| There are several potential mistakes you could make | | | | Unfortunately he didn't pay attention and then at the |
| when buying residential real estate in Florida and I'm | | | | end of 2006 after that year's tax bill came he noticed |
| going to cover three here that I feel are important to | | | | that his monthly loan payment had gone up about |
| be aware of. | | | | $200 and was quite upset and didn't understand why. I |
| The first one is skipping the home inspection(s). It is | | | | looked at his statement and saw that the increase |
| your choice whether to do them or not but I always | | | | was strictly due to tax set-asides and went over it all |
| recommend having a home inspection done and a | | | | with him again. |
| termite inspection. | | | | For condos and townhouses (and in some cases also |
| Whether or not your purchase is an as-is sale (where | | | | houses) you may have a monthly maintenance or |
| the seller would not be doing any repairs for items that | | | | association fee to pay. If the association has a stable |
| come up on an inspection) it is very important that you | | | | financial position and a good level of reserves, those |
| know if there are any current problems with the | | | | fees should stay somewhat stable. However, if the |
| property and what potential future problems there | | | | association is not in a stable financial position or if they |
| might be. This is especially true with foreclosure | | | | have not put aside adequate reserves you may end |
| properties. | | | | up in a position where you are being assessed |
| This is especially important in Florida when buying a | | | | thousands of dollars at some point in the future for a |
| property. | | | | roof repair, replacement of windows, etc. (mostly |
| 1) There are termites here and if you are buying a | | | | happens with condos complexes). |
| wood frame house there could be hidden damage that | | | | To avoid this you should get a copy of the |
| can create significant trouble in the future. Even with | | | | association's most recent financial statement and |
| concrete block houses, if the exterior is stucco and | | | | review this during the time period allowed. You should |
| goes down too close to the ground, termites will be | | | | also find out from the association what percentage of |
| provided something to eat and a possible way to get | | | | owners are behind on their dues. Condo communities |
| up into the frame of your roof. | | | | that were built in Florida during the boom or were |
| 2) Your air conditioning system needs to work well | | | | 'condo conversions' during the boom years are seeing |
| and continue working properly because you will | | | | a lot of foreclosures due to the number of sales that |
| definitely need it in the summer months. It is important | | | | were to investors and due to the drop in values. If too |
| to know both the age of the system and whether it is | | | | many people are not paying their dues it can result in |
| functioning as it should. | | | | an increase in dues to the owners that are paying to |
| 3) The largest expense is normally the roof and in | | | | cover the annual expenses. This is something that is |
| Florida the intense sun and strong, summer rains can | | | | seen more in areas like Miami but is also something I |
| shorten the life of a roof. You need to know how old | | | | have seen in a few complexes in this area. |
| the roof is and approximately how much longer it is | | | | One local complex where buyers made the mistake |
| likely to last as well as whether there are any current | | | | of not verifying the association had adequate reserves |
| or recent leaks. | | | | were assessed tens of thousands of dollars when |
| I had one client who found out on the inspection that | | | | their roof, windows, railings and carports had to be |
| the roof of the house they were buying had worn | | | | replaced a few years back. That, on top of the decline |
| much faster than it should have and was going to | | | | in property values since 2006 ended up being very |
| need replacement even though it should have lasted | | | | costly to those owners. |
| another 3-5 years. We were able to negotiate with the | | | | The 3rd costly mistake is trying to buy a property |
| seller on this and got the price dropped another $5000 | | | | without having a good buyer's representative (realtor) |
| because of this. | | | | representing you. It is easy to have a deal go sour if |
| Another good example for why this important is a | | | | either the buyer or seller gets upset about something |
| client who had a contract on a foreclosed property | | | | and there is no "cushion" to temper that on its way to |
| about a year and a half ago. It was a spacious house | | | | the other party. Some states like New York require |
| built about 16 years ago and was everything she | | | | that both buyer and seller have an attorney |
| wanted and at a better price than she expected. We | | | | representing them for the majority of the process |
| could both tell that there was work she was going to | | | | after a buyer chooses a property they want to put an |
| have to do with it, but it still seemed like a pretty good | | | | offer in on. Florida does not, although you can have an |
| deal. However, the home inspection showed us that | | | | attorney represent you if you choose. So when buying |
| she was probably making a mistake. | | | | a property in Florida you can proceed with no one |
| She would have needed to replace the roof, air | | | | representing you but if you don't know all the ins and |
| conditioner, ducting and hot water heater in addition to | | | | outs of the process you are at risk of making |
| what we already knew (appliances, repairing areas of | | | | mistakes that can lead to unnecessary costs, losing |
| wood flooring, pool screening). That was bad enough | | | | your deposit, losing the property you want to buy and |
| but then the inspector noticed that there was a gap | | | | other problems you could have easily avoided. |
| between the crown molding and the ceilings at some | | | | One example of this was a client of mine who was |
| of the walls at the back of the house. We could see | | | | interested in buying a condo that had sold for over |
| that there was already caulking in the gap from a | | | | $900,000 in 2005 and was a short sale listed at |
| previous separation and that now even the caulking | | | | $199,900 in a nice community with an incredible view of |
| was gapping. The inspector's opinion was that there | | | | the water and beautiful upgrades. It wasn't disclosed |
| was a soil settlement issue; possibly to the extent of | | | | by the seller or their agent that the community had |
| being a sinkhole, and that it was something that was | | | | legal problems with the developer and that it was likely |
| continuing to worsen over time (thus the new gapping | | | | that all owners were going to be assessed at least |
| in the caulking). Fortunately, my client's contract was | | | | $5000 in the near future. Fortunately I knew about this |
| written so that she was able to cancel and get her | | | | from another agent who had sold properties in that |
| deposit back due to the extent of the repairs needed. | | | | complex and informed my the potential buyer. Since |
| If she had tried to save a few hundred dollars by not | | | | that time the situation has only worsened and condo |
| having a home inspection it could ended up costing her | | | | values have plummetted. |
| tens of thousands of dollars. | | | | Also, if you do not have a competent buyer's agent |
| The second costly mistake comes from incorrect or | | | | and the selling agent does not know what they are |
| incomplete information on what your future financial | | | | doing or is making mistakes and you are relying on |
| obligations for taxes and/or monthly association fees | | | | them, you may end up with problems you wouldn't |
| will be. | | | | have had otherwise. It can be stressful to buy real |
| With both houses and condos you will have annual | | | | estate and you don't need to compound the stress |
| property taxes. The amount of taxes you will be | | | | with problems you shouldn't have to be dealing with |
| paying may be much higher than what the current | | | | and don't necessarily know how to handle correctly. A |
| owner was paying due to Florida's Homestead | | | | competent buyer's agent can help keep the stress |
| Exemption so you need to determine what your taxes | | | | level to a minimum and help you with those things that |
| will likely be. | | | | do come up which are stressful to help you get |
| A good example for this is a relative of mine that | | | | through them. Considering that in most cases you do |
| bought a newly built house in 2005. I warned him at the | | | | not have to pay the buyer's agent commission (it |
| time that his taxes would go up the next year and that | | | | normallly comes out of the commission paid by the |
| he should be prepared by putting aside additional | | | | seller to their agent) you should take advantage of this |
| money since the amount his bank would collect each | | | | type of help. |
| month for taxes in his loan payment would fall short. | | | | |