Okay, so you've found the home you want to buy, now what?? Well. hopefully you have a trusted real estate professional by your side to guide you in the right direction. If not, you should heavily consider finding one! But once you find a home you want to purchase, there are some key considerations to take into account.
Contracts:
First thing to understand about buying a home in Florida, is that the sales contract is an AS-IS contract. What this means, is that you are agreeing to buy the home in it's current or "As-Is" condition. Now this does not mean that you cannot get things fixed if items are not operating as intended, such as an HVAC unit. If there is anything that you want fixed, completed, repair, installed, etc. before closing, you have the ability to negotiate with the seller!
The second thing to understand about purchase contracts in Florida, is that they are strictly time-sensitive contracts! Each situation is different, however, the entire process runs on a timeline. You are going to have certain "contingencies" (protections) in place throughout the contract to protect you and allow you to exit the contract if something goes awry. You need to make sure that you work diligently with your team of trust professionals to have everything done in a timely manner!! If you do not, you risk losing your "Escrow Deposit". This deposit is held by a third-party title company and is given back at closing if you close on the home, but this money is your risk to the seller. If you were to break the contract outside of your contractual rights, the sellers would retain this deposit.
Contingencies:
As we mentioned, you will have certain contingencies in place. These provide a protection for you as the buyer! In the event that something does not go as planned, some issues were not disclosed, the property is not in acceptable condition, or many other possible scenarios, these contingencies will allow you to exit the contract and retain your deposit.
For now, we will go over the main 3 contingencies that are in place in most cases here in Florida. These include an inspection contingency, appraisal contingency, and financing contingency.
Inspection Contingency:
Let's start with "Inspection contingency". This is what we call the "due diligence period", and during this time frame, you as the buyer can inspect the home, receive quotes from contractors, see the home, take measurements, and anything else you need to do to make sure the home is in acceptable condition for you to move forward. Anytime during this contingency, you have the ability to negotiate with the seller for repairs, credits, price reductions, and more! If the seller does not agree to work with you on this, you have the opportunity to cancel the contract and retain your escrow deposit. This is your time to make sure you want to buy the home!! If you have any doubts, or issues with moving forward, now is the time to address them!
Appraisal Contingency:
The appraisal contingency protects you from your obligations if the property were to not pass appraisal per the lender's standards. This could mean that the appraised value of the home is less than the agreed purchase price, in this case, you would need to address the issue with the seller and get them to reduce the price to the appraised value. The bank will only finance you based on the appraised value, so any difference in purchase price and appraised value would need to be paid out of pocket by the buyer, IF and ONLY IF the appraised value is less than the agreed price. There are a ton of caveats here, so make sure you discuss with your agent regarding the best route to take in each scenario!
Financing Contingency:
The financing contingency is the one that typically lasts the longest! This contingency protects you from the obligations of the contract if for any reason the bank will not finance the property for you to buy. This could be from losing a job, a change in income or credit score, or any other reason the bank would deny the loan. This is your last leg to stand on to protect that escrow deposit!!! Make sure you and your real estate agent are working diligently with the lender to get them what they need, so they can get loan approval and "clear to close" in a timely manner.
Conclusion:
Buying a home in Florida is a great investment, but just like any investment, you want to make smart moves! So make sure you understand the sales contracts when you're purchasing real estate in Florida. Ensure your agent is keeping track of the process and guiding you diligently on a day to day basis. If you abide by the contract, work diligently to complete the process, and listen to your trusted professionals, you will. bejust fine!
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