Cape Coral/Fort Myers region, the other for the area around Bonita Springs/Naples. We are one of the few local real estate companies who belong to both Associations. As a result, we are in the fortunate position to offer you all the properties that are listed for sale, from existing homes and new construction to short sales and foreclosures (more details below.) You will not miss out on a single property despite only working with one single agent.

3. What types of properties are offered?

There are four basic categories:

• Resale - existing property
• New Construction - offered by the builder, frequently before construction even begins
• Short Sale - forced sale where the bank (mortgage holder) must agree to the price
• Foreclosure - offered by the bank after the property was foreclosed

About 80% of the properties on the market are in fact resale properties. Short sales and foreclosures can be really good bargains; however these properties are sometimes in deplorable condition so that further investments might be necessary.

4. The purchasing process from A to Z

Once you have decided on a specific property, your Realtor will submit your written offer, which not only includes the purchase price but also other terms such as financing, down payment, whether furnishings are included and when the closing is to be held. The Seller is given a specific deadline to accept the offer or make a counter offer, which is normally the case.

Once all the details have been agreed on, the contract is sent to a title company which handles the closing and ensures that everything is done properly. The down payment - typically around 10% of the sales price - is deposited into the title company's escrow account.

From the Buyer's perspective, it's a good idea to have a home inspection done that will bring up possible issues at the property. The sales contract determines up front which side is responsible for the repair costs - usually the Seller up to a certain amount, but there are also so-called "As Is" contracts when properties are purchased in their current condition. This also applies when buying a foreclosure. However, you can cancel the contract if the inspection results do not meet your approval.

Once the big day has arrived, the entire amount due must be in the title company's escrow account. Ownership rights are transferred from the Seller to the Buyer during the closing and confirmed by a title insurance policy that protects the new owner against potential third party claims. The necessary paperwork can be signed in the title company's office but that is not required, i.e. you do not have to be physically present in Florida for the closing.

5. What is automatically included when buying a home?

Unless otherwise determined in the sales contract, certain items (fixtures) are included in the sale, such as ceiling lamps, ceiling fans, blinds, A/C system, built-in closets and the entire kitchen with stove, refrigerator etc. In many cases, washer and dryer are also sold with the property.

6. Do you need a U.S. tax ID number when buying real estate?

In Florida, you do not need a U.S. tax ID number to purchase real estate, nor do you have to be a U.S. resident. However: When the time comes to sell the property, having a U.S. tax number is a distinct advantage. Please consult your tax advisor in this matter.

7. What taxes and fees are due when purchasing a property in Florida?

There is no land transfer tax in Florida, and real estate purchases are not subject to sales tax. Since the Realtor's commission is covered by the Seller in most cases, the Buyer's costs are on the low side. He pays only for the entry in the tax records and a nominal processing charge to the title company. Depending on the county, the title company fees can be the responsibility of either party - in Cape Coral (Lee County) the Seller is responsible, while in Naples (Collier County) the Buyer will be charged.

Annual property taxes are a fact of life even when living in paradise. They frequently include other fees such as garbage collection. The tax rate can vary significantly based on the location of the property. Looking at the Seller's previous property taxes will give you an idea what to expect, but keep in mind that properties used as homestead can claim an allowance, while investment properties cannot.

8. What exactly are HOA fees?

If you purchase a property that is part of a community, such as a condominium, there will be Home Owners Association or condo fees. They are usually charged on a quarterly basis and cover items that concern the entire community, such as insurance for the building or the maintenance of common areas, plus reserves for larger projects like a new roof. Sometimes, these fees also include water and cable TV.

9. How do you find a bargain when you are not in town?

Ideally, you decide on the property while you are in Florida, but if you find a bargain online and cannot make it down here, it still makes sense to submit an offer. (Bargains tend to sell quickly.) Your Realtor will support you by adding a home inspection contingency in the contract that will allow you to withdraw your offer, if the bargain turns out to be a bottomless pit in fact.

10. Who takes care of the property after the purchase?

Prior to closing, the Buyer should make arrangements for someone look after the property in his absence. The Realtor will be able to recommend reputable property management companies. These companies offer a number of programs, from a simple home watch service, where the property is checked regularly, to complete bookkeeping and/or vacation home services.