A step by step guide to home ownership in MiamiMarch 26, 2021
A step by step guide to home ownership in Miami
For all international buyers, it’s essential to have an adequate knowledge of the intricacies surrounding real estate transactions (as well as legal and tax issues), before committing to invest in Miami real estate.
Step 1. Determining the end-goal of your investment
Firstly, in order to save time, you need to consider the following:
- What is your reason for buying a property?
- personal use
- vacation/ second home
- investment property
Secondly, it’s important to also decide on the following:
- Type of property
- Your budget
To get a good idea what kind of real estate is available for purchase and at what price points, go to our website at www.MiamiLuxuryResidences.Com. There, you will find a database listing everything available for sale in the South Florida market.
To find out our top areas to live in, check out the Neighborhood section on our website here.
Step 2. Choose a Realtor to work with
It’s highly recommended to work with a professional when buying or selling real estate in South Florida. A licensed professional will work with you after signing an agreement, and will adhere to a strict code of ethics. Therefore, you can expect honest treatment in all transaction-related matters. Their primary obligation is to you, the client.
Buying or selling a home usually requires dozens of forms, reports, disclosures, and other technical documents. A knowledgeable expert will help you secure the best deal, and avoid delays or costly mistakes. What exactly? They can also provide local information on utilities, zoning, schools, and much more. Additionally, they have access to objective information about each property and their specifications. This data will help you narrow your search and determine if the property has everything you need.
A licensed professional can help you find opportunities that are not listed on MLS, and avoid out-of-date listings that might show up as available online when, in fact, are no longer on the market. For most people, a property is the largest purchase they’ll ever make – so having a helpful, but objective, third party helps you stay focused on the issues that are most important to you.
Over 90% of a transaction is handled by the realtor you work with, so choose carefully!
Step 3. Financing the Deal
If you are paying cash, the transaction is very straight forward and can close as soon as the closing documents are ready. From the other hand, if you are financing, the process will take a little longer. Please see the Foreign National Mortgage document for more detailed information on how to gain financing.
In short, it is advisable to purchase a property as a legal entity.
As soon as you give your realtor the green light, he will forward your information to our experienced attorneys, who will set up your Limited Liability Company (LLC) for an approximate cost of $750. This cost is tax deductible. A couple of days later, the attorney will send you back the company ‘articles of organization’ and ‘operating agreement’. As a result your real estate agent is now able to submit offers on behalf of your company!
It is also recommended to have a US bank account set up to manage the property: pay bills, collect rent, and to cover any maintenance fees.
Step 4. Property Search
Depending on your goals, we will look for the best opportunity for you. Once we find something which fits with your needs and budget, we will send you a detailed review.
Step 5. The Offer
The offer is made by means of a contract, signed by the buyer and presented to the seller through the participating brokers.
It is usual to accompany the offer with a good-faith check (in US dollars), which demonstrates you are serious about the offer.
The seller will respond by either accepting the offer, rejecting it, or making a counter-offer. If they do not respond by an agreed date, the offer is considered cancelled. A counter offer can suggest an alternative amount, or modify any other condition presented in the initial offer.
Further negotiations conducted in this way can sometimes result in a contract that is signed by both parties. This is known as an “executed” contract.
These contracts will require the buyer to complete their deposit by a specific date, and it is common to deposit 10% of the sale price (this can vary, however). This deposit will be kept in an “Escrow Account” which is a “Trust Account” used by the Attorney or the Title company chosen to hold the escrow deposit.
Step 6. Inspection period
If agreed upon, it is common to have an inspection performed within 5 to 10 days.
When it is a sale of a NEW condominium, or a single family home, the buyer has the option of canceling the contract within 15 days after they have received all the required documentation from the Condominium Association, as well as their Financial Statements and Budgets.
If it is the RESALE (not a new property) of a condominium unit or a single family home, the cancellation period will be 3 days instead of 15.
Commissions are generally 6% of the purchase price. That is to say, there is no advantage for the buyer to try to deal directly with the listing broker. It will not reduce the commission paid by the seller who is already obligated by an agreement when listing the property for sale.
In our opinion, the buyer will have much better leverage when they use their own agent who will search through thousands of options instead of trying to steer a client to a specific property where they are the listing agent.
Step 7. Closing
The closing and recording of the sale are usually done at the office of an attorney (or the office of a title company), who will work with the mortgage bank (if there is one involved) and will coordinate all documents, recordings, payments to third parties and handling of the funds.
The minute the title company (notary) confirms all the paperwork has been taken care of, we are ready to close. In case you cannot attend closing in person, your realtor will send you the complete finalized package for your review and signature. Finally, the ‘HUD statement’ will summarize the net amount owed to close the transaction, amount that you will need to wire immediately. Upon receipt of your wire, the title company can close: You are officially the owner!
Closing day is agreed by both sides during the execution of the contract.
In other words, closing (also referred to as completion or settlement) is the final step in executing a real estate transaction. The closing date is set during the negotiation phase, and is usually several weeks after the offer is formally accepted. On this day, the ownership of the property is transferred to the buyer. The buyer and seller exchange keys and final accounts between any third parties that are involved in the deal: banks, condo associations, etc.
Once you have paid the remaining balance, the seller signs off the property rights to you, which then officially makes you the home owner. If everything goes smoothly and both parties agree on everything and all the paper work is signed, you will become the home owner that same day. But if not, the closing date will be postponed to a later date.
Above all, you have to be aware of the financial outgoings of the transaction. Please review the main of them below.
CLOSING COST ESTIMATE:
|6% Realtor Commission||Title Insurance – $500*|
|Estoppel Cost – $750* company||Title Search Fee – $150*|
|Attorney fee to Attorney – $550*||Title Closing Fee – $695*|
|Misc (FedEx/ E-recording submission/ recording of Affidavit/ wire costs ~ $150||Transfer Tax: purchase price/ 100 x 0.6|
|Transfer tax: purchase price/ 100 x 0.6||Misc: E-submission/ Recording fee deed $27/ wire costs ~ $150|
|Lien Search $310*||Inspection $250*|
|0,5% Loan Points|
|Pre-paid interest ~$100 (approx. depends on a loan|
|Processing Fee $799*|
|Underwriter Fee $250*|
|Appraisal Fee $485*|
|Misc: Credit Monitoring/ credit report/ flood fee determination/ Flood Life of Loan Coverage/ Life of Loan tax services/ tax certification fee ~ $200|
|Condo Questionnaire ~ $300 *|
|Recording fee: mortgage /100 x 0.2|
|Recording Fee Deed ~ $30|
|Mortgage Broker, Originator or Lender Fee ~ $1000.00|
|Monthly/ yearly expenses|
|~1,75% property taxes|
|In Condos/ Townhomes there is monthly association fees from $200 – $1500|
* fixed price, depends on the company you work with.