Buyer FAQ's - Frequently Asked Questions
Q : What is the process, once I find a Home That I Like?
Q : I keep hearing about “Short Sale” properties. What are those?
Q : Do I have to offer the list price shown?
Q : Are the Property Taxes and HOA fees shown in MLS correct?
Q : Where can find information about area schools?
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Q : What is the process, once I find a Home That I Like?
A: The first step is to submit an offer on the property.
If you’re planning on paying all cash, we’ll need a “proof of funds” (such as a copy of a bank or stock statement) to submit with any offers.
If you’re planning on getting a mortgage, you’ll need to get a “pre-approval” letter from your lender to submit with any offers. If you have NOT yet gotten pre-approved (or if you’d just like a 2nd pre-approval to compare lenders), you may go ahead and fill out the form on the “Need Financing?” page of my website, and I’ll run it by one of the lenders that I work with to see what they can do.
** It is company policy that I have one of these from you before showing properties, since it will be required to place any offers. It will also save you time and aggravation by having this done ahead of time.
If your offer is accepted, then you will have 9 – 10 days to complete any inspections that you wish (I write that into our purchase offer). I always recommend getting a general house inspection & pest inspection, and I can refer you companies that handle both.
Closings are generally handled at title companies (rather than real estate attorneys) and the seller chooses which company will be used. I rarely have clients hire a real estate attorney as well, but you are certainly welcome to if you wish. You do NOT need to be present down here for the closing. The title company can either hire a mobile closing service in your area to come to you, or they will mail you the paperwork to sign (in front of a notary) and mail back.
Q : I keep hearing about “Short Sale” properties. What are those?
A: Many people are confused about short sale listings, so I wrote the following to help explain them a bit. Feel free to call if you have further questions about this.
When you click on a listing to see the details, towards the upper-right you’ll see where it says “Special Sale.”
Here it will either say:
1) "None" - this is what would be considered a "Normal" sale where an individual is selling their property, and their mortgage (if the have one) is less than the list price that they’re asking.
2) "REO/Bank Owned" - for bank owned properties, where the seller’s lender has completed the foreclosure process and now owns the property.
3) "Short Sale" - where the individual who is selling their property is behind on their mortgage payments, and the list price is LESS than what is owed to the seller's lender(s).
Usually once someone is about 3 payments behind on their mortgage, their lender will begin the foreclosure process, which in Florida often takes 4 months or more. If that person owes more than their house is worth (which is VERY common in this market right now), the seller will often try to sell the house for less than what is owed, hoping their lender(s) will accept it. This is what is known as a “short sale.”
A short sale property is one that’s in foreclosure, and the seller owes more than the price that his/her Realtor has it listed it at. The seller’s lender has NOT approved that price. The list price is simply what the seller’s Realtor felt was the market price to get people interested to submit offers. That’s why on short sale listings, in the Comments section, the listing agent has to include the words “Listing price may not be sufficient to pay the total of all liens and costs of sale and sale of Property at full listing price, may require approval of seller's lender(s).”
The exception to this can be when you see the words “List Price approved by lender” (or something similar) in the Comments section. This occurs when an offer has already been submitted & negotiated, and the seller’s lender has agreed to accept less than what was owed, but then the buyer was not able to close (ie. their financing fell through or they found another house), so it’s gone back on the market. In these cases, if you offer at or near what the bank has already agreed to accept, then getting a response on a new offer from the seller’s lender should be pretty quick. Also, ones that have an ADOM (days on market) of at least 100, are generally going to be further along in the process.
If we submit an offer, first the owner/seller has to sign the purchase contract, then it has to go to the seller’s lender so that they can decide if they wish to accept it, reject it or reply with a counter offer. The process often can take 4 months or more to even get a response from the bank. This is why many people (especially if they are looking to close on a house quickly) will pass up on short sales, which comprise at least ˝ of the market right now.
The advantage of short sales is that it gives you a lot more properties to choose from, and with less competition than bank-owned or “None” (neither bank owned nor short sale) properties. Of course, the disadvantage is the extended negotiation time (usually) with the seller’s Lender(s).
Feel free to contact me if you have any further questions about any of this.
Often what I do for client, is to separate the short sales by creating two separate searches, one with only short sales, and the other with only bank owned listings. Just let me know if you would like this when you fill out the form on the Property Search page.
Q : Do I have to offer the list price shown?
A : Sometimes, especially (but not always) when a bank (or individual seller) first places a home on the market, it may be over priced. They're just trying to see what they can get.
However, if it hasn't sold in 2 - 3 months, they'll generally be lowering the price - sometimes by $10k, sometimes by $20k or more if they feel it's very over priced.
Sometimes they price them below market right away, perhaps just to get the property sold quickly or perhaps they just made a mistake. Even in the current market, if it’s a good deal, it will get snapped up quickly, and may get bid up over the list price.
So, what I recommend to all of my clients, is that if you see a property (or properties) that look interesting, have me pull the most recent COMPS (comparable listings & sales) to see what nearby homes are selling for.
I'll go into the Realtor MLS and search a 1/2 - 1 mile radius around the property, and look for homes that are similar in size, age, etc that are : currently for sale, under contract and those that have sold within the past 3 months, and send you a list with those properties.
I don't think it's a good idea to just automatically offer a certain amount less than what the bank or seller is asking without knowing the comps for that property. Otherwise, if a house is really over-priced, you could pay $10k less than the list price and still be over-paying. By the same token, on another home you could be getting a great deal by paying the list price or even a little above.
So, just let me know if you see something you like and I'll be happy to pull the Comps before you make any offers.
Q : Are the Property Taxes and HOA fees shown in MLS correct?
A: One thing I like to tell my buyers is to take the HOA fees and property taxes listed in the MLS with a grain of salt.
HOA fees - we need to call to confirm. They’re usually at least close, but they’re only as accurate as the list agent who input the information. For bank owned properties especially, the listing agent may not have researched them very thoroughly. Of course, if you’re serious about a property, I’m always happy to call the HOA and confirm the fees for that unit. They’re usually based on a price per square foot. Also, when you get a property under contract, you typically have a 10 day inspection/due diligence period to verify things like that as well.
Property Taxes – The property taxes shown in each listing are drawn automatically from county records (unlike the HOA fees which are input manually).
However…they reflect what the previous owner paid, for the previous year’s taxes.
What you’d pay as the new owner may be higher or lower than the amount shown, but is probably not the same.
First of all, tax rates go up and down from year to year, and the assessed values can change. Also, did the previous owner have “homestead tax exemption” (which reduces the assessed value by $25,000), or was this a rental property that doesn't qualify?
If it was the previous owner’s primary residence, and if the had lived there a long time, then they may have qualified for the “Save Our Homes” cap, which puts a limit on how much taxes can be raised from year to year.
The best way to calculate what your current year property taxes will be as the new owner is to use the tax estimator tool on the county’s property appraiser or tax collector websites.
For Orange county (Orlando) -
First : type in the Property Address or the Parcel ID (best for condos with multiple units in the same building) in the Record Searches page of the property appraiser's website at : http://www.ocpafl.org/rec_srch.html#1
Once you pull up the property info page, scroll down towards the bottom and click on the "tax estimator" button.
For Seminole county (Altamonte Springs, Sanford, Lake Mary, Oviedo, etc…) -
Go to the tax collector’s website at : http://www.seminoletax.org/tax/estdisclaimer.shtml
Feel free to contact me with questions about any of these, but in the meantime just use what’s in the MLS listings as a guideline, but which we can confirm before submitting an offer.
Q : Where can find information about area schools?